Let’s face it; no matter how advanced your accounts payable function is, at the end of the day, its primary responsibility is to process invoices, and to process them efficiently in a cost-effective manner. This means making as few mistakes as possible. In this session, Mary S. Schaeffer, a nationally recognized accounts payable expert, will tear apart the invoice processing function and identify common mistakes made repeatedly by many organizations. She’ll share solutions (including low and no-cost options) any organization can use to strengthen its processes so the same mistakes are not made over and over again – eating voraciously into the bottom line. While we hope no organization will have all the problems identified, we’re fairly confident most will have at least one or two.

1. Invoice Processing in
Accounts Payable:
Start the Year Strong
Mary S. Schaeffer
Accounts Payable Now & Tomorrow

2. Agenda
O Background: Invoice Processing
O Best Practice Processing P2P
O Reality
O Step by Step
O Potential Problems
O Fixing broken controls
(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 2

3. Background of the Control
Issue in Invoice Processing
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4. Overview
O Start with the basic issue in accounts
payable
O Processing Invoices
O Control is all in the details
O Not a big picture issue
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5. When the details are ignored
O Duplicate payments
O Other erroneous payments
O Charges the vendor was supposed to pay
O Fraud easier to commit
O Inaccurate accruals
O Inaccurate financial and accounting records
O Remember: Your employees know where the
weaknesses in your system are
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6. Keep in Mind
O Many of the problems eliminated by
automation
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7. Dissecting the Invoice Handling Process:
How the Process Should Work
When The Invoice Arrives
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8. The Ideal World: Part 1
O Invoice arrives in accounts payable
O Invoice is sent out for approval (or approvals
done online)
O Approval comes back promptly
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9. The Ideal World: Part 2
O The three-way match is completed
O No discrepancies
O Invoice is scheduled for payment
or
O If there are discrepancies
O Discrepancies resolved before payment date
O Invoice scheduled for payment
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10. The Ideal World: Part 3
O Payment is made on the due date
O Note: Late payments create additional
problems
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11. A Word about Late Payments
O The Where’s My Money Calls
O The Second invoices
O Frayed vendor relationships
O The duplicate payment
O The honest mistake that leads to fraud
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12. Dissecting the Invoice Handling Process:
The Reality
When The Invoice Arrives
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13. Receipt of Invoice: Some Problems
O The floating invoice
O The invoice addressed to no one
O The invoice sent to the wrong person
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14. Invoice Receipt
O Ideally centralized – one location
O One postal address
O One email address
O One fax number
O Used only for invoices
O Semi secluded spot – avoid tempting others e-
fax facility
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15. If Invoices Sent to Purchasers First
O Possible approval delays
O Increase the chance of getting a second invoice
O More work for AP
O More he said, she said games
O E-Invoicing ends these problems – especially if
automatic escalations are included
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16. Invoice Processing
O Standardized process
O Naming convention - rigid
O Some go as far to standardize the way the
desks are set up
O Probably the best control against duplicate
payments
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17. The Accounts Payable Policy
and Procedures Manual
O Written
O Detailed
O No detail too small
O Updated regularly
O Reviewed annually if no updates
O Shared with everyone who might need t
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18. The Policy and Procedures
Manual
O Reference Guide for existing processors
O Important for those once-a-year tasks
O Training Guide for new processors
O Relevant Excerpts shared
O Cut-off schedules
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19. Invoice Number Control
O “Our system won’t allow us to enter
duplicate invoice numbers”
O Doesn’t provide the control you might think
O Don’t rely on it – exclusively
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20. Invoice Numbers
O Pay close attention to
O Almost as important as dollar amount
O If invoice processing is automated, this is
not an issue
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21. Invoices without Invoice
Numbers
O Create a standardized routine that will
create a unique invoice number
O Never use TINs as part of it
O Using the date can be problematic – except
perhaps for phone bills
O New Best Practice: Return it with a polite
letter
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22. Invoices w/o PO #
O Invoices without PO # or name of
requistioner
O Make PO# or name of requisitioner a
requirement
O Return with polite letter “in order to get
vendors paid in a timely manner”
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23. Disputed Invoices
O Identified
O Tracked
O Monitored for status
O Keep track of who is responsible for resolving
O Age the disputed invoices
O Who’s got the oldest invoice
O Report to management
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24. When Disputed Invoices Are
Ignored
O They don’t get handled in a timely manner
O AP’s reputation takes a hit
O Avoid the black hole reputation
O These invoices often get paid twice
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25. Disputed Invoices: Reports
O Sort by processor, purchaser, vendor, locale, etc.
O Identify problems
O People
O Processes
O Vendors
O Evaluate
O Train and retrain
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26. Invoices Arriving at the Last
Minute: Part 1
O More a problem in a manual set up
O Rush payment request
O Full backup???
O Sometime missing
O Often requests for return to requisitioners
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27. Invoices Arriving at the Last
Minute: Part 2
O Returning checks to requisitioners and Rush
payments – leading cause of duplicate
payments and potential fraud
O Poor practices
O Is the three-way match completed?
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28. Invoices Arriving at the Last
Minute: Part 3
Best Practices
O Never return check to requisitioner
O Find ways to minimize these transactions
O Make payments by ACH rather than check
O Insist on full backup
O Either at the time the request is made or
O Within the next few days
O Extinguish PO and open receiver
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29. What if There’s No Backup
O Process the payment
O Follow up and get backup afterwards
O Don’t forget, extinguish PO and receiver
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30. New Issue: Invoices Sent Twice
O Invoices e-mailed or faxed
O Vendor wants to make sure it was received
O Sends by snail mail
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31. Dealing with Duplicates
O Identify vendors likely to send twice
O Ask them not to
O Develop an ACT (Always Check Thoroughly)
list
O Automate invoice processing
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32. Payments
O Efficient payment process translates
O Early pay discounts earned
O Avoid late fees
O Schedule payments so paid on time – not early
O Ideally – one payment vehicle per vendor
O Use best vehicle
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33. Best Practice Mission
Statement for AP
O Pay the right amount, to the right vendor at the right
time
O Lowes Home Improvement
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34. How Invoice Automation
Helps
O Human keying errors eliminated
O No processor playing games
O Faster processing
O Invoices sent for approval automatically
O Clear audit trail and hence
O Faster approvals
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35. Questions/Comments
Share your thoughts and insights with
Mary Schaeffer by writing her at
marys@ap-now.com
 Sign up for her free weekly ezine at
www.ap-now.com/ezinesignup.html
(c) 2013 CRYSTALLUS, Inc. and Mary S. Schaeffer 35

36. About Mary Schaeffer
Editorial Director & Publisher
CRYSTALLUS, Inc. publisher Accounts Payable Now & Tomorrow newsletter
• Editor-at-Large CFO Publishing’s Learning Pro: AP Edition
• Nationally recognized accounts payable expert and consultant
• Frequent speaker at seminars, conferences and online events
• Regular contributor to the AICPA’s Corporate Finance Insider
• Creator of Institute of Financial Operations Accounts Payable
Innovation Certificate program
• Writes a free weekly e-zine, e-AP News
• Author 16 business books including the Do-It-Yourself Accounts
Payable Consultant
• M.B.A. Finance, NYU
• B.S. Math, York College
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