A supplier's statement is a vital document you should get every month from each supplier you owe money to. As part of your month end routine you should reconcile their statement back to their account on your system. By doing this you

1. Ensure you have received all their supplier invoices

2. That you have the correct values posted for each invoice

3. You are claiming back all the VAT charged to you. If you don't have an invoice you can't claim back the VAT.

4. You are paying the correct amounts owed to them. To many businesses pay their suppliers based on what is on the suppliers statement without having checked that they have received all the invoices and credit notes.

5. That the business name address and contact details are correct. All their contact details should be shown on their statement. Do you have all these details on your system?

6. By getting a statement from your supplier you avoid the mess of having paid a cheque to them and then for them to ring you and tell you that you omitted an invoice and you tell them you never got it and they say we will send you a copy and can you pay us when you get the invoice and you say no as the payment run is completed until next month and we don't pay invoices that are sent late.

Insist on getting statements from your suppliers. If you do insist on getting statements from your suppliers, use them to reconcile their account and don't just file them away.

How long do you keep supplier statements for? Always keep the current statement once it has been reconciled and that there are no problems with the reconciliation. There is no need to keep every months statement. The exception to this is the statement for the last month of your financial year, as your auditor will want it as proof that the supplier's balance agrees to your accounts system. Keep year end statements in a separate file and call it "Year End Supplier Statements for the Auditor"

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(c) Nilsson Denver Ltd 2008