Invoice matching is a fundamental function in any Accounts Payable process. The intent is to avoid overpaying, paying an incorrect amount and perhaps even fraudulent invoices. “Matching” is an activity that takes place during the invoice approval process.
Invoices are matched to purchase orders (2 way matching), as well as receiving information (3 way matching), and comparisons are made regarding things like quantities, price per unit, payment terms, etc. If something doesn’t match a hold is placed on the invoice and payment will not be made until the issue is resolved.
Nearly all organizations experience the pain associated with manually processing and matching invoices. The process typically goes like this:
1. An invoice is received, sorted and passed to the relevant staff members for processing. Incoming invoices are received in multiple formats — through the mail, via fax and as e-mail attachments; each format with its own paper-bound inefficiencies.
2. Supporting documentation such as the delivery note and the purchase order must then be collected, and in most cases is documentation is manually retrieved.
3. An invoice is then matched to this supporting documentation manually. Clerks literally ‘stare and compare’ to verify invoice data against the PO and delivery ticket, making three way matching a highly time-consuming, error prone, and costly process.
4. If the invoice needs to be approved (which is often the case) it must go through another review process. This often involves manually passing the invoice to management staff, who may or may not be available, compounding both the inefficiency and expense.
All of this takes time, money and effort to manage and can cause you to lose early-payment discounts. Ultimately, inefficient and languid invoice approval and payment can erode supplier relationships over time.
How can organizations overcome these challenges? One way is to automate with invoice matching software. Next generation solutions eliminate many of the inefficiencies by streamlining and automating the invoice matching and approval process. Here’s how it works:
Document management systems electronically capture and store all supporting documentation including purchase orders, delivery notes and other documents as needed. Some systems even provide notifications and alerts if any of these documents are missing.
Document imaging and data capture systems receive and digitize incoming invoices, either through physically scanning paper invoices or by accepting fax transmissions or e-mail attachments.
In this way, all required documentation is now part of an electronic workflow where automated data capture systems intelligently extract the important information from each document and validate it according to a pre-defined set of rules – matching numbers, amounts and terms based on any number of criteria.
Invoices can then be routed around the organization as needed for exception handling and authorization. By automating invoice matching, accounting staff only need to be involved in the process as needed for exceptions and issue resolution.
The key benefits of automating with invoice matching software include reducing the time and staffing required for the process, speeding the authorization and payment of invoices, and boosting eligibility for early-payment discounts from suppliers.
As an added benefit, setting benchmarks, tracking performance, and identifying bottlenecks through advanced reporting tools and dashboards that accompany the AP Automation system can greatly improve visibility and enhancement of the process.
Ready to move forward? Look for solutions and partners that provide the right mix of experience, vision, and advanced capabilities that leverage the full value of the invoice matching software to automate and improve your AP processes.