The Accounts Payable department receives invoices in all forms and formats imaginable. In this entry we will analyse the multi-page invoices which require an individualized and detailed treatment of the information contained.
Long invoices with many lines, require and individualized treatment and can imply a high cost for both the issuer – as they are liable to be paid late – and the receiver – as they present some difficulties in their treatment. Normally these invoices are from the invoice with purchase order circuit for the purchase of material goods (inventory).This causes most of invoice problems in companies.
Invoice problems
Invoices with purchase order
The circuit of invoices with order is the one in which there is an element against which the invoice data is compared. After this conformation / matching work, we see invoices with no differences and others with discrepancies between order and invoice or receipt of goods. Invoices that show no difference in this matching (either two-way: invoice vs. order or delivery note, or three-way: invoice vs. order vs. delivery note), will be recorded directly in the accounting and/or operational system. And invoices with differences will require exception processing, the complexity of which will increase exponentially depending on the number of lines.
In each one of the invoice lines there is information related to the order, delivery note, product reference, units, amounts, delivery date...This information is relevant and necessary when making comparisons. It is a lot of detail and requires a capacity for analysis and comparison.
Invoice problems: Electronic invoices, figitalization and OCR
With the use of electronic invoices or digitalizationand OCR (Optical Character Recognition) of paper invoices the invoice problems derived from the treatment of lines is reduced as in the first case, errors produced by manual data input are eliminated and in the second case they are minimized . However, with data extraction the problems with the invoice are not solved, unless one can count on automatic matching which can simplify these matching tasks. If the receiver does not have this technological capacity, the evolution of the process is impaired.
Automatic “matching” tools and “workflows”
For the invoice receiver, the more lines an invoice has, the more work for the Accounts Payable department, as the more checking that has to be carried out, the higher the probability that there is some type of difference and hence an incidence that requires an additional process. Therefore, the cost of processing these invoices is greater when the number of lines are greater. Therefore, the use of automatic matching engines and and workflows for resolving exceptions are indispensable in moving towards an efficient process in the processing of invoices with purchase order.
For the invoice issuer, practice shows that invoices are processed completely, that is to say, the invoice must be 100% correct for it to be registered and paid. Which of the two parties (buyer and seller) profits from an invoice of 400 lines being stalled because there is a mistake in one of the lines? That an invoice is 99% correct is not enough for it to be registered and paid.
The balance: two orders or less per invoice
There is, however, a number of elements to take into consideration in the two actors in the process, invoice system restrictions, cost savings in invoice issuing, invoice reception and processing costs, delays in in receiving payment and payment of invoices due to error...But from our experience in projects in all types of sectors, with companies of all sizes and cooperating with our clients both in the issuing and reception of invoices, we can state that the balance is normally obtained in the relationship: 2 orders or less per invoice, making the number of lines and delivery notes of said order less relevant.
This relationship implies limiting the operation to a specific commercial transaction, with a reduced number of participants (more orders, more buyers) and with a potential limited number of problems derived from a single or reduced number of orders. In the case of an exception, the process is more simple and in invoicing systems, it is usually a valid variable for the issuing of an invoice. Therefore, it is the best solution for both parties and that which normally presents less problems an invoice problems.
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