CHAPTER 2: UNDERSTANDING YOUR B2B CUSTOMER’S PROCURE TO PAY PROCESS (P2P)
2.4 The Perfect Invoice
The perfect invoice is one that is paid on time. In order for the invoice to be paid on time it is imperative that you understand your customer’s accounts payable process. AP usually wants to pay on time, but the process is cumbersome. In the last few years, AP has made strides in getting suppliers to send invoices electronically, since they cannot control where paper invoices travel and how long it takes for AP to receive the paper invoice. Notice in the chart below that AP receives an electronic invoice in one day versus between one and 280+ days with a paper invoice! However, if sending a paper invoice via the mail, (we cannot say this enough), make absolutely sure that the “Bill To” address is the accounts payable address so it can be received in 1-5 days.
AP’s Invoice Cycle Time Send invoice electronically to greatly reduce time it takes for AP to get invoice
Ages to Due Date
EDI, e-Invoicing, ERS
One Day
Ages to Due Date
1 - 280
Day 1 - 3
Day 1 - 200
Index Key Fields
AP Processor
Mail Rec’d
Sort Mail
Scan
Resolution Payment
Vendor Master File Updates
How OLD are the invoices? Days, Months? Where were they sent… to the requestor or AP?
Largest bottleneck: Receiving the invoice When does the clock start? Date of invoice
FIGURE 4
Many customers’ AP departments are using a document management system to convert paper invoices to an electronic format for automated routing and tracking of the invoices. They prefer the invoice to be printed on white paper with black ink to ensure the image is perfect. Many of these systems also provide a supplier portal so AR can look up the status of each invoice along with payment data. To pay an invoice on time, the customer’s AP department also requires the following specific information on the invoice, whether paper or electronic: 1. A unique invoice number: a numerical code that identifies a particular purchase. This is the most important item, because the AP system requires an invoice number as a required key field (40 percent of invoices received by AP do not have an invoice number). This is also a tax requirement in VAT countries. If possible, avoid using an “A” as the first digit in the invoice number, because Acknowledgement Invoices begin with the letter “A” and
32
THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
Made with FlippingBook - Online catalogs