What is a supplier

A supplier is a company or an individual who has delivered goods or services to businesses.

It can be anything from equipment to furniture, or goods intended for resale. A clothing store uses suppliers to purchase clothes for their store.

From an accounting perspective, everything you purchase from a supplier, regardless of whether you make the product or not. This is because in accounting, everything you purchase is considered purchased from a supplier, including services, raw materials, and finished products.

In everyday language, however, we often distinguish between a producer and a supplier. A producer is the one who has produced something, while a supplier is the one who delivers goods further. This is often an intermediary. In smaller companies, the producer and the supplier can be the same. If you buy a product as an individual from an online store, we rarely say that you have purchased from a supplier even though it has been delivered to you.

How do I book an invoice from a supplier?

If you buy a product or a service, you will usually receive an invoice from the supplier, and it is called a supplier invoice. Such an invoice is booked in the accounting as a plus (debit) on an expense account and a minus (credit) on a separate account for that supplier.

Read also: How to send an invoice: Methods and free templates

All suppliers have an account and they are sorted by name as suppliers within account group. This way of organizing it in the accounting is called ledger The ledger for a supplier, or supplier ledgeras it is also called, shows all invoices, credit notes, and payments that have taken place between your company and this supplier.

When you pay a supplier, this is booked in the accounting as a plus (debit) on the ledger account with the supplier name and a minus (credit) on the bank account it is paid from.