Master the Invoice Process: Best Practice [AP + P2P]

The accounts payable invoice process has many moving parts. It is so easy to get one or more of the wrong - and even one tiny, what seems like an inconsequential misstep can cause havoc resulting in either a duplicate payment that is difficult, if not impossible to retrieve, a late payment, a disgruntled supplier or worse, an unhappy manager. We’ll go through the steps and the best practices you should use every step of the way so that doesn’t happen to you. Make sure you stick around until the end when we discuss one practice that will definitely make suppliers angry … and angry suppliers tend to call management and complain about you. #invoice #accountspayable #accountspayableprocess
Link to Rookie Invoice Mistakes
• Rookie Invoice Process...
00:00 Introduction
00:54: Invoice Arrival
02:43 Three Way Match
06:25 Three Way Match Best Practices
09:17 Payment Options
11:50 Avoiding Duplicate Payments
20:00 Early Payment Discounts
25:35 Tracking Discrepancies
32: 45 Avoiding Errors
account payable
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[@Smf579]

Great videos! Very useful. Thank you!!!

[@APNow]

You are very welcome. I appreciate your note.

[@tishku8885]

I want to thank you soo much. You are a God-send. New job. The position is piecemeal AR, AP & Receving. Four bookkeepers all doing a little of everything, but never completes an entire process All four have access to the GL and has access to all company cc cards to pay bills and the ability to write checks. Is this a nightmare? It feels like one. Should I run now?

[@APNow]

Ugghhh - but first, thanks for your kind words. The problem with this approach is that it would be next to impossible to figure out who was responsible if the unthinkable happened ... if someone defrauded the company ... say by using the company card for personal purchases. No one likes to think this would happen to them .. but it does, especially when controls are weak. Do you think you can get them to change ... but be VERY careful how you word it!

[@tishku8885]

@APNow I do not think so. This is a brand new CFO hired to 'fix all the problems'. The everyone does everything approach is new to the company, as am I. I was trained one way, then a week later told to forget all I have learned. Yes, I do not like being responsible for check writing and company credit cards.

[@APNow]

The problems with the everyone does everything approach are several. 1 - the jack of all trades, master of none issue 2 - and most important IMHO, the lack of appropriate separation of duties protocol - which leads to no accountability and facilitates fraud ... I could go on, but I'll spare you. @@tishku8885

[@sid5ofus]

do you have a spreadsheet that tracks discrepancies already set up that you can share with us?

[@APNow]

I don't - now - but you bring up an excellent idea. Give me a few weeks and then look for a talk on this topic!

[@abhishekmukherjee5005]

Another gem

[@APNow]

You put a smile on my face! Thank you

[@rippin724]

What solution can you provide for an IT procurement person like myself who is required to receive, code, sign and send Invoice every month to AP. Why wouldn't it be acceptable to have AP pay for a monthly repetitive invoice for a copier where we've signed a 4 year lease. We've already approved this cost for 4 years. Same for Internet service providers and many other invoices. Do any AP departments allow this and still remain risk free? I'm spending 4-8 hours a week on invoices, and would love to have something to present to AP acceptable by the industry. Thanks

[@APNow]

So here's the issue. From time to time, those leases are renegotiated - usually when the service provider offers a new and better product. When that happens, it is rare that accounts payable is notified and payments on the old lease are stopped as the new one begins. Some organizations do allow one approval for ongoing recurring payments, as you suggest - but that is ONLY when the amount is the same every month. However, they then run the risk of continuing to pay on older leases. And, I can tell you from personal experience, trying to get that money back, is quite difficult, sometimes impossible. Good luck

[@rippin724]

@APNow Yes, I would be the one negotiating that if it happens, and that's not my issue. My problem is I have dozens of Invoices I have to process monthly at the same cost, and AP refuses to accept an agreement to pay on preapproval until a certain date, say months before LOI to vendor. There is no solution to what feels to me unessary time spend to receive, code and send emails to AP?
Thanks

[@APNow]

@@rippin724 Ahhh ... the GL coding ... has your organization looked into an automation solution? That might help - but it would be part of a larger initiative. One other possible solution - which everyone will probably hate AND exacerbates the problem of leases not being terminated properly - is to put the payments on a company credit card and have the lessor automatically hit the card each month. This only works if the payments are not large ... if they are, it is a good idea to have a human set of eyes looking at everything.

[@rippin724]

@@APNow Yes, we are looking into an automated solution, but still will have to be approved monthly. Credit card charges have to be coded as well. It sounds like it's not acceptable to have automatically approved invoices even if there is an approved date that expires. I can guarantee with controls in place that the lease would be terminated properly with LOI months prior, and new solution in place. It's simply that not only does AP refuse to automatically pay, they refuse to accept the invoice directly and reach out for confirmation. I actually have to receive it, code it, sign it and scan it. You can't get much more inefficient than that. Yes, auto inbound OCR invoices will be nice, but still have to approve monthly dozens of invoices same cost, and until a certain date.

[@APNow]

@@rippin724 Every company runs their AP process differently. If I were running the show at your company - which clearly I am not - I would have ALL the invoices go to accounts payable FIRST, where it would be scanned. The coding is sometimes done in AP and sometimes done by the end user (like you). BTW - I am surprised your auditors haven't said anything about the way invoices are handled??? Have yo gotten their input??