Goldmines of Invoice Verification

How can we ensure we are being invoiced accurately at all times, are all the rules and discounts in place? These are some of the challenges every retailer faces, the solution really is to regularly verify your invoices and make sure we are not overpaying the supplier.

When a supplier signs an agreement to fulfill your orders, it is important to ensure both parties agree to the set deliverables. This will be the base for negotiation when something is not matching the agreed terms.

The three main aspects of invoice verification could be as follows:

Payment structure

Advance payment to suppliers could be a bad practice; ensure that there is at least 30-45 days time gap before you pay a vendor from the time a purchase order was issued.

  • Approve payment - At all times payment should be approved only after an invoice is verified internally, receipt of each payment should be stored at the order level.
  • Purchase order - All purchase orders should contain the complete break up of the charges; this would include COGS, shipping charge, drop ship fees etc. Purchase orders usually serve as a legal document that confirms the total cost of an order as agreed by both parties.
  • Payment confirmation - On regular intervals we need to seek a detailed manifest for all past orders from the vendor, this will ensure all payments have been received by the supplier.

Internal verification

This is a crucial step and has to be done with a good process document; again, our aim is to ensure the supplier does not over charge us.

  • Receive invoices - Request regular invoices from the vendor, this should consist of one invoice per order and must include all the relevant charges like wholesale cost, ship cost, drop ship fees, discounts, return charges etc.
  • Reconciliation - All invoices have to be verified against the original purchase order, shipping charges should be cross checked against your master data which confirms whether the vendor shipped on your account or his.
  • Additional verification - Check if the vendor has any special discounts that could apply to the present invoice, the discount could be seasonal or product based. Verify accuracy in drop ship fees if applicable, also any additional charges in ship cost due to delay from the vendors end should be identified.

Credit Memo

This would be a sort of rebate for the retailer; every invoice that has been verified and paid should be stored in the database.

  • Post payment rebates - Your customer could return a product due to damage or defect, in such cases we need to get reimbursed from the vendor. If the invoice has already been paid then we need to get a credit memo for the referenced order.
  • Other payment - There could be situations where the vendor had been charging you for some additional service like palletizing or shrink wrapping and due to inconsistency in this service the vendor has agreed to waive off these charges.

Maintaining a master database of all the invoices and purchase orders is the key; the process could be a bit complex and would need a dedicated team of professionals. Outsource this time consuming process which would give you sufficient time to concentrate on vendor relations and vendor performance reviews.

Labels: , , , , ,


Blogger kanchana said...

Your blog is awesome..You have clearly about it ...Its very useful for me to know about new things..Keep on blogging..
PHP training in chennai

March 23, 2016 at 1:52 AM  
Blogger Gopi Perumal said...

Pretty article! I found some useful information in your blog, it was awesome to read, thanks for sharing this great content to my vision, keep sharing.

PHP Training in Chennai | Webdesigning Training in Chennai

November 2, 2016 at 4:29 AM  
Blogger Fathima Fazal said...

Thanks for splitting your comprehension with us. It’s really useful to me & I hope it helps the people who in need of this vital information.
Performance Tuning Training in Chennai | Oracle PL/SQL Training in Chennai

November 16, 2016 at 2:19 AM  
Blogger noman shams said...

Your blog is awesome..You have clearly about it ...Its very useful for me to know about new things..Keep on blogging..
best platform beds

August 8, 2017 at 8:08 AM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home