The Brief and Only Invoice Reconciliation Guide You’ll Ever Need | Did you know that 82% of businesses fail because of cash flow problems? This startling stat might have you concerned about properly budgeting for your business and making sure that you’re prepared for the future.
What can you do in order to keep your invoices organized and keep track of your budget? Read on to explore how to create an invoice reconciliation today!
What Is Invoice Reconciliation?
You can see how this article talks about invoice financing. This is the accounting process where you compare multiple records.
You might need to reconcile invoices if:
- There are misplaced invoices
- Duplicate invoices
- Invoices aren’t paid in full
- Fees from the bank
- Deposits or payments have an issue with timing
- And other reasons
When it comes to cash flow management, invoice reconciliation will tell you whether there’s an issue with fraud or it’s a random occurrence. Once you find out what’s occurring then you can work on fixing the problem.
Manual Invoice Reconciliation
Instead of doing a manual invoice reconciliation, you can use a system that does the process for you. Some programs will do both the online invoicing and procurement system for you.
This will allow you to waste less time on where an error happens. You’ll be able to figure out whether it’s past due, paid partially, or in full. It’s a way to reduce the overall amount of work it’ll take you.
Many systems will match payments, invoices, vendors, and records. You’ll need to check the system manually after this. Using a system will reduce human error that occurs from performing it manually.
Once an order arrives you’ll want to open it and take a look. A packing list will normally be included.
It’ll tell you the description and quantity of the different items of the order. Go through and mark each item that you received in the order. After this, you’ll want to review the packing list to make sure that there’s nothing missing.
Taking a Look at the Invoice
After the order arrives you’ll receive the invoice. Don’t pay for it until after you’ve checked all of the items unless they require prepayment.
Compare the purchase order to the invoice. Make sure that the quantities are the correct amount as well. Compare the amount that you’re charged as well as how much you should be charged.
If there need to be any changes you’ll need to reach out to who is in charge of pricing. Reach out to the vendor to discuss the changes that need to occur.
How To Perform an Invoice Reconciliation
After exploring this guide, you should have a better idea of how to perform an invoice reconciliation. Your best bet is to reach out to your accounts payable department and have them perform this action.
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