Vendor payment is one of the final processes in the purchase to pay cycle. When an organization orders goods or services from a vendor via a purchase order and these goods arrive, the vendor will then issue an invoice to the organization, requesting payment. If the details on the invoice match the goods or services received, payment is then sent to the vendor.
The typical process of paying a vendor or supplier begins at the arrival of the invoice at the door of the organization that had received the goods or services on credit. The method of arrival could be via email, postal mail, faxes, etc. As soon as the document arrives, the accounts payable clerk is saddled with the responsibility of verifying the document to make sure that it is indeed an invoice. When the document has been verified to be an invoice, it is then sent to the accounts payable department to review the quantities, prices, as well as the terms and conditions stated on the invoice.
If any purchase order was involved when placing the order, the accounts payable department ensures that what was ordered via the purchase order corresponds with the goods received and also tallies with what they are being charged.
If there is an issue or discrepancy between these document such as wrong prices, omitted items, damaged goods, you name them, payment is withheld until the issue is rectified.
Once the issue is rectified and the invoice approved, it is then sent to the accounting system for payment to be made according to the agreed terms and conditions.
The invoice should only be signed and approved by someone in the accounts payable department who is authorized to approve invoices for payment. The approver must print his or her name and signature on the invoice. An invoice that exceeds a certain amount may also need the approval of the CEO as well.
Once payment has been sent, the invoice should be stamped or perforated to a avoid duplicate payment.
Finally, a copy of the cheque that was issued is then stored in the paid invoice file.
Late payments and duplicates are the major challenges associated with manual vendor payment processing. On the bright side, automation tackles these challenges and increases the overall efficiency of the vendor payment process.
Automation significantly reduces the time needed to process a vendor’s invoice. Payables are routed automatically according to your configured workflow on the automation system. This means that no member in your vendor payment workflow will ever waste valuable time searching for an invoice or seeking what tasks need to be done next.
Additionally, the issue of a misplaced vendor invoice becomes a thing of the past when you implement automation.
Automate your vendor payment processes and you will never be in danger of overpaying an invoice or mistakenly paying an invoice twice.
Automation also eliminates the incidence of making late payments if a staff member overlooks a due date on an invoice.
The automation system will alert you to overpayments, duplicates, and also remind you of all pending due dates.
By eliminating physical approvals, automation allows staff members of the vendor payment workflow to collaborate on any particular payable in real time. Irrespective of their locations, every staff member of the workflow can simultaneously have access to the payment document to either confirm it, seek clarification, dispute charges or explain discrepancies – all with just an internet connection and the click of the mouse.
An automation system allows you to tailor your accounts payable workflow to fit the exact needs of your company. For example, you can route payment above a prescribed amount to employees with the right authorization, and also balance accounts payable staff workload.
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