Posted - 20/01/11 | 0 Comments

Tone up your collections – Part 2: Make your invoices "process friendly"

So what is the key to getting big companies to pay you on time? This article focuses on one of the simple and immediate things you can do to ensure your invoice gets VIP treatment from your customer.

Most big companies have a payment process. If you plug into it correctly then you should find that payment pops out at the other end on time. So let’s focus on this.

Big companies who have anything approaching good processes will either have an established manual invoice approval process or an automated process done by software. The process usually involves matching a purchase order, with a receipt notice and an invoice. This is often referred to as the 3-way match. Companies generally have a rigorous approval process for issuing purchase orders. So if the purchase order has been correctly approved and the receipt notice says they have received the correct goods and the invoice is for the amount on the purchase order, invoices normally get approved as a matter of process without having to be referred to anyone. If this is done by software processing an electronic invoice then approval can happen instantly the e-invoice arrives. This doesn’t mean you ‘˜ll get paid any quicker. But it does give you an even chance of getting paid on time.

So the lesson here is be ‘process friendly’ when you send your invoices in. Here are the things to watch: make sure you include a purchase order number. If you have a supplier number or code on the customers system find out what it is and include that. Make sure you format the invoice so that it can be easily reconciled to the purchase order noting that multi line purchase orders often have a separate order code for each line. Finally ensure you invoice contains all the things it legally needs – VAT at the correct rate, a VAT number, an invoice date and an invoice number. If anything  in this ‘process friendly’ list is missing or wrong then your invoice is likely to fail at the 3-way match and then you are outside the process – something different has to happen to get the invoice approved – someone has to do something. Start counting the days because your chances of being paid on time have just taken a big knock. On the other hand if your invoice is all in order so that it passes the 3-way match without question then you are half way there.

Next we’ll look at what to do if the invoice is all OK and you are not getting paid.

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