Truths and Myths about Reviewing Vendor Statements
Decades ago, when Accounts Payable processors manually completed the three-way match of a paper invoice, purchase order, and receiving document, it was considered a courtesy for a supplier to provide a monthly statement of account activity, detailing outstanding invoices and credits. With the move towards automation and reduction in processing errors and mismatches, paper statements may be largely a relic of the past that serve no useful purpose, other than to create additional work for companies that decide to look at them.
Today, the dilemma is to decide what action to take, if any, with hard copy statements from suppliers. Should they be immediately discarded, should every item be diligently reconciled, or should some other approach be followed?
Recently, Peeriosity’s iPollingTM functionality was used to perform custom research in the Accounts Payable (P2P) research area to understand the approaches that member companies take regarding statements from suppliers. Unlike traditional benchmarking, where companies complete large surveys at different points in time over multiple years, with results summarized, and with no visibility to individual responses, iPollingTM allows members to make direct comparisons between responses that are collected over a couple of days, with visibility to who responded, and with the option to follow up with any other respondents as needed for additional discussion.
A top-level look at this issue indicates that only 11% of member companies review all vendor statements, while 30% of the companies’ statements are not reviewed at all. For the majority (59%) of member companies, the answer is somewhere in between, where statements are reviewed only for some vendors.
With 70% of companies performing at least some level of review, the next logical question is to better understand exactly what is reviewed. Interestingly, for 30% of the companies, all payments and credits are reviewed regardless of age. For an additional 34% of companies, only payments that exceed a threshold of either 30 or 60 days are reviewed. Finally, at 36% of member companies only credits, where the supplier potentially owes the company money, are reviewed for possible action.
Here are some of the comments from responding companies:
- Our outsourced AP team will only review a vendor statement if they show a past due balance.
- We don’t review statements of accounts, however, I feel we should reconcile at least the top 50 suppliers on a monthly basis.
- Reviewed on a case-by-case basis. Not reviewed on a periodic schedule, however, we are looking into doing just that.
- We have worked hard to reduce the number of vendor statements in North America. We do not pay invoices nor enter credits based on statements received and have been educating our vendors to follow standard invoice/credit submission procedures as well as inquiry protocols. We perform an annual statement audit, which is the only time we truly want to see vendor statements.
- This one is an interesting area, and I look forward to seeing the responses in general. We have a set percentage that is required to be reviewed for credits. During this review, any invoice on the statement that is not in our system is requested as copies. Additionally, for our GRIR monthly processes, a very specific set of vendors are revised quarterly as well, using the same statements where possible as those used for the credit note revision process. Finally, ad hoc statements simply sent to us are not revised by default.
- The vendor statement review process has been outsourced to JPD.
- For the majority of Suppliers, statements are not requested, required, or reviewed. However, ‘Contract Vendors’ have dedicated purchasing representatives from our organization who are responsible to track activity, credits, etc., and resolve any discrepancies with our AP records. Our AP team does not review/reconcile vendor statements.
What approach does your company take to reviewing vendor statements? Are they reviewed for all suppliers, or only for specific suppliers? Are all line items reviewed, or do you only look for unprocessed credits?
Who are your peers and how are you collaborating with them?
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.