Are you pre-approving a Non-PO invoice before it enters the ERP, if so where’s the audit history? 

It is important to ensure you have a defined approval process for your company’s non-PO Invoices. We would always recommend having a formal procurement system to raise Purchase Orders, however, we recognise this is not always possible. 

For information see our Mi Invoices 

With the ever-increasing complexity of modern business, it is essential that companies have an audit history of all non-PO invoices entering their ERP. Pre-approving non-PO invoices before they enter the ERP can help ensure an accurate and transparent audit trail of these transactions. By pre-approving non-PO invoices, businesses can curtail the potential for any errors or discrepancies within the ERP system. Additionally, pre-approval also ensures that all invoices are fully compliant with the business's internal policies and procedures. 

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What is Pre-Approving Non-PO Invoicing?

Pre-approving non-PO invoices is a process of verifying a non-PO invoices before they are sent to the ERP system to track and capture the transactions. What they shouldn’t be, is pre-approving the invoice before it is sent to the invoice processing solution or manually keyed into the ERP system directly. 

Any process of pre-approval outside of an invoice processing application doesn’t have the same governance and control. For example, you should never walk the physical document around to a manager’s desk for a wet signature. Pre-approving an invoice before it hits the ERP using the defined approval process for the organization that utilises your automated invoice processing solution is the correct method. 

Benefits of Pre-Approving Non-PO Invoices

The benefits of pre-approving non-PO invoices can help ensure that the invoice details are accurate, compliant with internal policies and traceable to the same extent a PO approval would be. Pre-approving non-PO invoices can also help reduce the risk of fraud and increase the accuracy of internal controls by verifying that all invoices are compliant with the business's policies and procedures. This requires the establishment of a defined approval hierarchy that has at least a two-step approval mechanism, The reason for two steps is that a single person is then unable to self-approve invoices, which leads to an increased chance of fraud.
Furthermore, pre-approving non-PO invoices can also help reduce the risk of missing important invoice transactions. If an invoice is not sent to the correct channels the approval system cannot track and capture something that hasn’t been sent to it. The visibility of your transactions is essential for governance and compliance.

Ensure an Accurate Audit Trail of Non-PO Invoices is stored for Pre-Approved Invoices

The tracking and capturing of non-PO invoices can help ensure that the details of these documents are accurate. Ideally, suppliers will send their invoices to a defined central email address, not to the business approver responsible for signing off the invoice. This ensures accurate received dates for the invoice in order to meet payment terms. If it is sent to the approver, they should then forward it via internal systems so it can be captured and entered into the system to enable the approval process to be initiated. 

If the invoice is not sent on to be entered into the system, then the invoices get misplaced (lost), which means the supplier will not get paid, resulting in poor supplier management and impacting your reputation with your supplier base.

By ensuring all Non-PO invoices are included in the approval system an audit file can be created and submitted into the ERP system alongside and linked to the approved invoice. This creates a complete transaction that can be reviewed by both internal employees and auditors to see the details of the approval process to diminish any further investigations.

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