Invoice Reconciliation: How to Do It Efficiently

What reconciliation actually means

Reconciliation means confirming that every invoice you received is matched to a payment in your bank, and every payment in your bank is matched to an invoice. Discrepancies (unmatched invoices, unexpected payments) need investigation.

Three-way matching

For larger businesses, reconciliation extends to three-way matching: the purchase order (what you ordered), the goods receipt note (what you received), and the supplier invoice (what you were billed). All three should agree.

Monthly reconciliation checklist

1. 1Export all bills created in the month from FreeAgent
2. 2Compare against bank statement payments to suppliers
3. 3Flag any bill with no matching payment (overdue?)
4. 4Flag any bank payment with no matching bill (missing invoice?)
5. 5Check for duplicate payments (same amount to same supplier within 30 days)
6. 6Reconcile supplier statement against your records at month end

How automation reduces reconciliation work

When every invoice flows through InboxBill into FreeAgent with original PDFs, and FreeAgent has a connected bank feed, reconciliation becomes a matter of confirming FreeAgent's automatic matching rather than doing it manually. Most months there's nothing to investigate.