There are different opinions about how much time an invoice match actually takes. The real difference lies in how accurate you want to be about the historical data in your ERP system. The more accurate you are about your history, the more accurate you can be in the future.
When we help our clients with ROI calculations we usually start with a 60 minute estimate for an invoice match. The reason we use 60 minutes is from past experience. As we have found in other areas, there are often a lot of small manual tasks that people overlook. Keep in mind that a 2 minute task may seem like nothing, but many 2 minute tasks can add up.
When doing an invoice match, there are 2 variables that can differ. One is the number of receipts; the other is the unit cost. Sorting out the number of receipts is often the easier of the 2 problems. Goods were either received or not, with perhaps some items being returned. Sorting out a price difference can be more of a problem. Price change requests are often discussed and approved verbally, with updates not making it back to the Purchase Order in your ERP system. A month later, when the invoice arrives, it is often hard to remember exactly what was agreed upon.
The Easy Way
One simple way to deal with a price difference is to just take the difference and assign it to a variance account. Of course, your accountants will disapprove of this idea. Another simple way to deal with this would be to go to the purchase order itself and change the price “after the fact”. Both of these solutions are simple and they don’t take very much time at all.
The only problem with these 2 solutions is that you have introduced inaccuracies into your historical data. Your current inventory pricing is incorrect since the goods have been entered into inventory at the wrong price. Incorrect pricing in your inventory means that the costing of your finished goods or repairs is wrong. By not correcting the root problem you will continue using the incorrect price for new orders over and over.
The Accurate Way
When investigating the amount of time taken for an invoice match within your organization you need to consider all of the following activities. These may seem trivial, but every minute adds up.
• How much time does it take your accounts payable person to find the match problem through reporting?
• How much time to they take investigating the number of receipts and the pricing?
• How much time does it take to track down and interrupt the buyer when a problem can’t be found?
• How much time does the buyer take looking through old notes or email or trying to remember a conversation from a month ago?
• Is the AP person waiting while the buyer is checking their notes? If so, you are spending the time of two people not just one.
• Do you end up having to call the supplier to discuss the issue? Do they answer the phone right away or do you have to be interrupted a second time when the supplier responds?
• How long does it take to restart whatever tasks were interrupted?
• Once a resolution is determined, how much time does it take to call up the appropriate records in your ERP to make changes?
All of these things take time. A proper ROI calculation needs to take all of these things into account when adding up the time taken.
The Best Way
The best way to deal with invoice match issues is, of course, to reduce the number of invoice mismatches that you have. The only way to do this is to ensure that prices are correct at the time your supplier confirms their orders rather than waiting until invoice time. The best way to ensure correct pricing at confirmation is to implement a system, like B2B Connex, to give your suppliers a way to correct pricing before goods are received.