CloudX Blog

Accounts Payable Automation & Optimal Non-PO Invoice Processing

Posted by Chris Cosgrove

Jun 18, 2013 1:51:00 PM

 Accounts Payable automation abides!

The Dude Abides


Perhaps one of the most hilarious movies to come out of Hollywood in the late 90’s has to be the Coen brothers’ The Big Lebowski.  In this classic opening scene the raspy southern twang of Sam Elliott lays out a grandiose tale of the hero (or should we say anti-hero), Jeff “The Dude” Lebowski amidst the song the Tumbling Tumbleweeds from over half a century earlier.  It’s beautifully laid out and a great metaphor for how Lebowski lived his life and how events blew him around…and for the purposes of our conversation today around Accounts Payable Automation Answers, directly on point for how most businesses handles their Non-PO based invoices.


The Challenge of Non-PO Invoices without Accounts Payable automation


Non-PO invoices are defined as invoices that are received (or originated) without an underlying Purchase Order in place prior to the sale of the goods or services being invoiced.  With that said, from a processing perspective there are two fundamental components that have to be addressed in order to book a Non-PO invoice transaction.  They are:

  1. Approval – Non-PO invoices must be approved by the issuing authority (or authorities based upon the escalating dollar amounts and most businesses’ approval matrix).  This is typically done by getting a physical signature and date (for manual AP processes) or electronically via a workflow solution (for the smarty pants who have invested in those).
  2. General Ledger Coding – Every expense that an organization has to account for must be accurately booked into the proper expense codes for compliance and audit purposes.  As such, the GL coding component of the Non-PO invoice process is done after the invoice has been received in the organization and may be done by the Approver mentioned above, or by a coder (Agent of the Approver, ie. administrative assistant),  or by Accounts Payable staff directly.  This is not an issue for PO (Purchase Order) – based invoices, as the GL coding component is done on the front end of the requisition process as each expense is formally defined in accordance with the organizational procurement guidelines.


So, in comparison to their PO-based counterpart, they are relatively simple to process as once you generally have the authorization and the correct accounting booking in place, you’re pretty much home.  With respect to PO invoices, there is a proverbial ton of matching to do between procurement, receiving, and invoice documents on a vendor and line item level, not to mention the issues that surround tax, freight, and units of measure.


Additional Challenges 


However, challenges arise from how invoices are received, distributed, and collaborated at on without the presence of a good Accounts Payable automation platform.  As a result, most companies in a manual environment rely upon interoffice mail, physical couriers, e-mail, and even many cases express delivery, all of which can be costly, klunky, and limit visibility to where critical information and invoices are at in the organization in terms of processing states.   Additionally, receipt of invoices can be more complex if invoices are received at branch levels and then funneled back up to a centralized Accounting environment.  In some cases invoices may have to make two or more physical stops in their process, all of which add time to the equation, and from the invoice get-go (receipt), time is against, not only from a Early Payment Discount perspective, but also, from a late fee viewpoint.


The Answer?


So, the solution to addressing these issues is to use Accounts Payable automation to effortlessly automate the routing and approval process as well as the GL coding.  How so?  Simply put…triggers.  Triggers can be used to identify GL codes by items including specific Vendors or locations.  The same is true of Approvers…and by capturing the data off an invoice and applying a business intelligence engine to it, you can use multiple triggers to accurately automate burdensome, time-consuming processes.  This way your processes can be transformed from the malaise of the tumbling tumbleweeds, that are haphazardly blown about from location to location without any accountability and instead guided like a heat-seeking missile that finds its target every time in the fastest way possible.


You can check out more in depth intel in our eBook below on Best Practices to Accounts Payable Automation.

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Topics: Accounts Payable Automation, ap automation, Non-PO Invoices

Accounts Payable Software Speeds Non-PO Invoice Processing!

Posted by Chris Cosgrove

Jan 25, 2013 8:06:00 AM

 Use Accounts Payable Software to get Non-PO Invoice Approvals Quickly and Easily

So what invoice data is required to process Non-PO based invoices?


Invoice processing requires the assimilation of a defined subset of invoice information to accurately record the transaction within an ERP and confirm that the goods or services stipulated on the invoice were indeed ordered and received.

There are two fundamentally different methods by which invoices are driven according to their invoice category.  In our thinking, these two categories are fundamentally Purchase Order (PO) based and Non-Purchase Order (Non-PO) based.  In this article, we’ll look at just the Non-PO side and cover the PO component in a different piece.

With that said, Non-PO invoices are typically faster from a physical processing perspective in an AP department than their PO counterparts.  All invoices require the capture of certain core data elements to advance the processing and closure of the transaction.


The following fields are absolutely required in order to facilitate processing:


Vendor Name

Vendor Address

Ship To/Addressee

Payment Due Date

Invoice Number


Goods/Services – including line item detail if it is included (which obviously depends on the invoice in question)





It's important to note, that with adaptive, intelligent OCR technology, you can leverage both a keywords focused approach and a document attribute approach to extracting all of this relevant data auto-magically!  You can learn more about that here!

Whose invoice is it anyways?


To accurately advance the processing stages for a Non-PO invoice a determination has to be made by AP as to who the invoice belongs to.  For instance, certain defined vendors generally deal with a subset of vendors.  For instance, technology hardware like servers, notebooks, or tablets, may  be procured through an IT department head.  In a manufacturing environment, raw materials vendors generally often have their goods ordered by someone in an Operations role (or of course Procurement).  The point is that by capturing either the Vendor, Ship To, or Addressee (Attention/Attn:) components of an invoice, you can often times use a business intelligence component of Accounts Payable software to automate the routing of invoices to the appropriate Approver within the organization.  The point of that is to obtain the necessary signature (approval) to close out the invoice and submit for payment.  Without an Approver authorization, by the way, it’s really not possible to process a Non-PO invoice.  The reason for that is that the procurement authority was not invoked prior to ordering the goods (as is the case in a PO invoice) and also, the GL coding aspect of the invoice needs to be performed as well, so the expense will be booked to the appropriate account, ensuring clean books.


As far as improving the GL-Coding process, it’s good to understand where many organizations are today.


For most companies that operate in a manual AP process, they still GL code the old fashioned way. Submit a non-PO invoice to a department head for Approval, obtain that and see what GL code was written on the invoice, as there may be a subset of GL codes by department, and spend may be allocated to any of the codes for a variety of reasons.  Once the invoices get shipped back off to AP for final processing, AP then typically keys the invoice data into the erp and closes out the transaction.  The invoice will then either be physically filed or converted to a pdf/tiff and stored electronically for later retrieval.

All of this extra effort can be quickly and easily alleviated through AP automation though.  By capturing the invoice data at the outset of the process you can advance the invoice processing automatically and get the required approvals and even have automated GL coding applied by logic based triggers within the process.

In any case, the burdensome aspect of the Non-PO invoice process really has to do with the time factor required to route invoices throughout the organization (not to mention the distribution costs for all you courier dependent entities out there).  So for anyone serious about improving their Accounts Payable process and AP operations, whether you use AP software or AP services, improving the Non-PO workflow for GL Coding & Approval is non-negotiable.


To learn more about how to benchmark your AP process, even by how efficient you are with respect to invoice types, check out the eBook below!

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Topics: Accounts Payable Process, AP Process, Accounts Payable Automation, Improve Accounts Payable, Invoice Processing, ap services, Non-PO Invoices

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