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Invoice handling for organizations

I find nothing more frustrating than when there's a problem with a simple solution and the impacted party doesn't fix the issue it boggles my mind yet that's what many companies do when it comes to some of their more common invoice problems not only does not fixing the issue create more work for the accounts payable group it impacts the organization's bottom line making the organization less profitable than it could be that is never a good thing in this V video we're going to look at three such issues and share The Simple Solution any organization can use without spending a red scent while it is rare that you can completely eliminate a problem in the accounts payable function we've got one that you can eradicate completely as one of my regular viewers did make sure you stick around until the end when I share exactly how they did that let's start with a persistent problem that seems to plague most organization approvers who don't review and approve invoices in a timely manner now when we talk about invoice approvals we're talking about both in an automated world and in a manual world even though manual today is kind of half automated when we talk about sending out for approvals with emails now if you've bought an invoice automation module that has automated escalations in it and that is where if the person doesn't get in and approve the invoice within the agreed upon time let's say five days the requirement is automatically escalated to their boss if you think that was the Silver Bullet that was going to end this problem once and for all well you're in my boat and we unfortunately were both wrong it has not eliminated the problem even though I thought to be honest that it would take care of it once and for all so it helps it might help a little bit but we're not seeing the golden return if you will that I had at least expected from it so yeah automated escalations if you're getting an invoice or accounts payable automation process definitely have that feature included but don't count on it to eliminate all your problems because unfortunately it didn't work that way okay so what else can you do the next thing that you can do and this is a biggie I've talk a lot of times about education being the cure for certain problems and when it comes to getting people to approve invoices in a timely manner this is one of them so what you want to do is get your cut off schedule and make sure you share it with everyone who has to approve invoices so for example if you do payments let's say Friday at noon and in order to be in Friday's payment run you have to have that invoice by let's say noon on Wednesday whatever it is but for my example we're going to say noon on Wednesday then publish that and make sure everybody knows that Wednesday noon is the cut off okay so that's one thing some companies also have had some success sending reminder notices and so if the cut off again using my example is Wednesday at noon maybe Wednesday morning at 9 or 10:00 an email blast goes out from the AP manager either to everyone in the company or everyone who might have an invoice that needs to be paid that says something like hey if you have an invoice that needs to be paid Mary Jane needs to have it by noon today something of that nature okay you may send it to everybody or you may just send it to people who normally approve invoices you'll have to determine that so now I want to talk about some changes that you should make to your standing operating practices if you will that will help get approvals a little quicker or at least we hope they will you know all this is by the way you know like a plan each thing helps a little bit some might not work in your organization some will work in your organization very well so the first thing that you want to do is what I call get tough on Rush payments if somebody comes down they have an invoice that has to be paid they didn't get it in on time and now they want you to do a rush payment you want to get tough with them I don't mean automatically saying no because it's going to make a lot of enemies but you want to have a conversation with them you might even say if they're always there this is the last time that we're going to do this some companies also require a third signature a second signature and I'm going to talk more about that so that if you normally have two signatures on an invoice in order to be paid now you'll need three okay so just get toughed with Rush payments you might also create or work on a list of what I call your special people people who are always down there with their Rush payment requests and see about sending them special reminders if you discover and this will only be in a few cases but if you discover some of your employees have adopted the obnoxious practice if you will of automatically forwarding your reminders to either their junk mail or to a special folder you might want to have a talk with them Andor their boss it's going to be hard for you to find that out though sometimes the special folder they have these emails put there so that they can go and look at them all at once and get all the approvals done at the same time which makes a lot of sense except if they never remember to go and look in the folder so you know they may have good intentions with that okay as we get ready to discuss some really ugly or aggressive practices I'd like to invite you to share how you address this issue and you can do that by posting a comment in the comment section below and now let's talk about some super aggressive and so I'm going to tell you what these super aggressive or I like to call them ugly practices are and you'll need to think about whether you want to do this or not okay you may not want to do that and and I call these a last resort so number one when you lose early payment discounts because somebody didn't approve the invoice on time you might want to calculate what that is and maybe at the end of the month publish that now before you do this I caution you I caution you make sure that the reason that discount was lost was because that person didn't approve it not because of some screw up in accounts payable because the last thing you want to do is put something out there like that it's going to make them angry they're going to do some research and you don't want them coming back saying you know I returned it you didn't whatever okay so make sure along the same lines Another Not So Nice practice is to report late fees so if you get charged late fees and you pay them you might want to calculate them and again report them by offending party but again make sure it's them and not you before you do it I have what I consider the best approach and this is only going to work in some companies but you can get some management help on this if if if somebody on your management team like ideally your CFO likes and understands the issue and wants to help you stop it in that case you can ask him or her if they will agree to you implementing a new practice that requires their signature in order to get the rush payment so if Norm let's say you have two signatures whatever you have they need to go and explain to the CFO and get his or her signature when they go and ask then the CFO hopefully will give them a hard time why is this delayed what happened why didn't you get it approved on time and pretty soon in fact maybe even before you start nobody wants to go and ask for this so all of a sudden you may find better compliance or these rushes that they were asking are not really rushes so then you you won't have to deal with that in accounts payable that you do want to ask about when they need it because sometimes they think it's a rush payment but it's not actually a rush now let's take a look at an issue that has exploded in recent years leading to more wasted time and an increase in those dreaded duplicate payments suppliers who send multiple copies of the same invoice the rise of suppliers sending multiple copies of the same invoice has become a top concern for those managing or working in accounts payable process step number one set the stage provide precise instructions