Is Your AP Process Letting Money Fly Out The Window?

Did You Know That Exception Invoices In Your AP Process Can Cost Almost 10 Times as Much as an Invoice That Matches and Processes Straight Through. 

Here are a few examples as to why:

An AP clerk enters a PO invoice in the ERP system, matches the information on the invoice to the information that the buyer entered on the purchase order. The system applies invoice controls to the invoice. If the information on the invoice does not match the information on the purchase order, an invoice exception occurs.

The AP clerk then sends the invoice to the buyer for resolution when the invoicing process is interrupted by an invoice exception. Often times the invoice is sent via interoffice mail as paper of scanned and emailed. Either way these steps occur outside of the controlled accounting environment.

Now the AP clerk cannot finish processing the invoice until the buyer has resolved the exception and sent the invoice back to the AP clerk. This process may take some time and the result may be a delay in payment to the vendor.

There are two types of invoice exceptions: 

Invoice Header Exceptions
An invoice header exception occurs when the information on the invoice header does not match the information on the PO header. 

Common header exceptions occur because:

• The vendor numbers on the PO and the invoice are not the same.

• The invoice has charges that the AP clerk is not authorized to pay, such as sales tax, freight or additional charges.

Invoice Line Exceptions
Invoice line exceptions occur when the invoice line information does not match the PO line information. 

Common line exceptions occur because:

• The invoice line's unit price exceeds the unit price tolerance range.

• The invoice line's extended value exceeds the extended value tolerance range. Because the extended value equals the quantity multiplied by the unit price for that line, an extended value tolerance occurs under either or both of the following conditions: 

• The invoice line quantity differs from the PO line quantity. 

• The invoice line unit price differs from the PO line unit price, but the difference does not exceed the unit price tolerance range.

• The invoice line has charges that the AP clerk is not authorized to pay, such as sales tax, freight or additional charges.

In a recent study of 200 companies using purchase orders it was found that on average 1-in-3 supplier invoices had a matching issue which resulted in an exception which required manual intervention.

One of the most effective ways of handling invoices exceptions is by utilizing an e-invoicing platform that is designed to apply rules based matching that minimizes and in many cases eliminates the manual tasks associated with processing exception invoices. 

For more about this subject visit our website at www.Vision360Enterprise.com

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