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What is statement reconciliation, and why is it important?

Statement reconciliation is one element of a best practice approach to ensure you have accurate ledgers as well as a grasp on the amount of liabilities your accounts payable function has.

The process involves AP professionals checking the records their suppliers provide with the records their purchase ledger contains.  

As part of the process, a statement of transactions will be submitted by a supplier, and the AP function’s role is to discover any potential exceptions or errors against their ledger.

If there are any exceptions, an AP professional will have to speak with their opposite number in credit control to request copies of missing invoices or credit notes to ensure the ledger is balanced.

A key element of statement reconciliation is the checking of what has been paid as well.

An element of statement recs. that is often overlooked; a piece of information which statements, more often than not, do not list.

You need to check that a) the payments that have been made are of the correct amount and b) the payments that have been made, have been made to the correct supplier. 

The statement reconciliation process is vital, as it ensures that any items that are on the statement but are not present on the purchase ledger are requested and paid.

The same can be said for missing credit notes, which, in some cases, businesses can lose thousands of pounds in overpayments and unclaimed credit notes.

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