Rationale behind confirming payables to suppliers

Confirming sales receivables is something most company’s do regularly, either and this is depending on the volumes and the type of receivable one has, either in each month, twice a year or once a year. However, unfortunately I have to admit that confirming balances with suppliers is something that’s rarely done if at all. There’s the assertion I often hear that it’s the suppliers responsibility to confirm their receivables. Yes, it is, however it’s just as well important to understand your payables as a company.  

Confirming balances with your suppliers is something you don’t necessarily have to do often, but it’s suggested and required by some local regulations that this is done at least once a year. Albeit the requirements, the reasons you’d want to do this are far more important in my opinion.

For one why you would do it lies with the expenses you have had for the period – what if you’re missing an invoice and this is in a considerable amount? Perhaps the supplier doesn’t monitor their receivables this tightly and being over your payment date for say 14 days isn’t a big concern for them yet. They may not know that you haven’t received the invoice. You wouldn’t then have all your expenses within your accounts, but you also may be misjudging your cash requirements and thus probably facing liquidity problems for a short period of time.

Instead, we suggest you work out a routine that’s best suited for your company and for your business to ensure you’ve got those risks covered.