Increased Control with Accounts Payables Workflow
When creating an efficient accounts payable department, deciding which functions to improve first may often prove a difficult task. If there is no approval process for invoices, they won’t be properly received. Implementing an external AP Workflow by itself is often costly without electronic invoice savings. When improving accounts payable functions, it is essential to implement both electronic invoicing and payables workflow at the same time.
When determining how to improve AP processes, one may think it would be a good idea to require a purchase order for every invoice instead of implementing invoice workflow—however, this is simply untrue. There are many inefficiencies in an all-PO organization. Services are requested, provided, and invoiced—then it becomes a hurried messy process of creating a purchase order after the fact. This can cause riffs between you and your suppliers, and is much more work than simply approving an invoice per payment controls.
When automating payables, you need to accommodate the matching of PO invoices as well as the routing of non-PO invoices. However, selecting and setting up an automated invoice workflow system for users outside your payables department can be a daunting task. When looking for effective invoice workflow systems, it is essential that they offer the following functionality:
Entry points based on invoice information.
Invoices need to first be routed to the person in your organization who requested the service. Any workflow system that sends invoices to accounts payable is a waste of money. The whole point of automating your payables workflow is to eliminate effort in payables, not just change from one effort to another.
Non-AP Coding with memory and defaulting.
With the right system in place, the original requestors can be easily taught the few values they would need to code their own invoices. When the AP workflow system remembers their most commonly used values and automatically populates them based on a confidence interval, it makes it even easier to transfer coding efforts to requestors.
Routing based on hierarchy.
After the initial entry point approver (requestor usually) has approved/coded the invoice, the invoice workflow system should route based on hierarchy and approval limits. So, if an AP employee has an approval limit of $5,000 and reports to their AP Manager, an invoice for $7,500 should automatically route to the manager after the employee approves it. Hierarchy is important in enforcing payment controls. If a system simply asks the approver if they want to forward the invoice for any more approvals, it is not enforcing the payment controls and the payables department is going to have to enforce the payment controls manually.
Routing based on business rules.
Hierarchy should cover a good portion of payment controls, but there are often exceptions or special rules that need to be accommodated. The best AP workflow systems can offer invoice routing based on any available information, as well as special approval limits. For example, if an AP Manager oversees a specific project and normally has an approval limit of $15,000, for invoices pertaining to this specific project, he may be granted an approval limit of $25,000. Meanwhile, the controller is concerned about marketing expenses for the specific project, so a special rule is created requiring her additional approval for any invoices over $5,000 that are coded to that specific project and the marketing account.
Smooth running features.
An extremely efficient workflow system will include features such as vacation re-routing when certain approvers are gone, as well as automated escalations when approvers haven’t approved invoices within the allotted time. Implementing features such as these will make for an effective accounts payable department—and may even earn you some kudos!
Automating your accounts payable processes shouldn’t be stressful or cost you more money. Check out how your department can increase control over your processes from start to finish, and give us a call if you want any help.