Step-by-Step Vendor Reconciliation Process for Finance Teams

Vendor reconciliation sounds like a skillful, but it’s really just making sure your company’s records line up with what your vendors say. If you skip this step, you risk overpaying, missing payments, or dealing with unhappy suppliers. When you get it right, though, everything just runs smoother.

Here’s how finance pros usually handle vendor reconciliation:

Step 1: Gather Vendor Statements
Start by collecting statements from your vendors for the period you want to check. These statements show every invoice, payment, credit note, and what’s still owed. If you’re missing something here, the rest of the process gets messy fast.

Step 2: Pull Your Own Records
Next, the finance team grabs the vendor ledger from your accounting or ERP system. This is your side of the story: all the invoices, payments, and adjustments you’ve recorded.

Step 3: Match Everything Up
Now comes the grunt work. Line by line, you compare what the vendor sent with what’s in your books. It’s tedious, but using a clear format helps—less room for mistakes.

Step 4: Hunt Down Differences
Sometimes things just don’t match. Maybe there’s an invoice no one recorded, a payment logged twice, or a timing issue. The key here is to dig in and figure out exactly why.

Step 5: Fix and Update
Once you know what’s off, you fix it. That could mean adding a missing invoice, deleting a duplicate, or reaching out to the vendor to clear up confusion.

Step 6: Final Check and Report
After making all the fixes, the finance team does one last review and puts together a final reconciliation. Keeping everything documented makes life easier if there’s ever an audit.

A lot of companies outsource this job to firms that specialize in vendor reconciliation process, like Ajaykumar & Associates. They follow strict processes and help keep your records clean, accurate, and ready for whatever comes next.

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