Do you ever feel like your AP processes cause you to waste more time trying to accomplish simple tasks? Are you trying to determine how to break this vicious cycle of inefficient processes? If your organization does any of the following, consider a new approach to handling everyday processes with these helpful tips:
Saving the return envelopes that often are enclosed with invoices, particularly for services. Simply dispose of these and use your own envelopes for payment. This eliminates having to find a way to file these envelopes in order to match them with the payments.
Stamping the received date on invoices that already contain some kind of received date. Invoices that are faxed contain the date and time they were received. As for those invoices received as a PDF attachment via e-mail, if you’re printing the invoice, print the e-mail as well. It contains time and date information. If you have managed to implement a program that converts or moves the attachment into your system, the program most likely contains time and date information.
Requiring approvals for PO-based invoices. Just what does this additional approval accomplish, other than slowing down the process? A properly completed and authorized PO already approves the purchase.
Requiring exact match between the three documents that comprise the three-way match. While it would be nice if the purchase order, the invoices and the receiving documents matched to the penny every single time, in reality, a perfect match is not always achieved. Investigating every discrepancy without regard to the amount adds time and significant expense to the AP process. Often, the cost of investigating the problem exceeds the amount of the discrepancy.
Consider implementing a variance or tolerance limit. Establish a variance limit where both AP and purchasing feel comfortable. Invoices that fail the three-way match, but whose discrepancies fall under this limit should be able to move on in the process. Of course, if a particular vendor’s invoices are always incorrect, purchasing should contact that vendor to encourage them to improve their invoicing practices. However, for most vendors, small differences are likely to wash over time, or simply not amount to a meaningful loss of dollars.
Requiring a review of voucher packages. Assuming that a match process exists for a PO-based invoice, and a non-PO-based invoice, looking at the voucher package is a process that adds little to the overall AP process.
Requiring approvals for all non-PO-based invoices. The approval process for non-PO-based invoices is likely the process that causes the most headaches for AP. Consider establishing a “negative assurance” process for these types of invoices, particularly those small dollar invoices. This recognizes that most invoices, once they arrive in AP, are approved.
Spending undue time tracking approvals on every invoice. Require that all invoices be sent directly to AP. Then, use e-mail to forward only those invoices needing approval to the appropriate employee. Indicate in your e-mail that if you do not hear back from them by a certain date, the invoice will be paid. When that date arrives, pay the invoice. If, in the unlikely event the approver indicates there is a problem with a particular invoice, then AP must handle the issue. This changes the process from tracking approvals on every invoice to working only the exceptions.
Requiring two signatures on checks over a certain amount. This is not necessarily a bad process, assuming that the signers actually review what they are signing. However, many organizations routinely require two signatures on far too many checks. Consider the value that this step is adding and consider eliminating it or raising the threshold.
Requiring many AP related reports to be run on a daily or weekly basis. The primary purpose of reporting is to provide information about how well AP is functioning. If the reports AP runs are not being reviewed in a timely manner, or if they provide little value, consider reviewing your reporting practices. Take a close look at the list of reports and eliminate those that are not useful. Then consider whether those that do have value are being run at the correct frequency. Maybe a daily report is needed, but in some cases a weekly or monthly review is sufficient.
Learn more on how to streamline your invoice processing and gain productivity.