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Improving cash flow visibility

11th Mar 2016
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Cash is the lifeblood of an enterprise and a strong cash flow is essential for smooth business operation and an indicator of its financial health, says Daniel Kimpton of 

Having cash puts an organisation in a strong position, giving it all-important buying power for day-to-day activities and the opportunity to invest in business opportunities in the longer term.

When looking at how to improve cash flow, the focus is usually on sales invoicing; getting more customers to pay their bills more quickly. Management of the supplier statement reconciliation process is often overlooked, but it also plays a key role by ensuring an organisation’s supplier liabilities are accurate and cash flow is maximised because no credit notes, potential duplicates and over-payments are missed.

How does it work? Very simply the supplier’s credit control department sends a statement of account, which lists the invoices on their sales ledger, to the buyer’s accounts payable department. The accounts payable team at the buying organisation compare the statement to their accounts payable ledger(s) to identify - and resolve - any differences.

However, although in principle the process is straightforward, statement reconciliation is easier said than done. It is traditionally a labour-intensive process and reconciling a vendor account can take days because the statement can contain hundreds of invoices, which must each be manually checked against the accounting system.

Meanwhile, accounts payable teams already have a full schedule managing the day-to-day activities of processing invoices through to payment. 

But technology is helping to break this deadlock. Supplier statements in any format can be uploaded to cloud-based systems for automatic reconciliation. Moving away from a manual system increases the number of statements that can be handled by a huge margin, allowing accounts payable to focus on managing the exceptions, at the same time as ensuring accurate supplier balances are used for cash flow forecasting.

In other words, today’s technology can undertake much of the ‘heavy lifting’ that is an integral part of supplier statement reconciliation.

It is therefore a key tool to keep the cash flowing.


Daniel Kimpton is co-founder and business manager at


Replies (2)

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By brightsparks
14th Mar 2016 07:21

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