The invoice approval routing process will vary from company to company, of course, and it may also vary by vendor, department, requester, product type, and invoice amount.
The Aberdeen Group study found that the top pressure noted by survey respondents was difficulty locating and managing paper-based documents, so it makes smart sense to automate the approval process and eliminate the paper.
#PO INVOICE MEANING MANUAL#
For many companies, this is a manual process, full of paper shuffling and delays. The invoice approval routing process involves routing the invoice from approver to approver until final approval is received. It makes sense to establish tolerances for variances in both cost and quantity, to avoid spending hours tracking down just a few cents of savings. When a discrepancy is found, the invoice is flagged for follow-up, and routed to an appropriate reviewer. In a three-way matching process, an invoice is matched to the corresponding purchase order for quantity and amount, and also to the receiving information documented at the time the goods were received. In a two-way matching process, the quantity and amount on the invoice is matched to the quantity and amount on the corresponding PO. The regular use of invoice matching really requires that a company utilize an electronic procurement solution, since trying to perform this task manually might actually cost more in time spent than any savings generated.Ĭompanies might utilize both two- and three-way matching techniques, depending upon the dollar value of the purchase, or the nature of the product/service, for example. The matching process may involve matching a single invoice to multiple purchase order shipments, or multiple invoices to a single purchase order shipment.Ī 2017 Aberdeen Group study, Best-in-Class Invoice Processing Capabilities found that Best-in-Class AP organizations are three-times as likely to match invoices to PO line-level details. Invoice matching is the process of matching billed/invoiced items to the original purchase order to ensure that the vendor has invoiced correctly for the goods or services you ordered. It’s a match: two and three-way invoice matching To ensure accuracy, accounts payable invoices should go through both a matching and an approval process.
Are there any warranty or performance issues with the product/service post receipt that warrant holding payment?.Is the invoice coded to the correct expense accounts?.Do the payment terms match the agreed upon terms?.Is the invoice billing only for items actually received?.If the approval process was as easy as confirming the goods were received, then the purchase order receipt itself should be sufficient evidence that an invoice can be paid, but there are other factors to consider, including: Once approved, the invoice must make its way to the payables department for payment processing. What to look forĪn invoice may arrive with the product, or it may arrive at a later date, but when it does, it needs to be carefully compared to the original purchase order and to the receiving document to ensure that what is being billed for was actually contracted for and received. When we receive the vendor invoice, what are the best processes for determining if it’s accurate and should be approved for payment? Here we look at what needs to be part of the invoice approval process, and why it matters. What needs to be part of the invoice approval process, and why it mattersĪs we continue our tour through the procurement cycle, we come to a fork in the road: should we approve the invoice for payment, or not? So far, we’ve successfully identified a need for a product or service, approved the spend, secured a vendor and price, issued a purchase order, and the product has arrived at our warehouse.
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