One of the most common and important management steps is the review and approval of invoices from suppliers, contractors and service providers. Yet few organizations provide meaningful training on how to review invoices. What to check, where to find the needed information, and what to do when something looks strange, odd or curious to the reviewer.
Here’s some suggested content for publishing an article for your employees covering what to think about at the moment of invoice approval.
Each day, managers review and approve thousands of invoices. Too often that approval becomes a “rubber stamp” with little active thought about what the
approval step really means. “Signatures without thought” increase the likelihood of mistakes and make it easy for those who are trying to fool us.
Managers are encouraged to answer these basic questions before approving invoices and other payment documents.
1. How well do I know this vendor or contractor? Do I have first hand knowledge that they even exist!
2. Do I know that they actually provided the goods or services identified in the invoice or other billing statement?
3. Do I know that they are using the correct amounts for price (including unit prices used), sales tax, freight, and other variables that make up the amount invoiced?
4. On what basis do I know that the prices are reasonable in the first place? What standard have I used in determining that the price charged is fair?
5. How do I know that the quantities make sense? On what basis have we agreed to purchase the stated quantities?
6. How do I know that the invoice and other documents are mathematically correct?
7. Do I know that this invoice has not already been paid?
John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”