What is vendor statement reconciliation?
The match of a vendor's statement to the open bills on the books. You tick each unpaid item, then explain anything that does not line up.
Definition
Vendor statement reconciliation is the work of matching a supplier's statement of your account to the open bills on your books. The goal is to prove that what the vendor says you owe agrees with accounts payable for that supplier.
This is not a journal. It is a matching worksheet, done on one vendor at a time, using the statement as independent support.
Where it shows up
Balance Sheet: Related to the open accounts payable the statement should agree with.
P&L: Related to nothing extra unless a later missing bill is recorded.
Cash flow: Related to which of those bills will leave cash.
See also: Accounts Payable · Vendor Bill · Account Reconciliation
The Balance Sheet line you are proving is accounts payable, in current liabilities. The statement is support from the vendor, not a number you typed.
The Income Statement does not change just because you tied the statement. Expense was already recorded when each bill was entered, unless the worksheet finds a missing bill that then has to be booked.
Cash on the Statement of Cash Flows may leave on the next check run for items both sides agree are still open. The reconciliation itself does not pay anyone.
If you look in the payable system, this is the month-end tie-out of one vendor's open items. You sit with the bakery's statement on one side and your unpaid bills on the other.
How it works
The vendor sends a statement listing invoices, credits, payments, and the remaining balance. Your books have the same kinds of items, coded to that vendor.
You tick each statement line to a book line. An invoice on both sides is a match, and a credit memo on both sides is a match.
Unmatched items are the work. The vendor may show a bill you never received, a payment they have not applied, or a balance you already paid.
You also watch for timing. A bill you recorded on the last day of the month may not be on their statement yet, and a payment in transit may still show as open on their side.
A true miss is booked. A missing bill is entered so accounts payable is complete, and a duplicate on their statement is not paid again.
The worksheet should end at zero unmatched, or with a short list of items still being researched. An unexplained leftover is not a reason to force the numbers.
Payments on the statement should match what you issued by ACH payment or check. If they show a payment you never sent, stop and look before you pay the remaining balance.
Payment terms tell you which matched open items are actually due. The statement total is not automatically the amount to pay today.
Example
A cafe receives the bakery's month-end statement. It lists three unpaid bread bills totaling $1,200, plus a $50 credit for a short delivery.
The bookkeeper opens the bakery's unpaid items. Two bills for $400 and $500 match, and the $300 bill on the statement is missing from the books.
The $50 credit is on the books as well. After the missing $300 bill is recorded, both sides show $1,150 open, and the worksheet is done.
No cash moves during the tie-out. The next payment will cover the bills both sides now agree on.
Common mix-ups
Vendor statement reconciliation is not a bank reconciliation. A bank reconciliation proves cash, and this worksheet proves one vendor's payable.
The vendor's statement is not your books. Their total is a claim, and your accounts payable is the ledger you still have to support.
Tying the statement is not the same as paying it. You may agree on $1,150 open and still pay only the items that are due under the terms.
Related terms
- Accounts Payable: Amounts the business owes vendors for goods or services already received.
- Vendor Bill: The invoice a supplier sends that becomes a payable.
- Accounts Payable Aging: A report bucketing unpaid vendor bills by how long they have been outstanding.
- Duplicate Payment: Paying the same vendor bill twice.
- Account Reconciliation: Proving that a ledger balance agrees to independent support.
- Open Payables Report: The list of vendor bills approved but not yet paid.
- Prepayment: Money paid to a vendor before goods or services are received.
- Reconciliation Discrepancy: An unexplained difference left after a reconciliation is attempted.