What is the difference between a supplier statement and an invoice?

An invoice asks for payment for one sale and, if it meets the rules, is the tax invoice you need to claim GST. A statement summarises your whole account with the supplier: invoices, credits, payments and the balance. It is not a tax invoice and should never be entered as a bill.

Can I claim GST from a supplier statement?

No. For purchases over $82.50 including GST you need the valid tax invoice itself. If a statement shows an invoice you do not hold, ask the supplier for a copy before claiming the credit.

How often should I reconcile supplier statements?

Monthly, before your payment run, for suppliers you deal with often. For small suppliers with one invoice a month, comparing the statement balance with your own is usually enough, and you only need to go line by line when they differ.

Does Xero reconcile supplier statements automatically?

Not at the time of writing. Xero has no statement reconciliation screen like its bank reconciliation, and requests for one are open on its product ideas forum. The Supplier Bill Activity report gives you your side of the list to check against the statement. Dext and AutoEntry both offer automatic statement matching and connect to Xero.

Why does my supplier's statement balance not match my books?

Most often a payment made near month end that the supplier had not yet received, a credit note they have not raised, an invoice you never received, or a bill entered twice on your side. Work through the unmatched lines one at a time and each will usually fall into one of those.

Guide

How to reconcile a supplier statement, and why it is not an invoice

Once a month a supplier sends a page that lists everything they think you owe them. It looks like a bill, and plenty of businesses pay it like one. It is not a bill. It is the supplier's side of the story, and checking it against your own records is how you find the invoice you never received, the credit you were promised, and the payment they never applied. Every page currently ranking for this phrase is written for a corporate accounts team with an ERP system. This one is for a business with a handful of suppliers and a Xero login.

Short answer

A supplier statement is a summary of your account with that supplier, not a tax invoice, so never enter it as a bill and never claim GST from it. To reconcile it, list your own bills, credit notes and payments for that supplier over the same period, tick off every line that appears on both, and the lines left over are what you chase.

A statement and an invoice do different jobs

An invoice is a demand for payment for one sale. If it meets the tax invoice rules, it is also the document the ATO requires before you claim the GST on a purchase over $82.50.

A statement is a running summary of your whole account with that supplier. It usually lists the invoices they have issued, the credit notes, the payments they have received, a closing balance, and often an ageing breakdown such as current, 30 days and 60 days. It does not create anything new for you to pay. Everything on it should already exist somewhere else as an invoice, a credit note or a payment.

Do not enter a statement as a bill: If you key the statement balance into Xero or MYOB as a bill, every invoice on it is now counted twice, once on its own and once inside the balance. This is one of the most common ways a small business ends up paying a supplier twice.
Do not claim GST from a statement: A statement is not a tax invoice. If a line on it is an invoice you do not hold, ask the supplier for a copy of that invoice. Our guide on ATO record keeping covers what a valid tax invoice must show.
Do not pay the statement total without checking it: The total is only right if both sides agree on every line. Paying it blind means paying for anything they billed in error, and missing any credit they forgot to apply.

The statement is the supplier's ledger. Your accounting file is yours. Reconciling means making the two agree, and every difference has a reason.

Do you need to do this at all

Honestly, not for every supplier. If a supplier sends you one invoice a month and you pay it in full by the due date, the statement will simply show that invoice and that payment, and there is little to find.

It earns its time on suppliers with lots of invoices a month, suppliers who issue credit notes for returns or short deliveries, suppliers you pay in lump sums rather than invoice by invoice, and any supplier whose statement balance does not match what your books say you owe. That last one is the trigger. If the two balances agree, you can usually stop there.

Start with the balance. Compare the closing balance on the statement with what your books say you owe that supplier at the same date. If they match, file the statement and move on. Only reconcile line by line when they do not.

The free method, in full

This works with nothing more than the statement and your own records. If you use accounting software, the next section shows where to find your side of the list faster.

1Note the statement's date range and its closing date. You are comparing like with like, so your records need to cover exactly the same period.
2Check the opening balance first. If the statement's opening balance does not match what you owed the supplier at the start of the period, the difference is older than this statement. Sort that out before going further, or you will spend an hour chasing something that happened last quarter.
3List your own records for that supplier over the period: every bill you hold, every credit note, and every payment you made. In a spreadsheet, one row each, with date, reference and amount.
4Go down the statement line by line. For each line, find the matching row in your list by invoice number first, then by amount, and tick both.
5Anything left unticked on the statement is something the supplier has that you do not. Anything left unticked in your list is something you have that the supplier does not. Those two short lists are the whole job.
6Work out the reason for each leftover line using the next section, write it beside the line, and contact the supplier about anything that needs them to act.
7When every difference has a reason, your closing balance plus or minus the explained differences should equal the statement balance exactly. Write that working on the statement or in the sheet, and keep it with the statement.

For a supplier with a dozen or so lines a month, this is a short job once you have done it twice. Many small businesses never need more than this.

