Inventory how-to

How to reconcile a supplier invoice with a purchase order

Reconciling a supplier invoice means checking that what the supplier billed you matches what you ordered and what actually arrived.

Short answer: Reconciling a supplier invoice means checking that what the supplier billed you matches what you ordered and what actually arrived. Compare the invoice line by line against your purchase order and your goods receipt, then flag and resolve any differences before you pay.

Why the three documents matter

You need three pieces of information to reconcile correctly: the purchase order (what you asked for), the receiving record (what actually arrived, including any partial shipments), and the invoice (what the supplier wants to be paid for). Matching just the invoice to the PO is not enough, because a shipment can arrive short or with substitutions.

Common mismatches to check

Look for quantity differences between ordered, received, and invoiced amounts. Check unit prices against what was agreed on the PO, since suppliers sometimes bill at list price instead of your negotiated price. Check for extra charges like freight, duties, or packaging fees that were not on the original PO. Check case pack sizes too, since a supplier might invoice by case when you ordered by unit, or round differently than expected.

What to do when something does not match

If the invoice quantity is higher than what you received, hold payment on the difference and ask the supplier for a corrected invoice or a credit note. If you received less than ordered and it was a partial shipment, confirm whether the remainder is still coming or has been cancelled, and only pay for what arrived or was properly backordered. Keep a note on the PO itself showing the discrepancy and how it was resolved, so you have a record if the same issue comes up with that supplier again.

Step by step

  1. Pull up the original purchase order and the receiving record for that delivery.
  2. Line up each SKU on the invoice against the PO quantity and price.
  3. Compare invoiced quantity to received quantity, not just ordered quantity.
  4. Check for added charges like freight or fees that were not on the PO.
  5. Flag any mismatches and contact the supplier for a corrected invoice or credit note.
  6. Record the resolution against the PO before approving payment.
  7. Pay only once the invoice matches what was actually received and agreed.

Worked example

A store orders 200 units of a candle at $4 each, total $800, on PO-114. The supplier ships 180 units and backorders 20. The invoice arrives for 200 units at $800, plus a $35 freight charge not mentioned on the PO. The store checks the receiving record, sees only 180 units came in, and asks the supplier to invoice $720 for the received units now, bill the remaining 20 units separately when they ship, and confirm whether the $35 freight was agreed upon before paying it.

How SteadyShelf helps

SteadyShelf drafts the purchase order and records stock as it is received, including partial receipts, so you have accurate ordered and received quantities to check an invoice against. It does not handle invoice matching, payments, or accounting, so you still need to compare the final invoice against those records manually or in your accounting system.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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FAQ

What if the supplier invoice has a different SKU code than our PO?

This usually means the supplier uses their own internal SKU codes rather than yours. Match products by description and pack size instead, and ask the supplier to include your SKU or PO line reference on future invoices to avoid confusion.

Should we pay an invoice before all backordered items arrive?

Pay only for what has actually been received and confirmed correct. Hold payment on backordered quantities until they arrive, or agree with the supplier upfront on separate invoices for each partial shipment so the paperwork stays easy to match.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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