Do You Receive Multi PO Invoices? Why?
Part 3/5, Alan is asking you; do you receive multi PO invoices, and if you do why?
Join Alan Brown, senior sales consultant @ ITESOFT as he talks through the third part of our 5 part series: 5 things to remember when detailing your AP processes.
For anyone involved in an Accounts Payable automation project, or is thinking about getting started these sessions will give you some actionable insights to help.
Watch the video, listen to the podcast or read the transcript below.
Part 3 of 5.
Don’t forget to like, subscribe, rate & review!
Do You Receive Multi PO Invoices? Why? The transcript.
Welcome back to the 3rd session in this series with ITESOFT Insider View.
My name is Alan Brown, I am taking through this series.
We are starting off this series on the 5 things to remember when you are detailing your AP processes.
This week, this session, we are going to be talking about receiving multiple PO invoices and why?
Focusing on multi PO invoices
There is going to be, in this session, a few more questions about what is happening that I’m looking for you to take away to challenge internally about how you are currently operating your organisation.
This is all about getting information down, essentially, on a piece of paper that has a level of detail to it.
We are focusing on PO invoices.
Most organisations have a level of purchase orders within their organisation.
They will receive, in a lot of cases (let’s say 50/50 split) where they get 1 PO and 1 invoice coming in to match that purchase order.
There are, in certain specific industries, the situation where they will receive multiple PO invoices and as a by product of that it causes an increasing level of frustration within AP departments.
How do they deal with these?
How do they manage these?
Existing PO processes
When we are detailing your existing process, then at the start of the project we are looking to find out certain information.
And really drilling down into each of these aspects of it.
So, from your point of view.
Do you receive them at all?
If you don’t receive multiple PO’s and invoices, then that’s fine. You can essentially forget about this segment of the series.
But if you get a small proportion lets carry on. Because why are you receiving them like that?
Who benefits from multi PO invoices?
Who benefits by you receiving them the way that your supplier is currently sending them in?
Especially if you are getting frustration in your AP team! How is that helping your AP team?
When you are getting the purchase orders and receiving multiple PO’s on one invoice coming through that’s creating more problems for yourselves.
This means it is going to need more time and have more cost associated to it.
Do you know why you are receiving them like that?
Has anyone ever questioned them?
And more importantly, what are the workarounds that you have in place?
Is it just for one supplier, or is it for multiple suppliers?
Establish how many you receive
How many of the invoices that you get, as a proportion overall, is it the 80/20 rule? 80% of your po invoices coming in are absolutely fine and 20% are multiple PO invoices coming in on one invoice?
Or is it much greater?
I have come across organisations where they have it, could be the complete flip of that, 80% of the invoices that they have coming in come in as multiple PO’s on the one invoice. This creates huge amounts of issues.
Are they really necessary?
Are they really needed within your organisation to be delivered to you in this way?
The reason, or part of the reason why I throw this question out to you is; have you actually spoken to your vendors and asked why they are sending these types of invoices to you?
Understanding the problems with these invoices
Are your vendors aware of the problems that it potentially causes you?
Have you spoken internally with your AP team to be able to understand how much time they take to handle these invoices?
And is it daily or weekly basis? Is it only at certain times of the month that this happens?
Then we are looking at what are the impacts this has, not just within AP, but what is the impact into other parts of the business to process them?
We re talking about some of the fundamentals here that will ultimately go into your business case for automation or a different process.
It will be things like time, how much time is dealt in the business dealing with these multiple PO’s that come through?
We don’t know, currently, how you are going to be dealing with this as a business. Or what sort of cost are associated to it.
One of the things that we come across with this is that cost is a relative term.
Handling discrepancies on multi PO invoices
Do you, if you have a discrepancy, or a problem with one of the POs on that invoice, does that impact any of the other invoices or PO’s that are on that invoice?
Perhaps you just ignore that one discrepancy and decide to deal with that later.
That then means that you have other aspects that need to be dealt with that haven’t been previously considered.
What happens to payments as part of this? Or even any payment delays that may happen?
Does that whole invoice with multiple PO’s get delayed? Or is it just that one PO that gets delayed?
I generally find that most organisations haven’t thought that through well enough or have a policy in place, unless there is some pressure n the business that explains why it will be pushed through faster and harder.
Specialist teams in AP
A lot of organisations, when they are receiving these, multiple Purchase Orders, how do you break this down internally?
Perhaps you have a specialised team within AP that will deal with this.
It’s a bit like when a supplier sends through a statement, does that go to a specific team?
Do you have people skilled up for that?
Because if you have people skilled up for that, what happens when that person is off ill, or on holiday. Then you need to have multiple people skilled up.
Why do you need to be dealing with this in the first place?
Being able to detail this and have the visibility and understanding at a reasonably low level of what happens, why it happens, how often it happens, is really important.
Involve all the stakeholders
This helps you to also bring on board your AP team to be able to talk through, in detail, what happens.
And get them to buy into what you are trying to do outside of just automation.
It could be about a change of process or a change of standards that you ate putting in place.
I touched on looking at automation when you are looking at automation of the AP function.
And this is fundamentally one of the things that ITESOFT provides as an organisation.
These invoices cause a real issue and potential blockage within the organisation. They can even result in a project failing to meet its business case.
Therefor, why would you set yourselves up, potentially, for a failure?
Without taking some of these aspects into consideration.
You could deal with this at from a supplier perspective, an automation perspective, or a combination of both.
What we are looking to able to deal here is detail it. You can then demonstration internally higher up the chain that you have gone into detail.
You are able to communicate this meaningfully that says: this is why it is a problem. Or perhaps, this is why it isn’t a problem because it doesn’t happen often enough.
Recap of the questions we are asking
I am going to finish this session now; I have left you with lots of questions today to deal with.
Lets just do a quick review:
Firstly, do you receive multiple Purchase Order invoices?
Do you know where and how often that happens?>
How many invoices is it that you get?
How many vendors does this cover? It could be all; it could be a very small segment.
Why are they necessary within your organisation and what is the cost, I am talking about the impact, on the business to eb able to process these in an efficient and effective manner from the AP perspective? Time. Cost. Etc.
Guys, I would love to hear your feedback on this at some point.
Thank you for your time.
Have a great day.