Invoice reconciliation is the process of matching bank statements to incoming and outgoing invoices to ensure that all accounts are in order and that all book entries are correct.
In accounting, reconciliation is the process of comparing two sets of records to ensure that the figures are in agreement. It is the verification that the amount of money leaving an account matches the amount of money being spent and that the two are in balance at the end of the recording period.
In this article, we’ll cover:
- How Do You Reconcile an Invoice?
- What Are Invoicing and Reconciliation?
How Do You Reconcile an Invoice?
Invoice reconciliation is critical for maintaining accuracy in your accounting records and avoiding fraud. Matching information from bank statements to invoices going out or coming in helps you keep track of who has and hasn’t paid you, as well as which bills are still due.
Here are some useful suggestions for reconciling your invoices.
Find the Right Process
Invoice reconciliation software can alleviate a lot of the burden. It will also aid in the direction of your administrative process.
To begin, organise your supplier invoices by month so that you can run reports to identify overdue payments. This will make the reconciliation process go more smoothly and easily. Suppliers will almost certainly have their own methods of labelling and formatting invoices.
Check that you understand where you can find important information such as reference numbers, due dates, and other vital information.
Create a Checklist
Create a checklist to help you work through instances where you can’t reconcile the numbers as part of your invoice reconciliation process.
The checklist could include items such as:
- Was there a transfer or currency fee charged by a bank or other financial intermediary?
- Will the remaining balance be paid later?
- Did you provide a discount for paying in advance?
- Has the supplier undercharged or overcharged you?
- Is there a balance that has been rolled over from a previous balance?
What Are Invoicing and Reconciliation?
The process of creating an itemised bill for goods sold or services provided that includes individual prices, total charges, and payment terms are known as invoicing.
Whereas reconciliation is the process of comparing two sets of records to ensure that money leaving an account matches money coming in and that accounts are balanced at the end of the reporting period.