Let's face it, processing supplier invoices can be a daunting task and in some cases a smaller accounts payable department can feel the "invoice processing pain" simply due to a lack of resources more so than larger companies who may be drowning in shear volume of invoices. Either way the steps of processing, routing, matching, approving, coding, entering and paying invoices is error-prone, labor intensive and in-efficient. So what do you do if upper management isn't onboard with accounts payable process improvements or invoice automation?
Here are a few ways that being organized and following standard processes can help.
1. Don't pay from invoice copies. This can lead to duplicate AP transactions and payments. If you have to pay from a copy, be sure to check your records for the same invoice number and dollar amount.
2. Make sure you have a W-9 on file BEFORE paying a vendor. This will save a lot of hassle at year-end when you need to prepare 1099s. Fines for not complying with 1099 reporting can be hefty and the rules change from time to time.
3. Have rules about how invoice numbers are formatted and entered. If accounts payable team members are all using their own rules about entering invoice numbers (like what to do with leading zeros), it will be difficult to track down anything. Also, make sure you have a policy for invoices that don't have invoice numbers on them.
4. Segregation of duties! The person entering the invoice should be different from the person approving the invoice who should be different from the person signing the check.
5. Centralized receipt of supplier invoices. Okay, so this is easier said than done however, having all invoices come to the accounting department first before being sent out for approval(s). This way the invoice can be logged before it enters the black hole.
6. Enter invoices one at a time. Do not enter invoices as a batch. Each one should be entered individually in order to have an audit trail.
7. Coding of invoices. All invoices should have the G/L account coding written on them as well as any notes about special handling.
8. The amount of the invoice should be entered as billed even if you don’t plan on paying the full amount. A credit memo can be entered and matched against the invoice later. The key is to remember the audit trail.
9. Have a new vendor welcome letter that you can send informing them of where invoices should be sent, what information you require to process their invoices (like a vendor ID number) and any forms you need completed. Vendors will appreciate the information to ensure their payments aren’t held up.
10. Watch your payables carefully to take advantage of any discounts being offered by vendors. It can add up to a nice sum by the end of the year.
11. Setup your vendor files alphabetically and file your paid invoice as soon as completed.
There are many more ways to ensure a smooth accounts payable process if upper management won't go for process improvement. Feel free to list your own ideas that may help others looking for ways to make their accounts payable process better.
Vision360 Enterprise Accounts Payable Automation Solution by BlueCreek Software reduces time wasted chasing down paper invoices by automating invoice approvals, eliminating manual data entry, eliminating paper invoices and reducing processing costs.