Is Your Company Following Invoice Processing Best Practices?
Nine valuable tips revealed for doing it better.
April 3, 2008
by Mary Schaeffer
While proper invoice handling practices may not be the most interesting topic ever addressed, it is certainly one of the most important. Proper invoice processing is key to creating a plumper bottom-line for those who get it right from the start. Here's why.
What Can Go Wrong
Let's start with the basics. When a company's invoice doesn't get paid on time and 30 days elapse, most organizations send the customer a second invoice. And then another if 60 days go by without payment. A few firms will mark those subsequent invoices as "Duplicate Invoice" or "Copy," many do not. Even if your staff is 100 percent efficient and manages to weed out all those duplicate invoices, it still has to spend precious time identifying which invoices have already been paid and which haven't.
The harsh reality is that some of those duplicate invoices do in fact get paid, but most vendors do not return those duplicate payments. Even when they eventually identify that the payment is duplicate and return the funds, your organization has lost the use of those funds for however long it took the vendor to identify the item. And, to be candid, identifying unapplied cash is not usually a priority for most vendors. Thus, the bottom-line is adversely affected dollar-for-dollar for every duplicate that is not returned.
Better invoice processing procedures would help most organizations avoid this unnecessary debacle.
How to Avoid Duplicate Payments
The following practices will help your organization avoid many problems as well as tighten internal controls surrounding invoice handling.
Using these tips will help you keep a closer eye on your invoice processing system and greatly addto your bottom-line. Ka-ching!
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Mary S. Schaeffer is the author of over dozen business books including Fraud in Accounts Payable: How to Prevent It to be published in August 2008 by John Wiley & Sons. She serves as the editorial director of Accounts Payable Now & Tomorrow, directs the firm's consulting practice, blogs regularly at http://ap-now.com/blog and writes a free ezine for those interested in payment issues.