Generally, in the process of purchases with purchase order, there isn’t an invoice approval cycle as normally there is a prior approval/validation of the order and segregation in the reception process functions. In the processes of invoice with order, as we have indicated in a previous entry , the accounting of invoices is normally after matching – two or three way matching.
However, in the processes of general costs where there is no “formal” order it is necessary for the goods or service to be accepted.
Invoice Workflow: Electronic approval for Invoices
Currently the manual approval processes are in disuse due to their elevated operating costs, their slowness and the control deficiencies that they present. The use of invoice workflow tools is the best option when it comes to automating the process of invoices without order.
The improvement in the process should cover all the steps, from the account coding to the document recording in the ERP, including the acceptance.
Recommendations for the electronic invoice approval process
So that the electronic approval is effective as possible the following considerations should be taken into account:
- Approval criteria. Not all invoices follow the same approval criteria, for example, a general costs invoice normally is approved in the location of the cost centre that incurs the cost, while an assets invoice is normally is approved by the nature of the asset. For this reason the configuration of the approval rules should allow for multiple criteria, some of which come from the information contained in the invoice and other external sources or from prior stages on the process, such as in coding.
Within these criteria we can highlight: bank account, nature of cost, cost centre, invoice amount, reason for cost, provider, applicant, department, etc.
- Invoice Validation. The person responsible for authorizing the invoice is not always the person who is best to judge if the services offered meet those agreed. It is recommendable that there is the possibility to include validation officers, either static or dynamic when necessary, that certify that the invoice is in line with the service given. A validation officer is an actor whose participation is neither obligatory nor binding.
- Approval hierarchy. It is common that the internal approval policies are complex and vary depending on the nature of the task, amount, etc. To cover all these situations it is essential to be able to configure rules with parallel approval levels, sequential, joint and group approvals. Additionally, the possibility to count on the a delegated approval function (in the name of) is very useful as a backup of the main process participants when it comes to covering possibilities such as unforeseen absences and vacations.
- Event traceability. From an auditing point and as an advantage in terms of improving internal control it is necessary for each of the events through which the invoices pass throughout the process are registered with a time stamp and the person responsible for it
All these recommendations may not be valid or may become obsolete if your configuration is complex. When choosing an invoice workflow tool, the difficulty of adapting to organizational changes and whether the configuration of the tool requires technical/computer knowledge should be taken into account.
The simplicity of configuration and the fact that changes can be made by "non-IT" personnel should be one of the points to be taken into account.