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[Webinar] Invoice Processing in Accounts Payable: Start the Year Strong

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Let’s face it; no matter how advanced your accounts payable function is, at the end of the day, its primary responsibility is to process invoices, and to process them efficiently in a cost-effective manner. This means making as few mistakes as possible.

In this session, Mary S. Schaeffer, a nationally recognized accounts payable expert, will tear apart the invoice processing function and identify common mistakes made repeatedly by many organizations.

She’ll share solutions (including low and no-cost options) any organization can use to strengthen its processes so the same mistakes are not made over and over again – eating voraciously into the bottom line. While we hope no organization will have all the problems identified, we’re fairly confident most will have at least one or two.

Published in: Economy & Finance
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[Webinar] Invoice Processing in Accounts Payable: Start the Year Strong

  1. 1. Invoice Processing in Accounts Payable:Start the Year Strong Mary S. SchaefferAccounts Payable Now & Tomorrow
  2. 2. AgendaO Background: Invoice ProcessingO Best Practice Processing P2PO Reality O Step by Step O Potential ProblemsO Fixing broken controls(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 2
  3. 3. Background of the Control Issue in Invoice Processing(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 3
  4. 4. Overview O Start with the basic issue in accounts payable O Processing Invoices O Control is all in the details O Not a big picture issue(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 4
  5. 5. When the details are ignoredO Duplicate paymentsO Other erroneous paymentsO Charges the vendor was supposed to payO Fraud easier to commitO Inaccurate accrualsO Inaccurate financial and accounting recordsO Remember: Your employees know where the weaknesses in your system are(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 5
  6. 6. Keep in Mind O Many of the problems eliminated by automation(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 6
  7. 7. Dissecting the Invoice Handling Process: How the Process Should Work When The Invoice Arrives(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 7
  8. 8. The Ideal World: Part 1 O Invoice arrives in accounts payable O Invoice is sent out for approval (or approvals done online) O Approval comes back promptly(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 8
  9. 9. The Ideal World: Part 2 O The three-way match is completed O No discrepancies O Invoice is scheduled for payment or O If there are discrepancies O Discrepancies resolved before payment date O Invoice scheduled for payment(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 9
  10. 10. The Ideal World: Part 3 O Payment is made on the due date O Note: Late payments create additional problems(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 10
  11. 11. A Word about Late Payments O The Where’s My Money Calls O The Second invoices O Frayed vendor relationships O The duplicate payment O The honest mistake that leads to fraud(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 11
  12. 12. Dissecting the Invoice Handling Process: The Reality When The Invoice Arrives(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 12
  13. 13. Receipt of Invoice: Some ProblemsO The floating invoiceO The invoice addressed to no oneO The invoice sent to the wrong person(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 13
  14. 14. Invoice Receipt O Ideally centralized – one location O One postal address O One email address O One fax number O Used only for invoices O Semi secluded spot – avoid tempting others e- fax facility(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 14
  15. 15. If Invoices Sent to Purchasers FirstO Possible approval delaysO Increase the chance of getting a second invoiceO More work for APO More he said, she said gamesO E-Invoicing ends these problems – especially if automatic escalations are included (c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 15
  16. 16. Invoice Processing O Standardized process O Naming convention - rigid O Some go as far to standardize the way the desks are set up O Probably the best control against duplicate payments(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 16
  17. 17. The Accounts Payable Policy and Procedures Manual O Written O Detailed O No detail too small O Updated regularly O Reviewed annually if no updates O Shared with everyone who might need t(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 17
  18. 18. The Policy and Procedures Manual O Reference Guide for existing processors O Important for those once-a-year tasks O Training Guide for new processors O Relevant Excerpts shared O Cut-off schedules(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 18
  19. 19. Invoice Number Control O “Our system won’t allow us to enter duplicate invoice numbers” O Doesn’t provide the control you might think O Don’t rely on it – exclusively(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 19
  20. 20. Invoice Numbers O Pay close attention to O Almost as important as dollar amount O If invoice processing is automated, this is not an issue(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 20
  21. 21. Invoices without Invoice Numbers O Create a standardized routine that will create a unique invoice number O Never use TINs as part of it O Using the date can be problematic – except perhaps for phone bills O New Best Practice: Return it with a polite letter(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 21
  22. 22. Invoices w/o PO # O Invoices without PO # or name of requistioner O Make PO# or name of requisitioner a requirement O Return with polite letter “in order to get vendors paid in a timely manner”(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 22
  23. 23. Disputed InvoicesO IdentifiedO TrackedO Monitored for statusO Keep track of who is responsible for resolvingO Age the disputed invoices O Who’s got the oldest invoice O Report to management(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 23
  24. 24. When Disputed Invoices Are Ignored O They don’t get handled in a timely manner O AP’s reputation takes a hit O Avoid the black hole reputation O These invoices often get paid twice(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 24
  25. 25. Disputed Invoices: ReportsO Sort by processor, purchaser, vendor, locale, etc.O Identify problems O People O Processes O VendorsO EvaluateO Train and retrain(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 25
  26. 26. Invoices Arriving at the Last Minute: Part 1 O More a problem in a manual set up O Rush payment request O Full backup??? O Sometime missing O Often requests for return to requisitioners(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 26
  27. 27. Invoices Arriving at the Last Minute: Part 2 O Returning checks to requisitioners and Rush payments – leading cause of duplicate payments and potential fraud O Poor practices O Is the three-way match completed?(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 27
  28. 28. Invoices Arriving at the Last Minute: Part 3 Best Practices O Never return check to requisitioner O Find ways to minimize these transactions O Make payments by ACH rather than check O Insist on full backup O Either at the time the request is made or O Within the next few days O Extinguish PO and open receiver(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 28
  29. 29. What if There’s No Backup O Process the payment O Follow up and get backup afterwards O Don’t forget, extinguish PO and receiver(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 29
  30. 30. New Issue: Invoices Sent Twice O Invoices e-mailed or faxed O Vendor wants to make sure it was received O Sends by snail mail(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 30
  31. 31. Dealing with Duplicates O Identify vendors likely to send twice O Ask them not to O Develop an ACT (Always Check Thoroughly) list O Automate invoice processing(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 31
  32. 32. PaymentsO Efficient payment process translates O Early pay discounts earned O Avoid late feesO Schedule payments so paid on time – not earlyO Ideally – one payment vehicle per vendorO Use best vehicle(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 32
  33. 33. Best Practice Mission Statement for APO Pay the right amount, to the right vendor at the right time O Lowes Home Improvement(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 33
  34. 34. How Invoice Automation Helps O Human keying errors eliminated O No processor playing games O Faster processing O Invoices sent for approval automatically O Clear audit trail and hence O Faster approvals(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 34
  35. 35. Questions/Comments Share your thoughts and insights with Mary Schaeffer by writing her at marys@ap-now.com  Sign up for her free weekly ezine at www.ap-now.com/ezinesignup.html(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 35
  36. 36. About Mary Schaeffer Editorial Director & Publisher CRYSTALLUS, Inc. publisher Accounts Payable Now & Tomorrow newsletter • Editor-at-Large CFO Publishing’s Learning Pro: AP Edition • Nationally recognized accounts payable expert and consultant • Frequent speaker at seminars, conferences and online events • Regular contributor to the AICPA’s Corporate Finance Insider • Creator of Institute of Financial Operations Accounts Payable Innovation Certificate program • Writes a free weekly e-zine, e-AP News • Author 16 business books including the Do-It-Yourself Accounts Payable Consultant • M.B.A. Finance, NYU • B.S. Math, York College(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 36
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