A construction company will receive both invoices and a statement at the end of each month from their supplier.
Let’s have a look at the differences between the two and some tips on how to manage supplier statements and make sure that they are correct.
An invoice is issued from a supplier to a buyer and is related to the specific transaction of materials. The purpose of an invoice is to receive payment from the buyer or to simply show evidence of sale of the materials.
A statement is a document which shows all items that have not yet been paid by the buyer. This statement reminds the buyer that they have to pay their supplier.
Invoices can be issued every day and in large quantities, whereas statements are generally sent once a month.
Let’s take a look at some difficulties and solutions to managing statements.
What is involved in managing supplier statements?
It can be considered an essential aspect for Accounts Payable to check all invoices that were received by the business. It’s aim is to check for any missing invoices, duplicates or overcharged payments.
If all statements were to be reconciled effectively, then it would resolve any issues and ensure suppliers are paid on time.
The amount of invoices that a construction company may receive is significant. Trying to manage all of these invoices can cause difficulty. If these invoices are not checked and categorised as they come in, it can lead to invoices not matching up with the statement at the end of the month and may results in an overpayment. This stress can be reduced by organising these invoices by date and checking how much has been charged, as the invoices are coming in. This way, invoices should match their supplier statement at the end of each month.
Balance brought forward
Invoices won’t always match the statement at the end of each month. This can sometimes be because of an overpayment but it can also be because of a forgotten about balance from the previous month. If this was not noted the previous month, it can lead to confusion and an effort to search for where this payment is coming from. It is essential to then make a record of any underpayments, this way the business will not be shocked or surprised when they have to pay more the next month.
Having to manage day to day activities does not often leave a lot of free time to reconcile invoices and statements. It would be ideal to first reconcile large supplier invoices as these will be more expensive, meaning that any discrepancy or overpayment will likely be for a higher amount. Finding mistakes from bills that are statements that are more expensive will mean a higher retention of profit. If all statements can be reconciled effectively that would be even better, an efficient way to do this would be integrating the use of software that will notify the business of any discrepancies in their invoices or statements.
LiveCosts uses invoice automation, supplier tracking and construction project tracking which instantly notifies you of any discrepancies such as overpayments, incorrect orders and damaged materials arriving on site. Save money and time, there’s no longer a need to spend hours sorting through invoices to endure you’ve paid no more than you were meant to.