Reasons for doing creditors reconciliation statement
1. Identifying discrepancies: The main purpose of a creditors reconciliation statement is to identify any discrepancies between the accounts payable balance as per the company’s books and the balance as per the creditor’s records.
2. Ensuring accuracy: By reconciling the accounts payable with the creditor’s records, the company can ensure the accuracy of the outstanding debts owed to the creditors. This helps in avoiding any payment errors or losses due to overpayments or underpayments.
3. Maintaining good relationships with creditors: Reconciling the accounts payable on a regular basis helps maintain good working relationships with creditors. The company can identify any discrepancies in a timely manner and resolve them quickly, thereby avoiding any payment delays or disputes.
4. Compliance with accounting standards: A creditors reconciliation statement is also mandatory for financial reporting purposes. It helps the company comply with the accounting standards and provides an accurate picture of the financial position of the company.
5. Evidence for audit purposes: The creditors reconciliation statement serves as evidence of the company’s accounts payable balance and its accuracy for audit purposes. It helps in ensuring compliance with legal and regulatory requirements.