Streamline Your Purchase Orders and Invoices for NPOs

Purchase orders and invoices for NPOs

do you know the difference between a purchase order and of course the corresponding purchase order number and an invoice and the corresponding invoice number do you know what the difference is and what each is used for purchase order numbers and invoice numbers are two numbers used for several different functions in the procure to pay and accounts payable space and they are very different it is critical that everyone involved in these functions understand the basic difference between a purchase order and the purchase order number and the invoice and the corresponding invoice number sadly not everyone does these critical determinants are key to an effective and efficient processing of an invoice purchase orders without po numbers as we sometimes call them and invoices without invoice numbers are not acceptable and even a a basic accounts payable function or an accounting function you need both make sure you stick around until the end when we share one invoice number dilemma many might not not even be aware that exists today hey guys I'm Mary Schaefer founder of AP now the place where we curate the latest business intelligence for those folks who work and manager have responsibility for the accounts payable and or payment function now let's get started with the purchase order since that is the document that is created first and ultimately triggers the invoice a company the customer creates a purchase order to basically place the order it should contain all the information the supplier needs to fill the order so what will indicate what is being ordered how many what the price is and any other terms and conditions once it is accepted the supplier fulfills the order ships the goods and then creates an invoice to bill the customer and hopefully get paid this is where the purchase order number and the re invoice number come into play in most organizations of any size the company will have many orders the way they differentiate one from the next is the purchase order number which is frequently referred to as PO number this identifier helps them locate the order and the details related to that order as well as identify who placed the order if there's a problem or for other reasons hence it is critical that when a supplier creates an invoice to build a custom of a good sense they include that purchase order number on the invoice this helps the accounts payable person identify who they should go to to get the invoice approved for a payment and let's face it you want if you're creating and sending invoices you want to get get paid as quickly as possible thus it behooves every supplier to include the purchase order number on every single invoice they prepare while this may seem pretty obvious you'd be surprised just how many invoices are sent without a PO number on them I'll include a link in the description which describes how you can completely eliminate this problem and I have to tell you it's pretty rare that I say you can completely eliminate a problem in accounts payable but I've got the proof here and that's in that video so when you finish watching this you can click click on that or I hope you will if you looking to completely eliminate this problem in your organization okay now let's move on invoices on the other hand are a fancy way of saying bills although to be fair invoices often have a lot more information on them than the bills you and I receive in an ideal world one by the way which none of us lives the information on the invoice would match exactly with the invoice on the purchase order the invoice contains the detailed information about what was ordered and shipped and shows the amount of money supply is expect to receive from the customer now perhaps you've heard of something called the PO flip this is where the supplier takes the purchase order and flips it and creates the invoice from that uh that again assumes that everything goes perfectly and we don't see that happening that frequently so we will have to deal with the possibility the very likely possibility that some of our invoices are not going to match the purchase order now it'll probably come to no surprise to those listening to learn that not only does every purchase order need and a number and a unique identifier if you will so do invoices it's different from the PO number and and no you cannot use the PO number um as the invoice number I I know a few small companies who have taken that approach and nope not a good idea this obviously helps the supply attract payments but there's also a huge help to the customer when they're processing invoices as well accounts payable departments will use this in their first attempt to weed out duplicate invoices and it also assists them when they are trying to avoid duplicate payments or identify them today some organizations will not accept an invoice without an invoice number this is not a huge problem to be perfectly honest and I can't remember the last time I heard someone complain about it even the smallest suppliers know enough to put an invoice number on an invoice and it's fairly easy to do although neither the invoice number or the purchase order number you used directly and that all important three-way match done to make sure payments are create correct they are critical in seeing that the right documents are identified and used for that purpose the invoice is so important when it comes to efficient and effective processing of an invoice that many Erp systems will not and accept an invoice with an invoice number that has already been used obviously invoice from the same supplier this is one of the many reasons that some organizations do not permit partial payments against a purchase order while this may seem to be the Silver Bullet if you will when it comes to avoiding paying invoices twice it has not turned out that way for start is for it to work a hundred percent of the time processes would have to can the invoice number correctly and that doesn't always happen let's face it they are more concerned about getting the dollar amount right and the PO number right and I would be as well if I was processing invoices also and I'm loathe to share this with you today but is the reality of the world we live in more than a few invoice processes and organizations where erps will not accept a duplicate invoice number have figured out a way around it they know by adding a DOT a space a letter um to the end of the invoice number they can force it through which of course is not what you want them to do the other reason that invoice numbers don't uh uh don't offer the total protection against duplicate payments that you might hope is that occasionally supplies will change the invoice number when they send a second invoice as you might imagine this raises all sorts of additional headaches and of course we have some solutions for you on this as well we recently did a talk on it which you can watch right now on YouTube with the link that will appear on your screen and is also in the description below as always I appreciate your likes you subscribes your comments and your shares they mean the world to me