Why reconcile the factory and vendor accounts?
It helps identify duplicate invoices and misapplied payments.
Identifies discrepancies in the amount submitted for payment by the vendor versus the amount submitted for payment by the store.
Provides checks and balances, provides a means of identifying
RECONCILING THE FACTORY AND VENDOR ACCOUNTS
Where are vendor invoices waiting for statements and payments stored?
Consider creating a holding area for all invoices in transit waiting for final vendor payment. Begin with creating individual folders for all vendors that issue monthly statements (usually parts and service purchases). Then create different folders for all direct payment vendors, this will be the group that could be reoccurring but not necessarily. Vendors such as the electric company, Gas Company, advertising companies.
Direct payment vendors may not send a final statement or recap statement because the number of purchases is minimum within any period. As invoices are received, reviewed, approved and posted for payment store them in the newly created folders for each vendor. Upon receipt of the vendor statement, pull the folder, create the reconciliation, remove invoices and purchase orders if utilized by the organization, issue payment, attach the posted and paid invoices only to the check copy for payment approval.
- Vendor Statement
- Organization detail of postings (schedules or general detail)
- Reconciliation template
- Highlighter, pencil or pen and excel worksheet
Time to get started?
The approach to reconciling vendor accounts is the same as reconciling the bank account. Highlight from the vendor issued statement to the organization’s (internal postings) detail or schedule for the vendor. When reconciling part of the process is to confirm the dollar amount on each invoice from the statement to the books. Once everything transaction is highlighted, make a list of all outstanding transactions on the vendor statements and all outstanding transactions on the organization’s books. Re-reconcile again this time double check the vendor statement against the books on the remaining items.
For the worksheet, are there transactions on the store’s books book does but not on the vendor statement?
Are there items not reflecting on the vendor statement but not the books?
Does the store have payments in transit?
Are there payments in transit on the vendor statement (possibly payments not received or applied yet)?
Are there any adjustments to be made for possibly posting errors?
Is there any rounding or small variance?
Find the general ledger balance (store’s books)
Find the bank balance (should reflect on the vendor statement)
Once comfortable that all transactions are accounted for referring to the Excel template, complete the reconciliation. Consider sending a copy of missing invoices and discrepancies to the vendor with the issued to them for payment. Further audio discussion’s attached.
“They call it coaching but it is teaching. You do not just tell them…you show them the reasons.”