Key takeaways
What this article covers, in order:
- When the payment doesn't look like any bill
- The worked example
- Credit notes: the three ways they get used
- Other reasons a supplier payment won't match
- Supplier statement reconciliation
- A monthly payables routine
To match a bank payment to supplier bills, find the bills it paid, apply any credit notes the supplier issued, and check that bills minus credits equals the payment to the cent. Then, once a month, compare your balance for each main supplier against their statement. That two-step accounts payable reconciliation catches nearly every payables problem before it turns into a final notice or a double payment.
When the payment doesn't look like any bill
Grace runs a florist in Fremantle. On 29 Oct 2026 her bank shows a payment of $3,740 to her main wholesale flower supplier. She looks through her unpaid bills from them: $1,320, $2,640 and $495. None of them is $3,740, and no two of them add up to it either.
Then she remembers. A box of roses arrived wilted earlier in the month and the supplier issued a $220 credit note. Her partner paid the account online and took the credit off.
That's the most common reason a supplier payment won't match: something has been netted off.
The worked example
| Document | Date | Amount | Included in payment? |
|---|---|---|---|
| Bill 5521 | 2 Oct 2026 | $1,320.00 | Yes |
| Bill 5568 | 9 Oct 2026 | $2,640.00 | Yes |
| Credit note CN-311 (damaged stock) | 14 Oct 2026 | -$220.00 | Yes |
| Payment on 29 Oct 2026 | $3,740.00 | ||
| Bill 5604 | 23 Oct 2026 | $495.00 | No, not due yet |
$1,320 + $2,640 - $220 = $3,740. It matches exactly.
In the books, that means:
- Bills 5521 and 5568 are marked as paid
- Credit note CN-311 is applied against them, so it's used up
- Bill 5604 stays open with $495 owing
- The supplier's balance in your payables is $495
The key is that the credit note was entered as its own document, not by editing one of the bills down to a smaller amount. If Grace had changed bill 5568 to $2,420, the books would match the bank, but she'd have lost the record of the damaged stock, and the GST coding would no longer match the supplier's paperwork.
Credit notes: the three ways they get used
A supplier credit note reduces what you owe. It can be used in three ways, and each one is recorded a little differently.
1. Applied against a bill you're paying. The example above. You pay the net amount, and the credit note and bills all close together.
2. Held on account for later. The supplier issues the credit, you don't have a bill to use it against yet, so it sits there reducing your balance. Next month's bill is paid net of it.
3. Refunded to you. The supplier sends the money back. Say a $165 credit note is refunded into your bank on 5 Nov 2026. That's a deposit from a supplier, and it should be matched to the credit note, not recorded as income or sales. If you record it as income, you overstate your revenue and leave the credit note sitting open forever.
Always enter the credit note when you receive it, even if you're not sure yet how it will be used. Otherwise it's very easy to forget.
Other reasons a supplier payment won't match
- A part payment. You paid $1,000 off a $2,640 bill. Apply it to the bill; $1,640 stays owing.
- An overpayment. You paid $1,420 against a $1,320 bill. The extra $100 is a credit with the supplier. Ask for a refund or note it against the next bill.
- A card surcharge or bank fee. The payment includes a small surcharge for paying by card. Record the surcharge separately as a bank or merchant fee.
- A direct debit with no bill entered. Software subscriptions, insurance instalments and phone plans often come out automatically. Enter a bill for each, or record the debit directly to the right expense, but don't leave it unmatched.
- A payment to the wrong supplier. It happens with similar names. Contact both suppliers quickly.
- A duplicate payment. Same amount, same supplier, twice in a week. Ask for a refund straight away.
Supplier statement reconciliation
Matching each payment as it happens catches most problems. But some only show up when you compare your records with the supplier's. Most suppliers send a monthly statement. For your main suppliers, take five minutes to check it.
At 31 Oct 2026, Grace's flower supplier statement says she owes $1,045. Her books say $495.
| Amount | |
|---|---|
| Balance per supplier statement | $1,045.00 |
| Balance per Grace's books | $495.00 |
| Difference | $550.00 |
| Explained by: bill 5617 dated 30 Oct 2026, on the statement but not entered | $550.00 |
| Unexplained | $0.00 |
The missing bill was a large wedding order. The paper invoice came with the delivery and went into the van's glovebox. Grace entered it, and now both sides agree at $1,045.
The usual reasons a supplier statement differs from your books:
- A bill they've sent that you haven't entered (like Grace's)
- A credit note you've entered that they haven't processed, or the other way round
- A payment you've made that hasn't reached their records yet (timing, usually near month-end)
- A payment they've applied to a different invoice than you did
- A genuine error on either side
Timing differences fix themselves next month. Everything else needs a quick email or call.
A monthly payables routine
- [ ] Reconcile the bank so every supplier payment is matched to bills or credit notes
- [ ] Enter any credit notes received during the month
- [ ] Run your aged payables report and look for anything old or odd
- [ ] Reconcile your three to five biggest suppliers against their statements
- [ ] Follow up any unexplained difference the same week
- [ ] Check no credit notes have been sitting unused for months
The last point matters more than it sounds. Unused supplier credits are your money. It's common to find a few hundred dollars of forgotten credits when you look for them.
See bank reconciliation software for how matching works across the whole bank account.
How HelloBooks helps
You can enter supplier bills on the Free plan (A$0, no card, no expiry), and an AP (payables) ageing report shows what's owed and how old it is. When supplier payments come through your connected bank account or a CSV statement import, the reconcile screen lines each one up against your ledger with an AI match suggestion, a confidence score and the reason for the match. You work through the exceptions, like Grace's netted payment, and can unmatch in one click if a match is wrong.
Pro (A$30/month) adds bills & approvals, AI auto-categorisation and unlimited bank connections, plus AI Analysis on every report. See pricing.
FAQs
Should I edit a bill to reflect a credit, or enter a separate credit note?
Enter a separate credit note. It keeps a clear record of what happened, matches the supplier's paperwork, and keeps GST coding consistent with what the supplier issued.
Is a refund from a supplier income?
No. It's the return of money you'd already paid, so it should be matched to the supplier credit note or the original bill, not recorded as sales or other income.
How often should I reconcile supplier statements?
Monthly for your main suppliers is plenty. For small suppliers you deal with occasionally, checking when something looks off is usually enough.
What if the supplier says I owe more than my books show?
Ask for copies of any invoices you don't have. Usually it's a bill that never reached you or wasn't entered. If it's genuinely not yours, ask them to credit it.
What do I do with an old supplier credit I'll never use?
Ask the supplier to refund it. If they won't, talk to your accountant about how to clear it from your books properly.
Payables are quieter than receivables, so they tend to get ignored. A monthly check keeps them honest.
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