In Accounts Payable, First Pass Yield can be the percentage of 3-way match Purchase Order invoices successfully processed on the first try compared to the total number of 3-way match PO invoices Accounts Payable attempts to process.
What is your percentage of First Pass Yield? What are some of the reasons why 3-way match PO invoices can’t be successfully processed on the first attempt?
- The Goods Receipts (GR) have not been posted into the ERP.
- The vendor name on the invoice does not match the vendor name on the PO.
- Has the amount of the PO been exhausted or are Goods Receipts (GR) missing?
And the list could go on but the primary reason may very well be that the GR have not been posted. Especially these days when companies can email invoices the same day the goods are shipped.
On average, how many times does your Accounts Payable team touch an invoice before it can be successfully matched to the PO and related GR? Does the team delay the first attempt at processing for XX number of days from the invoice date to improve first pass yield? If so, how are these invoices staged or otherwise tracked? How many of them could have been processed sooner?
Get rid of all this unproductive time. Automate the application of rules, tracking and processing of invoices. This is how it can work.
Invoices and related data are loaded into an Automated Workflow system. PO details from the ERP are loaded into the workflow. The system now has the information needed to separate the 2-way match PO invoices from the 3-way match PO invoices. Assuming the system matches the PO number on the invoice to a PO record loaded into the workflow, it can then look for the GR details which would also be supplied to the system from the ERP. GR not posted yet? The system can then hold any such invoices in a separate queue for up to XX number of days and continue “looking” for the GR details. Once the GR details are loaded into the workflow, the invoice can be matched to the details then sent into the ERP for posting. If GR are not loaded into the system with the pre-determined number of days, the invoice that remains unmatched can then be sent to a queue reserved for invoices the AP team needs to research. This way AP is only spending time on the invoices with issues.
Do you have vendors located overseas? It can take several weeks for goods to be delivered. With automation, and by using the country code on a vendor record, a rule can be set up so invoices from overseas vendors can be held in the queue for a different number of days waiting for the receipt to be posted.
Back to some of the other reasons PO Invoices fail to be processed the first time through or worse. They are processed into the ERP with undetected errors.
For example, has the company paid the wrong Vendor in the past because the Vendor named on the invoice was not the same Vendor the Purchase Order was created for? An Accounts Payable Automated Workflow system can highlight these types of inconsistencies.
Has the amount of a Purchase Order been exhausted or is the company still waiting for the GR to be posted? Do the AP Specialists identify the root cause of why an invoice can’t be processed or do they assume the issue is a missing GR Let an Automated Workflow system apply a reason code as to why a PO invoice cannot be matched to a Purchase Order and/or related GR. This will save time and reduce research frustration.
Future articles will address Quantity and Price Variances pertaining to 3-way match PO invoices.
Want to learn more? Contact New England Document Systems. They have the experience, and the resources to assist you; from answering your questions about available solutions to helping you to implement the right tool. Contact us to discuss just how much improvement you want to see in your Accounts Payable Operation.
This article is part of New England Document Systems’ partnership with industry experts. This contribution was written by Anne Wheeler of CS Process Flows, LLC. Anne is a Consultant and Project Manager specializing in Accounts Payable processes and systems.