Reconcile Vendor Statements Monthly!

We asked the Accounts Payable Manager at a Client to request each Vendor / Supplier to fax a vendor statement for our review. As the statements were received from the vendors, each was reconciled to the Client's accounts payable records.

Our investigation disclosed items posted to the vendor’s statements but not recorded on the client's accounts payable records for: Product returns, Advertising allowances, Product rebates, Damage allowances and Volume rebates.

The reconciliation documented over $250,000 of money due the company on the vendor’s statements that were not recorded on the company’s accounting records.

We had the accounting department for the client write up “debits” to the accounts payable and process the paperwork immediately. During the next check run, $250,000 was deducted from the respective vendors and the paperwork was sent along with the correspondence when the check was mailed to each vendor.

Most companies, when they have outstanding credits on their accounts receivables at the end of the year, write them off to "income" rather than notify their customers that they have offsets to their accounts payable that they have not deducted from a check. The customers lose this money because the vendors remove these items from the vendor statements usually after their year-end audit.