Invoice receipt to approval (“OK to Pay”) cycle times are an indicator of the company’s efficiency in the processing of incoming invoices. Invoice approval includes recording the invoices, converting paper to electronic data, matching invoices to requisitions, purchase orders & receipts, and approval to pay.
Shorter invoice processing time does not imply earlier payment of invoices simply because the invoice has been approved. It simply means that invoices are approved for payment at the most advantageous payment date. Shorter receipt-to-approval cycles result in more control over the payment process, better cash flow forecasting, maximizing payment discounts and negotiating better terms with vendors.
Seven Suggestions to accelerate the invoice approval cycle
Control non-PO spending
- Don’t rely on Accounts Payable to become the watchdog for non-PO invoices (emergency spending, legal fees, consultants, facility services, repairs, utilities, taxes)
- Implement an auditable invoice routing and approval process for transactions without requisitions or purchase orders, especially to verify service hours invoiced, billing rates.
Identifying discrepancies with work orders, verbal commitments, or consultant, legal and accounting fee overbilling can result in significant savings.
Eliminate the paper
- Scan paper invoices to an invoice folder for transaction entry using in-line attachment view
- Implement e-mail inboxes for vendor invoice scans or PDF files
- Encourage vendors to transmit invoices to your secure vendor invoice portal or as PunchOut transactions.
Off-load data entry to your vendors
- Offer your vendors the ability to receive purchase orders on your vendor portal, submit invoice transactions, and check the invoice processing and payment status on-line.
Automate invoice matching
- Eliminate manual entry by automatically generating invoices based on approved Purchase Orders in the system
- Build dynamic approval workflows with invoice matching and additional approvals for variances. Limit matching and approvals required based on PO amount and spending category.
- Two-way: Invoice to Purchase order
- Three-way: Invoice to PO and receiving transactions
Implement dynamic approval workflows
- Minimize the number of approvers for routine requisitions with additional approvals only as needed for, e.g. variances, special payment terms, or specific spending categories
- Implement easy to maintain approval workflows
- Approval rules based on role or position easily adapt to organizational changes
- Set up e-mail alerts and reminders
- Set up alternate approvers to avoid bottlenecks when the primary approver is not available.
Provide flexible transaction access – anytime and anywhere
- Approval by e-mail response.
Supply the necessary information for approvers
- In-line attachment of documentation (purchase orders, invoices, packing lists).
- Fully detailed transaction log and audit trail.
Efficient invoice approval processes result in better cash management, improved vendor relationships, visible and audited payments, and labor savings in the entry and approval of vendor invoices.
Join Rich and two of his industry collegues as they panel a discussion with Blytheco entitled: ‘The Paperless Office & Document Management: Myths, Legends and the Truth’ This live webucational event will be held on Thursday, October 8th at 2pm EST / 11am PST.