What is invoice reconciliation?
By Tim White · Glossary · Last updated
Invoice reconciliation means checking your invoices against another record (purchase orders, vendor statements or payments made) to confirm nothing is missing, entered twice or wrong. It keeps what your books say you owe in line with what you actually owe.
What gets reconciled
Invoice to purchase order: did we agree to this price and quantity? Invoice to receiving record: did it arrive? Vendor statement to your ledger, usually at month end: did we miss any bills or payments? Payments to invoices: is every payment applied to the right bill?
A month-end example
Harbor Supply's statement lists 12 open invoices totaling 48,200.00. Your ledger shows 11, totaling 46,400.00. The missing 1,800.00 is invoice 8841, which was emailed to a project manager and never forwarded. That's the most common gap. The next most common is a credit memo booked as a payment, or not booked at all.
Habits that make it easier
Reconcile monthly, not quarterly. Four weeks of paper is manageable. Three months isn't.
Match on invoice number and amount together. Some vendors restart numbering each year, so a number alone can point to the wrong bill.
Common questions
What's the difference between reconciliation and matching?
Matching checks one invoice against its PO or receipt before payment. Reconciliation checks a whole account, or a whole period, against a vendor statement or bank record.
How often should you reconcile invoices?
Monthly for most small businesses. Weekly if you process a lot of payables, so problems surface while people still remember the details.
Sources
Keep reading
- How do you stop paying the same invoice twice?
- What is 3-way matching in accounts payable?
- What is accounts payable?
- What is two-way matching?
- What is remittance advice?
- What is the difference between a purchase order and an invoice?
- What is a credit memo?
- InvoiceJet for bookkeepers
- Show-your-work vs black-box extraction
- InvoiceJet pricing
Try it on your own invoices
10 invoices a month free, no card. Every field comes back with a confidence level and the text it was read from.