Getting What You Paid for – Reconciling Supplier Invoices

One of the main stresses a financial team will face comes from reconciling supplier invoices with purchase orders, delivery notes and actual inventory.

Huge volumes of invoices pour in every month and each vendor or supplier usually wants paying immediately! Supplier reconciliation is, however, a rather important process which ensures your business gets what it has ordered and pays for and is not overcharged.

As with any reconciliation challenge, if it is met with the right mix of processes, staff and technology it can be easily overcome.

So what are the key challenges with supplier reconciliation and how can we overcome them?

Volume of statements

As we’ve already mentioned, one of the key challenges is the sheer volume of invoices that the accounts department receives from vendors and suppliers. If you try to reconcile these statements as they come in, you may run into trouble since the amounts may not match until the month end and you could still end up overpaying.

You can help to alleviate this stress a little by organising these by the supplier invoices date, as they come in. Then, at the end of the month, you can quickly discover which supplier has invoiced, how much they’ve charged and for what, making the reconciliation a bit easier to organise.

A mix of formats

Supplier invoices tend to arrive in whichever format they like to use, rather than one that is easy for you to process. You may have to translate their reference number to yours, investigate the item labels and break down the amounts. Just finding the information you need on an invoice can be a hard task.

An easy method to help overcome this formatting issue is to reformat the data into your own accounting/ERP system as the invoices come in. It still leaves you with the thankless task of identifying and picking out the useful information, but it will make your end of month reconciliation a lot easier.

Alternatively, you could use automation software that remembers the data translation and information matching and automatically reconciles the account for you.

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Old balances brought forward

Often you will find that your supplier’s invoice figures don’t match the value of your deliveries, or your purchase orders for the month.

This will either be because the supplier has over or under-charged, or, much more likely, they have rolled over a previous balance. However, invoices do not always detail the rolled over amount – leaving you to investigate where it may have come from. There is little you can do about this other than develop processes for the quick identification of brought forward amounts to help speed up your reconciliation.

Pressure from suppliers

Suppliers are notorious for expecting immediate payment of invoices, despite the high volume and lengthy reconciliation challenges that go with them. It certainly doesn’t help matters when they keep ringing through to chase their payment.

Expecting suppliers to change their practices is unrealistic, so you must do your best to deal with their incessant calls whilst maintaining your composure. One of the only ways to overcome this challenge is by speeding up the supplier reconciliation process. The tips in our blogs may help, but the most effective way of accelerating the reconciliation process is to install reconciliation automation software. This technology can process your reconciliations in a matter of minutes rather than days leaving you to deal with suppliers and improve your other accounting processes.

Where next?

Request a demo of Trintech Adra Account Reconciliation Software