Reconciliation of your Supplier Statement

Supplier Statements Should be reconciled each month

Each month you will get send a statement from most suppliers as a summary of what transactions have been recorded against your account for the month. It is worthwhile reconciling back to this statement in order to;

• Check invoices in Xero to ensure they match what the supplier has outstanding on their statement.
• Check allocation of payments and credits against invoices
• Creates integrity of the information on the Accounts Payable report.

TIP – You can add and organise statement in the file section of Xero. Use the unique email address to send the statements in.

The accounts Payable Report in Xero only contains supplier invoices that are fully approved

Steps for Reconciling Supplier Statements

1. Ensure all invoices for the period you are reconciling are entered in Xero.
2. Check the Statement Balance and compare with the balance on your accounts Payable Report in Xero for the supplier.
3. If the balance of the Accounts Payable report matches the balance of the supplier statement and the invoices the statement show as outstanding are the same as those on the Detailed Accounts Payable Report there is nothing further to do.
4. If the amount outstanding on the supplier statement is different from the amount outstanding on the accounts payable report for the supplier, the variance needs to be identified.
5. To find variance, run the accounts payable report in Xero Accounting>Reports>Purchases>Aged Payables Detail
6. There are several things to look for;
   • Work out what the amount is of the variance. If the amount of the variance is an invoice value on the supplier statement, check this invoice has been entered in Xero (Check Drafts and Awaiting Approval).
   • Check for duplicate entries in Xero or by the supplier on their statement.
   • Check each invoice off on the Aged Payable report against the supplier statement, this should identify those invoices missed, not marked as paid correctly or individual invoice amount is incorrect.

7. Once you have identified those invoices you can go ahead and rectify the issues so that the statement matches your supplier amounts outstanding.

TIP: If the Statement opening balance is incorrect you will need to ask your supplier for previous statements to ensure all invoices are captured and the opening balance of the current month is correct.