What each kind of difference usually means

An invoice on the statement that is not in your books: Most often the invoice never reached you, went to someone else's inbox, or is sitting unentered. Ask the supplier for a copy. Do not enter it from the statement line, because you need the actual tax invoice before claiming the GST.
A bill in your books that is not on the statement: Either it arrived after the statement was produced, it was entered against the wrong supplier, or it was entered twice. Check for a duplicate first, because a duplicate bill is money you are about to pay for nothing.
A payment you made that is not on the statement: Usually timing. A payment made in the last few days of the month often lands after the supplier ran the statement. It should appear on next month's. If it is older than that, send the supplier the date, amount and reference from your bank so they can find it.
A credit note you were promised that is not on the statement: The supplier has not raised it yet. This is the difference most worth chasing, because it is money owed to you that nobody else is going to remember.
The same invoice with a different amount: Either one side misread or mistyped it, or the supplier reissued the invoice and you hold the old one. Compare the invoice number and date on both, and ask for the current version if they differ.
A payment applied to the wrong invoice: The total agrees but the ageing does not. The supplier may show an older invoice as overdue when you paid it and they applied the money elsewhere. Send them the payment details and the invoice number it was for.

Finding your side of the list in Xero, MYOB and QuickBooks

None of the three main packages used by Australian small businesses has a statement reconciliation screen of the kind they have for bank feeds. Xero's own product ideas forum has open requests for exactly this, and a Xero staff reply in late 2025 pointed users to existing reports instead. So in every package, the job is to pull your list out and do the ticking yourself.

Xero: Search the Reports page for Supplier Bill Activity, set the supplier and the same dates as the statement, and export it. Xero staff named that report, the contact activity statement and the account transactions report as the places this information lives. Aged Payables Detail at the statement's closing date gives you the open balance to compare in the first check.
QuickBooks Online: The Supplier Balance Detail report shows open bills by supplier, and the supplier's own page lists every transaction with them. Export either to a spreadsheet and tick against the statement.
MYOB: Open the supplier's record to see their transaction history, and use the payables reports for the balance at a date. Report names vary between MYOB products, so search the reports list for payables or supplier.

Exporting your side to a spreadsheet and putting the statement lines beside it is the quickest manual method in all three. Sort both by invoice number and most lines tick off in a few seconds.

When paid software is genuinely better

If you reconcile many supplier statements every month, typing the statement lines in is the slow part, and that is the part tools exist to remove.

Dext includes supplier statement reconciliation on its plans, with a number of statement credits depending on the subscription. It reads the statement, matches lines against the documents you have already submitted, and flags the gaps, and when connected to Xero or QuickBooks Online it can also check against your ledger. If your bookkeeper already runs Dext, this is the obvious answer, and you should ask them before buying anything.

AutoEntry, owned by Sage, does a similar match between an uploaded statement and the purchase invoices you have sent it. Its own help pages say the automatic match needs the supplier name, date and amount to agree, and that partial matches have to be found by hand.

Both tools publish accuracy and volume claims. We have not tested either, so we are not repeating those numbers here. The test that matters is your own: upload three real statements, including a scanned one, and see what it gets wrong.

For a business with a few suppliers, the free method above is enough and no tool will save you meaningful time. For a bookkeeper reconciling dozens of statements for several clients, Dext or AutoEntry is worth trialling, and Dext is the one more Australian practices already use.

Habits that make next month quicker

Ask suppliers to put the invoice number on every line: Some statements list only dates and amounts. Ask the supplier to include invoice numbers. It turns a guessing game into a sort.
Put the invoice number in your payment reference: When you pay, use the invoice number as the bank reference. The supplier can then apply the money to the right invoice, and the wrong allocation problem mostly disappears.
Keep the statement with your working: Save the statement as a PDF with the date first and the supplier name, and add a note of how you reconciled it. When a dispute comes up six months later, that note is what settles it.
Reconcile at the same point each month: Do it before the payment run, not after. Finding a missing credit before you pay is a lot easier than asking for a refund.

Common questions

What is the difference between a supplier statement and an invoice?: An invoice asks for payment for one sale and, if it meets the rules, is the tax invoice you need to claim GST. A statement summarises your whole account with the supplier: invoices, credits, payments and the balance. It is not a tax invoice and should never be entered as a bill.
Can I claim GST from a supplier statement?: No. For purchases over $82.50 including GST you need the valid tax invoice itself. If a statement shows an invoice you do not hold, ask the supplier for a copy before claiming the credit.
How often should I reconcile supplier statements?: Monthly, before your payment run, for suppliers you deal with often. For small suppliers with one invoice a month, comparing the statement balance with your own is usually enough, and you only need to go line by line when they differ.
Does Xero reconcile supplier statements automatically?: Not at the time of writing. Xero has no statement reconciliation screen like its bank reconciliation, and requests for one are open on its product ideas forum. The Supplier Bill Activity report gives you your side of the list to check against the statement. Dext and AutoEntry both offer automatic statement matching and connect to Xero.
Why does my supplier's statement balance not match my books?: Most often a payment made near month end that the supplier had not yet received, a credit note they have not raised, an invoice you never received, or a bill entered twice on your side. Work through the unmatched lines one at a time and each will usually fall into one of those.

Solven builds custom software and automation for Australian businesses. If you have a job like this that no tool quite fits, that is the work we do.

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