The monthly job that gets skipped
At the start of each month, statements arrive from your suppliers. The good practice is to compare each one with what your ledger says you owe. In reality, the big suppliers get a quick look when someone has time, and the rest go into a folder.
The problems surface later. A supplier puts your account on hold because an invoice you never received is overdue. A credit note you were promised was never applied. You find you paid the same invoice twice, three months ago. Each of these would have been visible on the statement, if someone had checked it.
Why it is hard to keep up
Statements are designed for the supplier's convenience, not yours. Each one has its own layout, its own reference numbers and its own idea of what has been paid. Matching a statement with forty lines against your purchase ledger by hand is slow, and most lines match perfectly, which makes the task feel pointless until the one line that does not.
| Difference found | What it usually means |
|---|---|
| On statement, not in ledger | Invoice never received, or lost before entry |
| In ledger, not on statement | Invoice entered twice, or wrong supplier |
| Payment not on statement | Supplier has not allocated it, or it went to the wrong account |
| Credit note missing | Promised credit not issued, or not entered |
| Amount differs | Price or VAT difference, or a part credit |
What skipping it costs
Unreconciled supplier accounts produce avoidable trouble: accounts put on stop over missing invoices, duplicate payments that are hard to recover once time has passed, credit notes you are owed but never receive, and a payables figure that you cannot fully trust. Your relationship with a supplier also suffers when disputes come up months late, with nobody on either side remembering the details.
The root cause is not laziness. It is that the effort is spread evenly across every line while the value is concentrated in a few. A person cannot know in advance which three lines out of two hundred are wrong, so they either check everything slowly or check nothing. A machine can check everything quickly and hand over only the three.
How we automate statement reconciliation
- Collect statements from a dedicated inbox, and where suppliers provide portals, from scheduled downloads that the portal permits.
- Read each statement with a document model into a standard structure: date, reference, type, amount, running balance, and check the statement adds up.
- Pull the supplier's account from Xero, QuickBooks, Sage or your ERP through the API: bills, payments and credit notes for the period.
- Match line by line, handling the supplier's references against yours, invoices split across payments, and timing differences for payments in transit.
- Classify every difference into one of the types above and draft the next action: request a copy invoice, query a credit, confirm a payment with remittance details.
- Present one summary per supplier with the differences only, and a status for each: resolved, waiting on supplier, waiting on us.
Duplicate payment checks run across all suppliers at the same time, looking for the same amount paid twice to one supplier, or the same invoice number entered under two suppliers.
After it is running
Every statement is reconciled, not just the big ones. Differences are raised with suppliers while they are recent and easy to sort out. Missing invoices are requested before they cause an account hold. The person in accounts spends time on the few lines that matter rather than ticking off the many that do not.
Your year-end creditors figure comes with evidence that it agrees with what suppliers themselves say you owe, which is exactly what your accountant wants to see.
It also tells you something about your own process. If the same kind of difference keeps appearing, such as invoices that suppliers say they sent but never reached you, that points to a problem upstream, perhaps an old email address on the supplier's records or invoices going to a site rather than to accounts. Fixing that cause removes a whole category of future differences.
Could this be you?
- Supplier statements go into a folder and are rarely checked.
- Suppliers have put you on hold over invoices you never received.
- You have found duplicate payments long after they were made.
- Credit notes you were promised sometimes never appear.