The single most difficult and annoying aspect of paying invoices is managing the process of obtaining invoice approvals. Managers tend to let invoices pile up in their "in" boxes for weeks before attending to them, or lose the invoices, or claim they never received them to begin with. Even more irritating, suppliers call them about late payments, and they pin the blame on the accounting department, even though the delayed payment was caused by their own inactivity. Fortunately, there are some annoyance mitigation techniques for managing the invoice approval process, which are as follows:
- Set approval boundaries. The single most important technique is to define invoices requiring approval so narrowly that the vast majority of invoices do not require any approval. For example, any invoices falling below a minimum dollar limit would not require approval, nor any recurring invoices, or invoices authorized by a contract to which the accounting staff has access. If properly defined, this technique should keep at least 80% of all invoices from being approved; I target a 95% level for my accounting operations, and usually achieve a level closer to 98%. However, there is a significant probability that some of the expenses underlying these invoices that are not being reviewed should eventually be eliminated (such as long-term equipment rentals or cell phones). To ensure that these expenses are occasionally reviewed, consider having an annual meeting with each department manager to go over all of their invoices for a one-month period, just to see if some can be eliminated.
- Use negative approval. Now that the scope of annoying invoice approvals has been drastically reduced, use negative approvals for nearly everything else. Under this approach, an invoice copy goes to the designated approver (after the invoice has already been keyed into the accounting system), with a note stating that if no response is received by a certain date, then the accounting department assumes that the invoice is approved. Since some managers may later claim that they never received the invoice, it is useful to maintain an issuance log to prove when invoices were issued, and to whom they were sent. I prefer to not use a log, and instead digitize invoices with a scanner and e-mail the invoice to managers. By doing so, the e-mail system provides proof that the invoice was sent.
- Special handling for crucial invoices. If an invoice obviously must be approved (it's for a massive dollar amount, etc.), then don't wait for inter-office mail. Physically take the invoice to the approver and have it reviewed and signed while you wait. If they are not available, then create a list of alternate approvers, and go down the list until someone signs it. This is obviously labor-intensive, and so should only be used for critical approval situations where the accounting staff is clearly unable to pay an invoice without an approval.
Please note that the three preceding invoice approval steps do not include the use of an imaging and workflow solution. Though such a solution is needed for a really high-volume or geographically distributed company, most smaller organizations should focus on avoiding approvals with the first two methods listed above. By doing so, the remaining approval volume no longer makes it necessary to invest in such a fancy technological solution. The key point is that no investment should be made in the automation of a manual process when most of the manual process should be eliminated.
A final issue is what to do about the repeat offenders who always have difficulty getting approved documents back to the accounting department in a timely manner. There is no need to endure the grief caused by these people, so don't enable their behavior by pandering to their requirements. Instead, identify who they are by compiling a list of specific approval problems, and then take this list to a senior manager and request an alternative approver. If no alternative approver is allowed, then prepare a report of problems caused by the repeat offender, and continually send it to senior management until someone else is designated for the approver role. In short, repeat offenders rarely correct their behavior -- you need to find an alternative person.