Supplier Ledger

The supplier ledger (also called the creditor ledger or AP sub-ledger) is the detailed record of all transactions with each individual supplier. For every supplier the business deals with, the supplier ledger shows the invoices received, the credit notes applied, the payments made, and the current outstanding balance. The supplier ledger is the operational record that AP staff work from day to day; the general ledger AP control account shows only the total across all suppliers.

Most accounting systems maintain the supplier ledger as an integrated component of the AP module -- when an invoice is entered against a supplier, it appears in both the supplier ledger and the general ledger simultaneously. The critical control is that the sum of all individual supplier balances in the supplier ledger always equals the balance in the AP control account in the general ledger. This equality, verified through AP sub-ledger reconciliation, is a fundamental bookkeeping control.

What the supplier ledger shows

For each individual supplier, the ledger shows a transaction-by-transaction history: invoice date, invoice number, description, invoice amount, any credits applied, any payments made, and the running balance. This history is the basis for supplier statement reconciliation -- comparing what the business's supplier ledger says about a supplier's balance against what the supplier's own statement shows.

The supplier ledger also provides the detail needed for the AP aging schedule -- by looking at the invoice dates and due dates on each outstanding transaction, the system can calculate how long each invoice has been outstanding and place it in the appropriate aging bucket. Without the supplier ledger's transaction-level detail, the aging schedule would be impossible to produce.

Supplier ledger errors and their effects

The most common supplier ledger errors are: invoices coded to the wrong supplier (so one supplier's balance is overstated and another's is understated, while the total is correct); payments applied to the wrong invoice (so individual invoices show as outstanding when they have been paid, and others show as open credits); and unapplied credits sitting in a supplier account (reducing the apparent balance but not clearing against the specific invoice they relate to).

Unapplied credits are particularly common and particularly problematic. A credit note received from a supplier but not matched to a specific invoice sits in the supplier ledger as an unmatched credit, reducing the supplier's apparent balance. The AP team may then include the supplier's invoices in a payment run at their full face value, paying more than is actually owed because the credit has not been applied. Periodic review of supplier ledger unapplied credits -- and following up with suppliers to confirm how credits should be applied -- is a straightforward control that prevents overpayment.