When a supplier's statement shows a different balance from your books, do not pay either figure yet. Get both to the same date, tick off every bill, payment and credit note that appears on both sides, and sort whatever is left into one of four reasons: not with us yet, not with them yet, keyed differently, or disputed. Once every item has a reason, the two balances explain each other, and you can send the supplier a short note saying what you agree, what you are recording and what you would like them to check.
You need three documents: the supplier's statement, your own ledger for that supplier, and your bank statement.
Why the two balances differ
You and your supplier keep separate records of the same dealings, and each side records things when it learns about them. The supplier enters a bill the day they raise it; you enter it when it reaches you and has been checked. You enter a payment the day you make it; they enter it when they see it in their bank. Credit notes, returns and typing mistakes add their own differences. Much of a gap can turn out to be timing, but you only know that once each item has been found.
Same date, then tick what matches
- Agree the date. Ask the supplier for a statement up to a specific date, and print or export your ledger for that supplier to the same date. Comparing a statement to 30 September with your ledger to 15 October creates differences that are not real.
- Put them side by side. Supplier's statement on one side, your ledger on the other.
- Tick what matches. Go line by line. A bill matches when the bill number and amount agree on both sides. A payment matches when the amount agrees and the payment reference (UTR, UPI or cheque number) can be traced. Tick both copies.
- List what is left. Every unticked line on either side goes on a short list with its date, reference and amount.
Four reasons for what is left
| Reason | What it means | What you do |
|---|---|---|
| Not with us yet | The supplier has recorded a bill or credit note you have not recorded | Ask for a copy, check it, and record it if it is correct. If you are unsure which month it belongs in, ask your accountant |
| Not with them yet | You have recorded a payment the supplier has not recorded | Send them the payment date, amount and reference |
| Keyed differently | The same item appears on both sides with a different amount or number | Check the original bill or payment; whichever side is wrong corrects it |
| Disputed | You and the supplier disagree about the item itself, such as a price, short supply or rejected material | Talk to the supplier; leave it out of the agreed balance until it is settled |
Every leftover item should get one of these four labels. If you cannot give one, the item is not yet understood; ask the supplier for the document behind it.
If a difference affects tax, such as GST input credit or TDS, take it to your accountant.
Worked example: a workshop and its steel supplier
Illustrative example: a fictional engineering workshop in Rajkot and its fictional steel supplier, balances at 30 September. The businesses and figures are invented.
The workshop's ledger shows ₹1,98,500 owed to the steel supplier. The supplier's statement, sent on WhatsApp, shows ₹2,44,540. The difference is ₹2,44,540 − ₹1,98,500 = ₹46,040.
After ticking everything that matches, four items are left:
| Item | Reason | Effect, starting from our balance and working to theirs |
|---|---|---|
| Supplier's bill of ₹38,000 dated 29 September, not yet received by the workshop | Not with us yet | +₹38,000 |
| Workshop's payment of ₹20,000 on 30 September, not yet on the supplier's statement | Not with them yet | +₹20,000 |
| Supplier's credit note of ₹12,500 for returned material, not yet recorded by the workshop | Not with us yet | −₹12,500 |
| A ₹45,600 bill entered in the workshop's ledger as ₹45,060 | Keyed differently | +₹540 |
The bill and the payment both make the supplier's figure higher than ours: they have a bill we have not entered, and they have not yet reduced their balance for our payment. The credit note works the other way: they have reduced their balance, we have not. The keying error left our ledger ₹540 short (₹45,600 − ₹45,060).
The bridge: ₹1,98,500 + ₹38,000 + ₹20,000 − ₹12,500 + ₹540 = ₹2,44,540. Together the four items explain the whole ₹46,040 (₹38,000 + ₹20,000 − ₹12,500 + ₹540), and nothing is disputed.
The bridge explains the gap; it is not the balance either side should end up with. Each side now records only the items that are missing on its side:
| Workshop's ledger | Supplier's statement | |
|---|---|---|
| Balance at 30 September | ₹1,98,500 | ₹2,44,540 |
| ₹38,000 bill (workshop records it) | +₹38,000 | already included |
| ₹12,500 credit note (workshop records it) | −₹12,500 | already included |
| ₹540 keying error (workshop corrects it) | +₹540 | already correct |
| ₹20,000 payment (supplier records it) | already included | −₹20,000 |
| Agreed balance | ₹2,24,540 | ₹2,24,540 |
The agreed balance is ₹20,000 lower than the supplier's statement because the only item missing on the supplier's side is the workshop's ₹20,000 payment. Once the workshop has received and checked the bill and the credit note, and corrected the ₹540, and the supplier has recorded the payment, both sides show ₹2,24,540, which is then paid on the normal terms.
Paying the supplier's ₹2,44,540 would have paid ₹20,000 too much: the payment already made would have been paid again. The supplier's figure already allows for the credit note. Paying the workshop's own ₹1,98,500 would have paid ₹26,040 too little: the ₹38,000 bill and the ₹540 keying error were missing, partly offset by the ₹12,500 credit note the workshop had not yet recorded (₹38,000 + ₹540 − ₹12,500 = ₹26,040).
Reply to the supplier
Send a short note once you have been through the list. Put what you agree first, so the note reads as working together, not a complaint. It is a working note between you and the supplier, not a formal balance confirmation.
Statement reconciliation: [Your business] with [Supplier], to [date]
Your statement: ₹[ ] Our ledger: ₹[ ] Difference: ₹[ ]
1. Agreed: all other bills and payments to [date] match.
2. We are recording: [bill / credit note no., date, amount], received from you on [date].
3. We are correcting: [bill no.] entered by us as ₹[ ], correct amount ₹[ ].
4. Please check: our payment of ₹[ ] on [date], reference [UTR / UPI / cheque no.].
5. Disputed: [item, amount, reason], to be discussed with [name].
Balance after these items: ₹[ ]
For the workshop, items 2 to 4 would list the ₹38,000 bill and ₹12,500 credit note, the ₹540 correction and the ₹20,000 payment with its reference. Item 5 would read "None", and the balance after these items would be ₹2,24,540.
If a supplier asks you to sign a ledger confirmation
Some suppliers send a ledger or balance confirmation and ask you to sign it. Treat it the same way as a statement:
- Reconcile first. Do not sign until you have been through the matching above.
- Confirm only the balance you agree. If your reconciled figure differs from theirs, reply with your figure and list the differences alongside, using the reply note above.
- Keep a copy of what you signed or sent, with the reconciliation behind it.
- If you are unsure whether to sign, or what the document asks you to confirm, ask your accountant before replying.
Make it a habit
Reconcile with your largest suppliers on a regular cycle, for example monthly or quarterly depending on how many bills you receive, and with any supplier as soon as their statement disagrees with yours. Doing it before a payment run means you pay an agreed balance rather than arguing about it afterwards. Smaller suppliers can wait until they send a statement or you have a question.
The customer side, briefly
Your customers can reconcile your statement against their own ledger in exactly the same way. When you send a customer statement, make it to a stated date and include invoice numbers and payment references, so the customer can tick items off easily.
Discuss your supplier balance routine in a demo
If you would like to talk through how you agree balances with suppliers before paying, and ask whether FastComply Books currently supports that routine for your business, request a demo and choose "Book a demo" on the form. FastComply Books is in an invitation pilot in India, so the demo is where we confirm what is available for your business.
