Accounts payable organizations would love to focus only on the exceptions related within the process. Many, however, are faced with problem invoices. And as any accounts payable professional knows, problem invoices bog down the process and create several pain points. But these pain points can be levers for continuous improvement and automation initiatives if tracked and acted upon.
The first—and arguably most important—step is to define problems stemming from vendor invoices.
| Purchase Orders (POs) | |
| 1. PO Not Approved | 4. Purchase Order Line Discrepancy |
| 2. New PO Required | 5. Invalid or Stale PO |
| 3. Blanket PO Limited Exceeded | |
| The Approval Process | |
| 6. PO Approval Pending | 8. Incorrect Approval Levels |
| 7. Invoice Approval Pending | |
| Pricing and Quantity | |
| 9. Contract Pricing Discrepancy | 10. Quantity Discrepancy |
| Invoice Process Discrepancies | |
| 11. Outstanding Credit Balance | 14. Incorrect Freight Calculations |
| 12. Invoice is Missing Information | 15. Invoice Keyed with Incorrect Date |
| 13. Invoice Already Paid | 16. Invoice Coded Incorrectly |
| Tax Calculation Errors | |
| 17. VAT Error | 19. Other Incorrect Tax Calculations |
| 18. Sales and Use Tax Error | |
| Supplier and Shipment Issues | |
| 20. Invoice Sent for Unreceived Goods | 22. Supplier Referenced Wrong PO |
| 21. Short or Shipment Errors | |
| Supplier Master Issues | |
| 23. Duplicate Supplier in Master File | 25. Fraudulent Supplier |
| 24. Remit Address Doesn’t Match | |
Today’s ERP systems have the capability to block or park an invoice and assign a custom reason code for the specific problem identified. A blocked invoice report can then be reviewed to understand the most common issue resulting in a bottleneck.
Next, use those “problem” categories suggested above to develop data analytics and tracking procedures for your biggest pain points. Identify other types of errors that are more specific to your company or industry and their potential solutions.
Many accounts payable teams have established common procure to pay (P2P) metrics with procurement to ensure a level of accountability for the accuracy and timeliness of contracts, purchase orders, pricing, and quantity discounts. Organizations refer to this team effort as the P2P transformation process.
Ultimately, a third-party audit or a self-audit tool is very valuable in your strategy for invoice processing. Companies use these results from their accounting system for finding and implementing process improvements—to which many organizations have found that a problem invoice often results in a duplicate or erroneous payment.
Finding solutions to vendor invoice problems may start with defining the issues, but it certainly should not end there. Working toward an automated process—from capturing documents to making payments—is a strong strategy for better managing your accounts payable workflow.
