Using Purchase Orders (POs) is always a best practice, right? The surprising answer from AP Strategist Henry Ijams, Managing Director and Founder of PayStream Advisors is, “Not necessarily.” This insight definitely caught our attention during today’s NextLevel presentation: Tackling the Pesky Non-PO-Based Invoices: How It Fits into your AP Automation Strategy.
There are many opportunities for error and excess costs with a ‘POs for everything’ model, Ijams noted, particularly when it comes to purchasing services. Moreover, many departments want invoices first so approvers can verify invoice and delivery before processing payments. Ad-hoc purchasing is certainly a reality, but is not well supported with POs. And trusted relationships with service vendors coupled with established payment processes mean that sometimes POs don’t make sense.
Automating AP, including POs, to achieve greater than 50 percent of spend under purchasing review is indeed an established best practice that can produce significant time and cost savings. However, many organizations still struggle with efficiently managing remote, field and other non-PO-based invoices. So, just how do you enhance visibility and control in these areas? And what’s the best approach to tackling non-PO-based invoices within an overall AP automation strategy?
Co-presenter Annemarie Thompson, Assistant Controller at Bryn Mawr, detailed how the private liberal arts college took on the challenge in two phases. To address overspending, unhappy auditors and a lack of proper controls, Bryn Mawr began using SciQuest to automate purchasing and procurement in 2010. During Phase I of implementation, it was apparent that creating POs for service expenses was inefficient and, in many cases, unnecessary when the college had an established service contract in place. With Phase II in November 2011, the college moved to an automated electronic approval process for services expenses, such as utilities, repair and maintenance, and updated defined roles for end-users and approvers. This streamlined payment requests and approvals without the need to create a PO. Thompson walked attendees through the college’s revised process step-by-step. She also noted that campus-wide communication, detailed documentation and end-user training were central to the success of this initiative.
Using their non-PO-based invoice process, Bryn Mawr has gained greater visibility for end users and the entire organization. Today, Bryn Mawr’s AP staff is enjoying the shift from data entry to an auditing role. 55 percent of all payments (or 320 non-PO invoices) are processed via the automated system per week and 53 percent of invoices are electronically attached, reducing paper dramatically. The college plans to mandate invoice scanning in the near future and bring all faculty live as shoppers. A Phase III implementation will include the creation of forms for specific types of products and services to deliver more detailed insight and control over spending.
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