Your China supplier sends a year-end statement for several orders of shop fittings. Its closing balance differs from yours. One transfer went out near the cutoff, a defect credit has no invoice allocation, and the factory included an advance for next year's goods in the same total. Your accountant needs more than screenshots of transfers. Reconstruct the year's commercial account with the supplier before translating it into accounting entries.
The fittings and statement are fictional examples, not customer transactions. This article is general information, not accounting, tax or legal advice. A commercial reconciliation is not a journal-entry prescription or proof of the correct accounting balance. Your accountant determines recognition, cutoff, measurement and local requirements.
Agree the population and the cutoff
Identify the buyer and seller entities, statement period and currencies. Confirm whether the statement covers all orders, a particular division or only invoices the factory considers open. A supplier may omit a settled invoice that your team still needs to explain an earlier payment.
Begin with the opening balance and its supporting reconciliation. An unexplained carry-forward makes the closing difference harder to isolate. Collect the invoices, accepted amendments and credit documents for the period, including records needed to explain balances carried in or out. Preserve original versions and later corrections.
The International Trade Administration's document guide describes commercial invoices and packing lists as documents with different roles. It is US export guidance, not a universal year-end checklist. A shipment record can explain goods movements without establishing how the supplier allocated a payment.
Reconstruct the commercial balance by currency
For invoiced trade payables in one currency, the team's bridge starts with the agreed opening payable, adds relevant invoices, subtracts accepted credits and subtracts payments allocated to those obligations. Explain any other agreed adjustment separately. The result should reconcile to the supplier's comparable closing population.
Advances for goods not yet invoiced, unapplied receipts and disputed amounts need their own schedules. Do not force them into the bridge merely to make both totals match. Avoid applying an advance twice, once as a receipt and again as a credit. The accountant must decide how each item belongs in the books.
Never add amounts in different currencies as though they were one balance. A USD payable and a CNY advance need separate original-currency schedules. Any reporting-currency conversion is another task with its own documented accounting basis.
Your editorial reconciliation file could show:
| Schedule | What it explains |
|---|---|
| Opening payable | Prior closing balance and agreed carry-forward differences |
| Invoices and credits | Document population, accepted adjustments and currency |
| Allocated payments | Supplier credit, invoice allocation and remaining balance |
| Advances and unapplied receipts | Amounts held separately and proposed treatment |
| Exceptions | Disputed or unmatched items, evidence and next owner |
| Closing comparison | Your reconstructed balance against the supplier's statement |
These fields organise commercial matching. They do not determine recognition or permit unilateral netting.
Investigate transfers around the year end
For the fictional late transfer, retain initiation details, payment-route records, supplier acknowledgement and the date the seller says it credited the funds. A transaction sent before the cutoff may still be absent from the supplier's statement. Finance and the accountant should explain the timing difference using the actual evidence.
Ask the supplier which invoice it applied the receipt to. If the answer differs from the agreed instruction, record the discrepancy and obtain the correction or agreement required. Keep post-year-end acknowledgements dated as received; do not backdate them to make the year-end file appear complete.
The payment-records guide helps organise evidence. Receipt of funds, allocation to an invoice and the accounting date remain separate matters for reconciliation.
Resolve exceptions item by item
Send the factory a list of differences with references, amounts, currencies and your proposed explanation. For a defect credit, include the accepted agreement and whether the credit was issued or used. For an unmatched invoice, check amendments and the actual goods before deciding it duplicates another charge.
The paid-shipment differences guide covers explaining discrepancies within one purchase. This year-end review also checks continuity across purchases and periods. A corrected shipment file does not explain an unrelated opening balance.
Ask an authorised supplier contact to confirm the reconciled figures and identify anything still disputed. Retain both positions where agreement is incomplete. A forced matching total can conceal an unresolved obligation that your accountant needs to assess.
Hand the accountant evidence, not a blended conversion
The IFRS Foundation's IAS 21 overview explains that foreign-currency accounting involves the choice of exchange rates and reporting exchange-rate effects. It does not establish which framework your business uses or provide a supplier-specific closing entry.
Give the accountant original-currency schedules, payment dates, advance details and the exception history. The advance and exchange-rate guide addresses why advance consideration and a remaining payable need specialist treatment. Commercial matching should be traceable before that measurement begins.
Use pay an invoice to ask A2vanta about a documented outstanding payment before funding. Payment handling does not certify the supplier statement, determine tax or close your accounts.