Reconcile Supplier’s statements monthly, or you may lose a lot of money! – I was engaged to do a turnaround for a wholesale distributor to convenience stores. Early in the engagement, I walked into the AP department, and it looked like a hurricane hit the room. It was a mess. Therefore, I knew I had trouble as soon as I saw the physical condition of the department.
Reconcile Supplier’s statements – I asked the accounts payable manager to call all the company’s suppliers. She was to ask each supplier to fax us a copy of their current detail accounts receivable. Once all the statements from the vendors, I planned to reconcile my client’s accounts payable listing to their supplier accounts receivable detail. Theatrically, the two lists should be identical. After receiving all the supplier’s statements, I reconciled the ten most significant suppliers. We found posted items on the vendors’ reports but not recorded in my client’s accounts payable listing. The missing amounts were for product returns, advertising allowances, product rebates, damage allowances, and volume rebates.
If there are debits on your supplier’s statements, that is your money.
When I found the problems with the reconciliation, I asked the AP department to reconcile every supplier immediately. When I completed the task, I asked them to report their findings to me. The results of the analysis, $256,000 was due to my client for the missing items on my client’s AR listing. Immediately, I had the accounting department write “charges” to the accounts payable and process the paperwork. During the next check run, we deducted $256,000 from the respective vendors.
Reconcile Supplier’s Statements Monthly!
Most suppliers write these debit off to income if the customer is not aware of the credit for the return, advertising allowance, etc. It is rare for the supplier to call their customers to alert them of the money available on their statement. These charges are offsets against payment for future invoices.
If you are not receiving monthly statements from your vendors, call and request them.
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My name is Robert Curry, and I am an Author, CEO Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I have worked with more than 70 companies taking their businesses from Loses to Profits.
I have recently published two books about turnarounds: “From Red to Black – A Business Turnaround” and “The Turnaround.” Both books are true stories about turnarounds of real companies that I have turned around during my career. In both books, I have shared all my Profit Improvement Recommendations (“PIR’s”). PIR’s helped to grow sales, reduce expenses, improve cash flow, and most importantly, strengthen the management teams.
If the information in this article Reconcile Supplier’s Statements Monthly! helps you, your family or a business associate, please email me at firstname.lastname@example.org and please share the story with me.
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