Vendor Ledger

About the vendor ledger tool

How to reconcile a vendor's statement using the ledger

1. 1

   Record everything against the saved vendor

   Enter each purchase bill with the vendor's invoice number and date, each payment through Vendor Payment, and each return through Debit Note. Entries you skip are the differences you will hunt for later.

2. 2

   Open Vendor Ledger

   Go to Payables, then Vendor Ledger. Select the vendor and the date range matching their statement, typically the month or the financial year from 1 April.

3. 3

   Match the opening balance

   Check that your opening balance equals the vendor's. If it does not, the difference is from an earlier period; agree it once and record the correct opening figure.

4. 4

   Tick off line by line

   Match each bill by their invoice number and each payment by amount and date. What remains unticked on either side is the reconciliation: a bill you have not recorded, a payment they have not applied, or a debit note they have not accepted.

5. 5

   Download and send

   Click Download PDF and send it to the vendor with the list of differences, or sign it as the balance confirmation their auditor asked for.

What a vendor ledger should show

• Vendor name, GSTIN and address, and your business details, so both sides can identify the account.
• Period and opening balance as on the first day, marked Cr when you owe the vendor.
• One line per transaction: date, type (purchase bill, payment, debit note), your document number and the vendor's invoice number, narration and amount.
• Purchase bills as credits (you owe more); payments and debit notes as debits (you owe less).
• Running balance after each line and the closing balance for the period.
• Payment references (UTR, cheque number) on payment lines, so the vendor can trace them in their bank.
• Debit notes with the reason (return, short supply, rate difference) and the bill they relate to.
• Period totals that reconcile: opening + bills - payments - debit notes = closing.

Who uses the vendor ledger

Vendor Ledger: frequently asked questions

Why does my vendor ledger balance not match the vendor's statement?

The usual reasons: a bill the vendor issued that you have not recorded yet (goods in transit or a bill sent to the wrong email), a payment you made that they applied to another account or have not received, a debit note for returns that they have not accepted, and differences in the opening balance from a prior year. Match line by line from the last agreed balance to find them.

What does a debit balance in a vendor ledger mean?

A vendor account normally has a credit balance, meaning you owe the vendor. A debit balance means the vendor owes you: you have paid in advance, paid more than the bills, or issued debit notes for returns exceeding the open bills. Either adjust it against the next purchase bill or ask the vendor for a refund or a credit note.

Does a purchase order or goods receipt appear in the vendor ledger?

No. A purchase order is your intention to buy and a goods receipt records that goods arrived; neither creates an amount payable. The vendor's balance changes only when the purchase bill is recorded, and again when you pay or raise a debit note. Convert the PO or receipt into the bill when the vendor's invoice arrives so stock is not added twice.

How do I record a return to the vendor in the ledger?

Raise a Debit Note against the purchase bill, either by opening the bill and choosing Convert to Debit Note or from the Debit Note tool, with the quantity returned and the tax on it. It reduces your payable to the vendor and the ITC you claim for the month. The vendor should issue a matching credit note in their GSTR-1.

Can I get a vendor ledger for a specific month or the whole year?

Yes. Choose any date range; the tool computes the opening balance as on the day before the range starts and lists only transactions inside it. Use a month for routine settlement with a distributor and 1 April to 31 March for the annual balance confirmation.

Should I keep separate vendor ledgers for the same supplier's two branches?

If the branches have different GSTINs, yes, because each is a separate registered person under GST and issues its own invoices; keep one saved vendor per GSTIN. If they bill from one GSTIN and only deliver from different locations, one ledger is enough and the delivery location can go in the narration.