Purchase Invoices - what a waste of time.
According to Levvel Research's 2019 Payables Insight Report, 80% of invoices require multiple approvals. In many companies, that means at least 3 people need to take time out of their busy days to manually look at, read, assess, check and approve each and every invoice. Some business need 6 sign-offs on every invoice.
By their very nature, if you have authority to approve an invoice, you're probably middle or senior management. So your time is valuable and probably better spent on higher impact tasks.
Dependent on the volume of purchases, do these senior people have time to check every invoice, or just the higher value ones? Does that mean small invoices are over-looked due to lack of time?
And what, exactly is each approver actually checking?
Is each and every person in the approvals chain assessing the same thing, or looking into different information in order to authorise the invoice for payment? Is the supplier manager ensuring that the supplier is suitable to trade with? Are procurement enforcing best practice purchasing in advance of saying 'yes' to the invoice? Does the budget holder check that the invoice is within their budget? Are management required to sign-off higher value invoices and if so, what critieria do they use to assess the invoice? How about the accounts payables team - are they only checking coding and reconciliations with POs? Is the accountant, ensuring that there's sufficient cash to pay the supplier before they will approve the invoice?
Nearly half of small businesses walk the invoice around the office to get approvals. That's a lot of worn out carpets and tired accounts payables staff.
Isn't approving purchase invoices simply a waste of time?
It's too late in the process to effect the choice of supplier, the specification of the product or service, the quantity, the price and the deliveries. All of these decisions need to be made in advance of placing the order.
That's what purchase orders are for.
Have a think about the implications of multi-level invoice approvals. So what happens when all but one person approves the invoice? It might have been passed across 5 people's desk only to get blocked by 1. If its rejected, and re-submitted does it need to go through the entire chain again, or just to the rejector? There might be multiple line items on a high value invoice and there's a query over a £10 order. Do you hold up the entire invoice? Its a strategically important supplier who is critical to your business - how much does everyone in the approvals cycle really understand the importance of keeping the supplier onboard? And if anyone person is too busy, away from their desk or on holiday, the invoice might sit, un-approved, for days or even weeks.
What a pain. Life is too short to waste this much time.
DITCH YOUR INVOICE APPROVALS PROCESS - MAKE BUDGETS AND PURCHASE ORDERS THE PLACE WHERE YOU APPROVE COSTS.
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