Supplier Invoice: How to Check Before Paying

Before paying a supplier invoice, you should confirm three things: the supplier is genuine, you actually ordered and received what is being billed, and the amount and bank details are correct. Skipping these checks is how businesses pay for goods that never arrived, pay the same invoice twice or send money to a fraudster's account. A short, consistent checklist catches nearly all of these problems in a couple of minutes per invoice.

This guide gives you a 12-point checklist, shows how to match an invoice against a purchase order and delivery record, walks through a worked example with errors, and explains what to do when something does not add up.

The 12-point supplier invoice checklist

#	Check	What you are looking for
1	Supplier is known	Supplier exists in your vendor list with verified details
2	Addressed to you	Your correct legal business name and address
3	Invoice number	Present, unique and not already in your system
4	Purchase order or agreement	Invoice references a valid PO or contract
5	Goods or services received	Delivery note or goods received note confirms receipt
6	Quantities	Billed quantity equals received quantity
7	Prices	Unit prices match the PO, quote or price list
8	Maths	Line totals, subtotal, discounts and grand total add up
9	Tax	Correct rate, tax ID shown, tax calculated on the right base
10	Extra charges	Delivery, fuel or handling fees were agreed
11	Terms and due date	Matches agreed terms; early payment discount noted
12	Bank details	Identical to the details already verified on file

The same points apply when you are the one sending invoices; our invoice checklist covers them from the seller's side.

Step 1: Confirm the supplier is real and the invoice is for you

Start with the basics. Is this a supplier you have used before, set up through your normal vendor process? Is the invoice addressed to your company's correct name? Invoices for unfamiliar suppliers, or addressed to a slightly wrong name, need a second look. Fake invoices for "directory listings", "domain renewals" or office supplies nobody ordered are a common scam; our guide to invoice scams shows the usual patterns.

Step 2: Match the invoice to the order and the delivery

For goods, the standard control is a three-way match: the purchase order, the delivery record and the invoice must agree. The delivery record is often a goods received note, completed by whoever checked the delivery in.

For services, there is usually no delivery note, so match against the contract, statement of work or timesheet, and ask the person who managed the work to confirm it was done. A two-way match (order and invoice) is common for low-value services.

Step 3: Check quantities, prices and maths

Recalculate at least the line totals and the grand total. Spreadsheet errors, manual typing and outdated price lists all produce wrong invoices. Look for:

• Unit prices that differ from the PO or quote
• Quantities that do not match what arrived
• Discounts that were agreed but not applied
• Rounding that seems to favour the supplier on every line

Step 4: Check the tax

Confirm the tax rate is right for what was supplied, that the supplier's tax registration number appears where required, and that tax has been calculated on the correct amount (after discounts, for example). If you reclaim VAT or GST, an invoice that does not meet the legal requirements may not support your claim, so ask for a corrected one.

Step 5: Make sure it has not already been paid

Search your accounting system for the same invoice number, the same amount from the same supplier and the same date. Duplicates often arrive when a supplier emails an invoice and then posts a copy, or resends it as a reminder. Our guide to preventing duplicate invoice payments covers the controls in more depth.

Step 6: Verify the bank details every time

This is the most important fraud check. Criminals compromise supplier or customer email accounts and send genuine-looking invoices with new bank details. The FBI's Internet Crime Complaint Center reports that business email compromise frequently involves requests to change payment details and advises verifying any change by phone with a known contact; see its public service announcement on business email compromise.

Practical rules:

• Compare the bank details on every invoice with the details held in your system, not with the previous invoice.
• Never change bank details based on an email or invoice alone. Phone the supplier on a number from your records.
• Require a second person to approve any change to supplier bank details.
• Be suspicious of urgency, secrecy or a request to pay a "new" account "just this once".

Worked example: catching three errors

A café receives an invoice from its packaging supplier.

Item	PO	Delivered	Invoiced	Issue
12oz paper cups (case)	10 @ $42.00	10	10 @ $46.00 = $460.00	Price $4 higher than PO
Lids (case)	10 @ $18.00	8	10 @ $18.00 = $180.00	2 cases not delivered
Carry trays (case)	4 @ $25.00	4	4 @ $25.00 = $100.00	Correct
Delivery	Free over $500		$15.00	Not agreed
Total			$755.00

What the café should pay:

• Cups: 10 x $42.00 = $420.00
• Lids: 8 x $18.00 = $144.00
• Trays: 4 x $25.00 = $100.00
• Delivery: $0.00 (order is over $500)
• Correct total: $664.00

The invoice overcharges by $755.00 - $664.00 = $91.00, about 12%. Without the check, that money is simply lost.

What to do when an invoice is wrong

1. Put the invoice on hold in your system so it is not paid automatically.
2. Contact the supplier quickly, listing each discrepancy with the evidence (PO number, delivery note).
3. Ask for a credit note or corrected invoice. Do not alter the supplier's document yourself.
4. Pay the undisputed part on time if your agreement allows; it keeps the relationship healthy.
5. Record the outcome so the original and corrected invoices are not both paid.

A quick acknowledgement helps too. Our invoice received acknowledgement email templates include versions for invoices placed on hold pending a query.

Building this into your accounts payable process

For a very small business, the owner may do every check. As you grow, separate the roles: one person orders, another confirms receipt, and a third approves payment. Set an approval limit above which a second signature is required. Our guides to the accounts payable process and invoice approval workflow show how to structure this without slowing payments down.

Common mistakes

• Paying from a supplier statement instead of individual invoices
• Approving invoices without confirming the goods arrived
• Updating bank details from an email
• Missing early payment discounts because invoices sat in someone's inbox
• Filing invoices without recording the approval, which makes audits harder

Checks for different types of supplier invoice

Invoice type	Extra checks
Goods with a PO	Three-way match; check for back-orders and partial deliveries
Services (consultants, agencies)	Hours against timesheets; rates against the contract; expenses supported by receipts
Subscriptions and software	Number of seats or users; renewal date; price increases since last year
Utilities and rent	Meter readings or lease terms; period covered; no overlap with the last bill
Contractors and trades	Work completed and signed off; retention; any agreed variations
Overseas suppliers	Currency, exchange rate, import duties and who pays bank charges

Setting tolerances so small differences do not block payment

Insisting on a perfect match for every cent slows payments and frustrates suppliers. Many businesses set tolerances, for example accepting a price difference of up to 2% or $25 on an invoice, whichever is lower, without a query. Anything above the tolerance goes back to the buyer for approval. In the café example, the $40 overcharge on cups would exceed a $25 tolerance and be queried, while a few cents of rounding would be accepted automatically. Unagreed charges, like the $15 delivery fee, should be queried whatever their size.

Review tolerances once a year, and look for suppliers who are always just below the threshold. That pattern can be a sign of deliberate overcharging.

Reconciling with supplier statements

Once a month, compare each major supplier's statement with your own records. It catches invoices you never received, credit notes you forgot to apply and payments the supplier has not matched. Do not pay from the statement itself; use it to find gaps, then pay against individual approved invoices.

If you are a supplier yourself, the easiest way to get paid quickly is to send invoices that pass these checks first time, with the PO number, clear line items and consistent bank details. You can build one in our free invoice generator and download it as a PDF with no account needed.