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A supplier's statement shows a higher balance than the ledger, and the supplier is chasing payment of an amount the accountant cannot explain.
Split the gap into items recorded on only one side: invoices not booked, payments not credited, one-sided credit or debit notes, TDS not reflected, unadjusted advances and disputed items. Each must be backed by a document.
A request for the vendor's statement of account and invoice list, a line-by-line comparison, and a register of disputed items with owners.
The full gap explained, missing entries booked on the correct side, and only genuinely disputed amounts held back.
Most gaps between a vendor’s statement and your ledger come from a short list of causes: invoices received but not booked, payments made but not yet credited by the vendor, credit or debit notes on one side only, TDS deducted but not reflected, advances not adjusted, and disputed rates or quantities. Split the gap into these pieces and it usually disappears.
What are the likely causes, and what fixes each?
| Cause | Which side lacks the entry | Document to ask for or check | Entry or action |
|---|---|---|---|
| Invoice received late or not booked | Your books | Invoice copy, GRN, e-way bill | Book the invoice in the correct month |
| Payment not yet credited by vendor | Vendor’s books | Your bank statement, UTR | Send the UTR; no entry on your side |
| Credit note issued by vendor, not booked by you | Your books | Credit note copy | Book the credit note |
| Debit note raised by you, not accepted by vendor | Vendor’s books | Your debit note, reason | Ask the vendor to accept and issue a credit note |
| TDS deducted, not booked by vendor | Vendor’s books | TDS challan, TDS certificate | Ask the vendor to check their TDS credit statement |
| Advance not adjusted | Either side | Advance payment record, bill | Allocate the advance against the bill |
| Rate or quantity dispute | Neither, until agreed | PO, GRN, contract | Escalate to purchase team; record as disputed |
A worked example: a ₹1,12,000 gap
On 30 September your ledger shows ₹4,00,000 payable to a raw material supplier. The supplier’s statement shows ₹5,12,000. The gap is ₹1,12,000.
Matching line by line, you find three items:
- Invoice of ₹59,000 dated 30 September, received and booked by you on 3 October. It is in the supplier’s September statement but in your October books.
- Payment of ₹48,000 sent on 29 September by NEFT. The supplier booked it on 1 October, so its September statement still shows the amount as due. Your books already show it as paid.
- TDS of ₹5,000 you deducted on an earlier service bill. You reduced the supplier’s balance; the supplier has not yet booked the TDS.
| Item | Amount |
|---|---|
| Balance per our books | ₹4,00,000 |
| Add: invoice dated 30 September, booked by us in October | ₹59,000 |
| Add: payment sent 29 September, credited by vendor 1 October | ₹48,000 |
| Add: TDS deducted by us, not yet booked by vendor | ₹5,000 |
| Balance per vendor’s statement | ₹5,12,000 |
Check: ₹59,000 + ₹48,000 + ₹5,000 = ₹1,12,000, and ₹4,00,000 + ₹1,12,000 = ₹5,12,000.
Only the first item needs an entry on your side: the ₹59,000 invoice belongs in September if the goods were received in September. The second is a timing difference that will clear on its own. The third needs the supplier to book the TDS, which it can confirm in its TDS credit statement (Form 26AS, or Form 168 from tax year 2026-27).
What if the vendor’s list shows an invoice you never received?
Do not book it on the vendor’s word alone. Ask for:
- A copy of the tax invoice.
- Proof of delivery, such as a signed delivery challan or courier receipt.
- The e-way bill number, where the goods required one.
Then check your GRN register. If the goods were received but the invoice was lost, book it. If the goods never arrived, tell the vendor in writing. Remember that under Section 16(2) of the CGST Act, 2017, you can claim input tax credit only on goods or services you have actually received.
Should you pay the undisputed part while the rest is checked?
Usually, yes. In the example, the payment and TDS items are not disputes at all, and the ₹59,000 invoice is valid. If a rate dispute does exist on one invoice, pay everything else and hold only that amount, with a note to the supplier explaining why.
This matters most for registered micro and small suppliers. Under the MSMED Act, 2006, payment is due within the agreed period, which cannot exceed 45 days. Holding an entire balance over one disputed invoice can push the rest past that limit.
What to read next
- Debtors and creditors reconciliation in India turns this into a repeatable monthly routine.
- Invoice matching: TDS, net and gross amounts goes deeper into TDS-related differences.
- What is vendor reconciliation shows the basic reconciliation layout.
- For reconciling supplier balances and TDS together, see account reconciliation software India.