Supplier Statement Reconciliation: An Overview Of The Importance & Benefits
What is supplier statement reconciliation and why is it important?
Reconciling supplier statements is a critical control for Accounts Payable to ensure their ledgers are accurate. In an ideal world, automating the process would enable a much higher volume of statements to be reconciled, exceptions would be resolved proactively, and more suppliers would be paid on time.
However, with limited resources and high volumes of invoices, reconciling supplier statements is all too often neglected and only performed reactively when the supplier’s account is in trouble.
Accounts Payable are simply unable to get through any meaningful volume on a routine basis which is then compounded by suppliers who, seeking confirmation that their invoice has been received, then submit further queries and take up more of Accounts Payable’s time. Businesses that attempt to reconcile statements manually suffer the worst – the process is time-consuming, tedious and all too often neglected due to the volume of statements to reconcile. Not reconciling statements or only reconciling for fire-fighting purposes is not the right approach – it pays dividends to instead be proactive by automating supplier statements when they come in and focus Accounts Payable users time on managing the exceptions. Businesses who are able to reconcile statements proactively will resolve errors before they become more costly issues, improve deadline performance and reduce supplier queries.
Common problems with manual reconciliation
Supplier statement reconciliation should be a straightforward process – and, on paper, it is – but it is affected by many factors that make the job much harder than it needs to be. There simply isn’t enough time in a day for an average-sized AP department to reconcile meaningful volumes of statements. Many AP departments are snowed under trying to process invoices through to payment on time and only reconcile statements when the account is close to or on stop.
This assumes all members of your Accounts Payable team are proficient in Excel. Manual statement reconciliation is tedious and unpopular; consequently, it tends to be the first task that gets pushed to the bottom of the agenda during busier periods.
Across manual statement reconciliation is also a complete lack of accountability. AP departments who are struggling to reconcile a significant number of statements tend to miss things, fail to keep complete and accurate records, pass workloads around, and generally lose track of who is doing what.
Few Accounts Payable departments keep an audit trail to track issues, and even fewer employ management reporting to identify what might have caused those issues.
While all of these problems can be resolved as encountered, continued errors on critical supplier accounts and sporadic mistakes can be equally difficult to locate and resolve. This can be compounded through the volume of your transactions, knowledge loss due to staff turnover, or lacking a mechanism to prevent or address these issues.
Repeat errors with the same suppliers could eventually even result in loss of business or even production that will affect delivery of goods to customers.
How can automation help?
Any work that is detailed and time-intensive is open to human error. When this involves finance and the intricacies of relationship management in the event of a mistake, this can quickly become a key pain point for any business.
Adding automation to this process can improve the processing ability of Accounts Payable and empower you to take a preventative approach to address issues. You will never need to comb through statements one by one to find any problems – missing or non-reconciled payments will be flagged up automatically, saving immeasurable amounts of time for your Accounts Payable department as a whole.
How Statement-Matching helps
At Statement-Matching we provide a solution to automate supplier statement reconciliation which will save you immeasurable time and money.
Statement-Matching automates the reconciliation of Excel, PDF and Paper statements then highlights the exceptions for Accounts Payable to follow up. The software re-reconciles statements automatically every day, ensuring no back log can build up.
Statement-Matching ensures that all invoices and credits are received and highlights any that are missing. The software also identifies mis-postings such as debits and credits that have been posted the wrong way around, duplicates, and data entry errors. Proactively resolving these issues means suppliers will be paid on time, incorrect payments will be reduced, early payment discounts will be maximised, and late payment fees will be minimised. Accurate supplier liabilities improve cash flow forecasting, prompt clearing of GRNI and ultimately a dramatic reduction in supplier queries.
Statement-Matching provides comprehensive reporting to quantify errors and identify problem vendors for root cause investigation. Vendors can also be flagged in the system as critical, so that you can ensure your key suppliers are reconciled proactively on a monthly basis and actually followed up by the AP team. Suppliers really notice the difference and appreciate receiving reconciliation reports giving them the status of their documents, so it helps you to build and maintain stronger working relationships.
