AP Invoice Entry Use ERP Accounts Payable Functionality to Streamline AP Invoice Entry

An organized and effective vendor invoice entry and logging process is critical to efficient and accurate Accounts Payable processing.

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    Accounts Payable (AP) operates in a demanding environment. The volume of AP transactions is substantial, and the payables processing cycle can be difficult to complete, as AP interacts with nearly every department in the company as well as with outside vendors. To successfully meet its processing goals, AP must rely on both streamlined and sound processes. If these goals are not met, the result is unhappy vendors which cause rushed processing and of course the attendant processing errors.

    AP’s inability to process transactions in an effective manner can be traced to specific reasons such as out-of-date procedures, poor review and approval processes, inadequate executive support and not using the current ERP to its full capabilities.

    In today’s SMB marketplace there are several AP specific applications designed to automate AP invoice entry, distribution and approvals. Overall, the application functionality is satisfactory, and can make a positive impact in AP invoice processing. However, like everything else, there is a price to be paid for these improvements.

    Invoice receipt and logging processes vary greatly between companies. Most of the time, invoice receipt and logging tasks are based on legacy processes which have been used for several years. For example, many companies put incoming paper invoices into folders. Invoices may be sorted by vendor, due date or both. AP may or may not maintain some sort of received invoice log. Electronic invoices are printed and handled in the same manner. Using these old-fashioned filing and logging methods cause invoices to be misplaced or lost making open invoice search and processing difficult. Instead, let your ERP do the invoice logging for you.

    A better way to receive and log vendor invoices is to enter them into the ERP as soon as they are received and use the ERP as a logging tool. Since the ERP tracks invoice information such as vendor, invoice date, discount date and due date entering the invoices into the ERP can streamline the invoice entry and logging process.

    Invoice entry is controlled using process status levels (e.g., unposted, posted). Some ERPs provide additional levels. No matter how the levels are structured, the invoice entry process only affects the financials when the transaction is posted.

    To streamline the subsequent invoice review and approval process, the invoice itself can be scanned and attached to the applicable voucher, using the voucher screen’s notes and attachments feature, as a part of the data entry and logging process. Electronic invoice records can be attached in the same manner.

    It’s a fairly easy task to generate AP reporting to display voucher transactions entered and saved in an unposted status. The unposted vouchers displayed should reconcile to the invoices entered. Using basic ERP reporting features such as filtering, sorting and search, invoices received and entered should be easily determined.

    Functionality, Measures and Alerts

    Measures and alerts are meant to assist the user in keeping abreast of processing status, identifying anomalies, and ensuring that implemented process controls are being effectively employed. The information below illustrates the interactions between AP invoice entry and tracking functionality, measures and alerts.

    Functionality- ERP Accounts Payable invoice entry

    Measures and Alerts-

    AP invoices entered but not posted within “n” days

    Entering an AP invoice is the first step in AP processing. After entering, the invoice needs to be reviewed, approved and coded to the correct GL accounts. After these processes are completed, the transaction is recorded into the GL by posting the voucher.

    Use the AP invoices entered but not posted measure and alert to be sure that voucher posting is not delayed. Investigate any vouchers not posted within the defined number of days to identify any invoice approval issues or other approval and processing backlogs.

     Functionality- ERP Accounts Payable voucher posting

    Measures and Alerts-

    Accounts Payable vouchers entered but not posted at period end

    At first glance, this measure and alert would seem to be same as that described above. While the concept is the same, reviewing unposted vouchers at the end of an accounting period plays a vital role in the AP period close process. The key to accurate financial reporting is ensuring that all the period’s associated transactions are accounted for and posted. Use the AP vouchers entered but not posted at period end measure and alert to identify any AP period close issues and/or the need to process any period close expense accruals.

    For additional insight into the AP period close process. See: AP period close

    Process Implementation Best Practices

    Successfully implementing a new process isn’t always easy. Consider the best practices below to streamline and control new process implementations.

    Understand the Process

    • Be sure that all AP team members involved in invoice entry and logging understand the associated process.
    • Review the process to ensure that the AP team members understand the tasks to be completed as well as, the applicable ERP functionality.
    • Be sure that the AP manager understands the voucher posting process. Assign voucher posting permissions to the appropriate AP team members as warranted.

    Align Resources

    • Assign specific AP invoice entry and logging tasks to specific AP team members. Include staffing to support out of office coverage.
    • Be sure that any company executives included in AP transaction review and approval processes are aware of their responsibilities and tasks required, so as not to delay voucher posting.
    • Assign measures and alerts review tasks to the applicable AP and/or accounting team members.

    Improve the Process

    • Use ERP tools, measures and alerts to assist in identifying and resolving processing issues. Resolve any issues identified as soon as possible.
    • If the volume warrants, use technology such as automated vendor invoice scanning and entry, auto-invoice routing and approval functionality. A simple internet search will yield several application options.
    • Use default vendor GL accounts when entering invoices if needed. Using vendor account codes allows the AP team member to enter the invoice quickly and not have to enter lengthy account distributions during the entry and logging processes. Another reason for using the default vendor account code is that some ERPs will not allow the user to save a voucher without the header and detailed account distribution being completed. Remember, we’re just entering and logging invoices at this point. Additional account coding can be completed after the review and approval process. Other ERPs, however, will allow the user to save a voucher after entering only voucher header information (e.g., vendor, invoice date, invoice amount). In this case, using the default vendor account code is optional. Either way, since the voucher has not yet been posted, any GL account changes needed can be made to the applicable voucher record prior to posting.
    • For basic processing needs use ERP tools such as voucher copy, voucher templates and recurring vouchers to streamline AP processing.
    • Save the scanned invoice images to system directory folders after invoice entry. Name the folders using the invoice entry date. Name each record by vendor and invoice number. By following this process, paper invoice filing can be simplified (or eliminated). Future invoice searches become more effective as AP team members can use directory tools such as record search and filtering to find the invoice record and the attached invoice image.
    • AP voucher processing is a two-step process, voucher entry and voucher posting. Some systems allow the user to enter and post the transaction at the same time. While this functionality speeds up processing, many companies don’t like it as it may not provide adequate internal controls. In companies using two step processing, the AP manager reviews all the unposted AP activity, resolves any issues and posts the transactions as required.

    Process Communication

    • When hiring new AP team members, be sure to include invoice entry, invoice editing and voucher posting (optional) training as a part of their onboarding. If new AP team member(s) are at a manager level, include any additional tasks. Assign a temporary mentor from AP and accounting (if needed) to ensure that training happens.

    Common System Permissions

    System permissions and security functionality play a vital role in any ERP process. Using these ERP tools allows the user to set up efficient and controlled processes. Common AP period close functionality, measures and alerts examples are displayed in the tables below:

    Accounts Payable Functionality to Streamline

    Accounts Payable Functionality to Streamline AP Invoice Entry


    An organized and effective vendor invoice entry and logging process is critical to efficient and accurate AP processing. To successfully meet its processing goals, AP must rely on both streamlined processing and sound controls.

    Use the functionality, best practices, measures and alerts described here to avoid unhappy vendors, rushed processing and considerably reduce the number of AP processing errors.

    Process Flow

    Accounts Payable Functionality to Streamline AP Invoice Entry