on where vendors should send invoices this might include when you first start the relationship be it in a welcome letter or welcome package or in your annual letter now if you don't do either of these things consider including a note when you send an email requests for the W9 try and set them straight right at the beginning right off the bat so that there can be no misunderstanding and when we talk about telling them where to send the invoices and you know the centralized location it should be one email address one fax number and one postal address and that each of these should be very specific so for example with email you don't want them just sending it to any email you want them sending it to an email address that's something like accounts payable at ABC company or invoices at ABC company this way um if somebody's out or somebody lead leaves you're not do with an issue where invoices are in an email account that you can't get into and of course your postal address should be very very precise now of course you can also have a portal for your vendors to deliver invoices to you and we need to mention that step number two to getting rid of these horrific duplicate copies of the same invoice pay on time the reason for this is it doesn't give your supplier a legitimate reason for sending a second copy if they don't get paid by the due date they are well within their rights to send a second copy of that invoice in an attempt to try and get paid so don't give them that opportunity pay on time I'm not saying pay early but I am saying if you've agreed to 30-day terms pay them in 30 days don't decide well we'll try and get a few extra days and we'll pay them in 40 or 50 days because once you do that they're going to send that second invoice and that's more work for your staff and that's going to negate some of the savings that you've got from your cash flow enhancement by paying a little bit late step number three identify those vendors who regularly send you more than one copy and by the way you might also identify those vendors who not only are they sending you a second copy of that invoice but they're changing the invoice number because that's going to require some extra checking and that's another way that a duplicate payment can get made but anyway you're going to identify those vendors who are sending more than one copy and then you contact them and ask them to stop some will and unfortunately some won't you can make this first attempt at asking you know to only send one copy and telling them exactly where to send it by email and you know you'll be successful in some cases but where you aren't and it will happen we have to go to step number four and that means actually picking up the phone and calling those who persist in sending multiple copies of the same invoice now you're going to ask them politely because you know you want them to do what you're going to do and again just like before some will and some won't now to be honest many of these companies who are sending multiple copies of the invoice that is their process so you calling them up and asking them to stop is not going to change anything because that's their process and they're not going to change it just for you but you still you want to try and if they persist you might tell them that if they're going to continue sending all these extra copies of these invoices that they're going to go on the list of vendors who require extra verification because you have to protect your organization and you have to M make sure that you don't make a duplicate payment and you might tell them that you know going on this list um could delay their payment and that that goes right against what they're trying to achieve by sending the second copy step number five repeat step number three and number four some vendors who do stop sending the duplicates will resume that'll practice after a few months and you'll have to get on them again and then in other cases you'll have new suppliers who come on board and it will be their process to send multiple copies so you want you want to also make sure that you stop them there are Consultants who are now advising their clients to send a second copy of that invo on the invoice date or a few days before the invoice date they have some convoluted reasoning that they think this second invoice will remind their customers that the payment is due and will prompt a payment now unfortunately what this does is create extra work for you and personally although I can't prove this I think that some of these companies who are sending these second copies at this last minute like this or hoping that you'll make a duplicate payment before we get to the last issue the one that you can really eliminate if you're getting value from this talk I'd love if you'd hit the like or the thumbs up button it sends a message that you're getting value from this talk and I should make more like it a personal thanks from me to everyone who has done that and now let's look at one of the few problems that can actually be eliminated remember I'm going to show you how one multinational organization operating in the US achieved that goal invoices without a purchase order number how much time does your accounts payable team waste trying to figure out who approved an order that comes in without a purchase order number or the name of the person who placed the order what if I told you there was a way to completely eliminate that headache this is what typically happens an invoice comes in it comes into accounts payable they need to send it out for approval problem is the invoice does not have a purchase order number on it nor does it have the name of the person who placed the order now one of two things things it could be fraudulent but let's assume it's not or you could have to figure out who approved it and I can't tell you how many companies I've seen different personnel and in one case actually the controller go around from office to office trying to figure out who ordered this and who should approve it a complete waste of time not really a good use of human assets when they are at a premium so here's what you do you create a standard form letter or it can be an email also I'm going to say letter but I also mean email when I send this the wording goes something like this Dear Mr Miz vender in order to get you paid in a timely manner ABC company that's your company's name requires that every invoice have either a purchase order number on it or the name of the person who placed the order and then you send it back to them when they get it back they'll include that information return it to you and you can pay it without having to waste time running around doing this nonv value ad gu now you may be sitting there thinking oh that would never work at our company I don't think so Mary will this work I shared this one day in our free easing I shared this tip and I got a note back from one of my readers and she said to me I'm so glad you put this in she said this is what happened at our company they were a Danish company I believe and she said the management from Denmark came to the company and told them they were going to do this and she said no no no no no that wouldn't work that wouldn't work and they went back and forth and she kept saying to them no it will not work in the United States we don't do that in the United States but they overrode her and they sent it out and she was so adamantly against this she said that they sent the letter out without her signature on it without her name anyway the letter went out and she said three months later guess what they're not getting invoices without invoice numbers or purchase orders that's right they got everybody in line in three months you can do the same as you can see from the discussion of these three problems and there are a lot of other issues a good understanding of invoices and invoice processing is critical if you want to have a successful accounts payable operation that's why we recently put together a concise compilation of the invoice information you need to achieve that goal you can watch it right now using the link that has appeared on your YouTube screen and is in the description good luck