Optionally, Statement-Matching can also be opened up to suppliers whereby they are invited to have access to a portal. The portal option enables suppliers to view their invoices and payments, including status and due dates. Suppliers can also submit messages, which are integrated to your email query inbox and they can even upload their own statement with the results available instantly.
Statement-Matching works with any ERP system and we can have customers up and running, ready for training, within a week of receiving their initial data. Once it’s set up and in sync with the ERP system, it just keeps working for you every day, re-reconciling statements already in the system and automatically reconciling new statements.
Some specific elements of Statement-Matching include:
Clean setup: Our Cloud-based solution means there is no hardware or software to install, so all that users need is a browser. We can have the system up and running, ready for training, within a week of receiving the initial data.
Automated Reconciliation: Excel, PDF and Paper statements are all reconciled automatically by the system, so Accounts Payable can focus their time on managing the exceptions only.
Exception management: Select which statements to work on by system, legal entity and vendor splits. Follow up missing invoices and credits with suppliers by sending reports requesting copies to be emailed in as soon as possible to avoid delays in payment. Fix all the miss-posting errors on your ledger to ensure no incorrect payments are made and, once you have the statement in a Fully Matched status, send a copy to the supplier to give them invoice status information, due dates for payment and payment references for any invoices that have been paid. Set flags in the system to follow up missing documents or mark-up problem vendors for reporting and further investigation.
Comprehensive reporting: The system provides reconciliation reports to share with suppliers as well as audit reports for year end. Error-based reports enable you to quantify the number and value of missing invoices/credits by vendor, as well as report on other error types identified during reconciliation. Supplier-based reports enable managers to monitor the process and ensure your key suppliers are reconciled each period.
Monthly subscription: Our solution is provided as a monthly subscription with a fixed element, based on the number of invoices you process per annum, and a variable element, based on the number of statements you upload each month.
Additional functionality: Once you have the platform in place, there are two supplementary modules that can be turned on for an additional subscription: a supplier portal and Duplicate-Matching. The supplier portal allows suppliers to view invoice and payment status, submit messages and upload their own statements. Duplicate Matching provides configurable duplicate identification reports and workflow to manage the prevention/recovery process.
No long-term contract: Statement-Matching operates on a 30-day rolling contract with no minimum term. You can terminate with 30 days notice, any time you like.
The range of options that Statement-Matching software offers truly empowers your AP team to focus on managing exceptions and adding value. Join the world’s leading shared service organisations and start proactively reconciling your statements as part of your day-to-day controls to ensure AP ledgers are always accurate.
Why choose Statement-Matching for your business?
By setting up a system that automates supplier statement reconciliation, you will eliminate the majority of issues commonly faced by Accounts Payable departments worldwide. You and your team will be able to process more statements with much fewer resources, and in doing so reduce supplier queries, and pay more suppliers on time.
Your relationship with suppliers will improve, as will the profile of Accounts Payable in general.
Your team will no longer feel the stress of statements piling up, and they will be able to spend their time more efficiently on other tasks.
By choosing to automate your supplier statement reconciliation process, you’ll drive continuous improvement of Accounts Payable and reduce the potential cost of a third-party audit recovery.
We offer a free Proof of Concept so you can see how our software works with your data, before you make any commitment. You can give us data for up to ten suppliers and we’ll load that up along with the statements, then set up a training session to go through the results. We’ll give you all the support you need to make it a success and provide input for your business case.
If you require further information or guidance, we offer a range of further reading materials on our website alongside dedicated product information and FAQs about the specifics of the service.
If you want to find out more about the Statement-Matching system, please do not hesitate to contact us with any questions or, better still, book a demo via our website, and we will show you the end-to-end process on a live system.