Invoice Processing
Invoice Processing is often not as easy as people outside of accounts payable may realize. For you to understand, it is a business function that gets performed by the accounts payable department, who manage a complex and important process. For Invoice Processing you need to:
Capture Required Data
Check it is not a duplicate
Check it is not a replacement for an invoice that may have been changed by the supplier after discussion with your organization.
You need to check if the supplier is setup
You need to check the invoice is tax compliant
You need to check the bank details
You need to see if a purchase order exists is valid
You need to check if the goods have been received
You need to find who is the approver
You may need to cost code the invoice or find someone who can
You may need to chase approvals
You may have to get supporting information from a supplier
Invoice processing…
includes these and many more steps. To measure how efficient your AP processing is measure the number of people in accounts payable. Work out an hourly cost. Now divide your cost by the number of invoices processed. Then add the cost of the approval process. Now you have an idea of the cost per invoice. This number will be useful as you make improvements in AP processing. The improvement in AP processing can allow you to grow as a business without adding costs. Improved invoice processing can also improve supplier relationships and reduce stress in your business.
