Still Chasing Paper? Eliminate 4-steps From Your AP Invoice Processing

To show you what I mean, let’s take a brief walkthrough of what that would look like. To start with, I’ll lay out the typical accounts payable process for construction projects using a traditional paper & spreadsheet approach. We’ll use an example where items – such as materials – are received and subsequently invoiced. I’ll follow this example with how it would look using 4castplus to manage the receipts, accruals and invoice matching. So, first the paper method. Bear in mind this example may not reflect your process exactly, but I’m sure it’s pretty close:

1. Vendor delivers goods, such as materials, leaving a packing slip with the shipper/receiver (S/R).  The S/R puts the packing slip into a file folder, and by the end of the day, there are, for example, 25 packing slips.  Items that are short-shipped or damaged are noted on the packing slip and in a log of some type. 
2. At the end of the day, the S/R brings folder with packing slips into accounting, leaves it on their desk.  Accounting takes the packing slips, verifies to a PO (unit cost/quantities are valid) and then files into an accrual folder alphabetically.  They ‘may’ log the packing slip into an accrual log or may enter directly into accounts payable (AP) as ‘pending’.
3. Vendor invoices start to come in. These could be a physical copy, emailed copy, or via an e-payable system.  AP will go into the accrual folder and find the matching packing slip.  To manage accruals, they’ll verify if the invoice value agrees to the packing slip.  They physically or electronically attach the packing slip to the vendor invoice, scan it and save it.  The vendor invoice and scan are then emailed to the project manager (PM).  Accounting notes that the vendor invoice is with the PM for approval.
4. PM receives the vendor invoice and reviews the back-up. The PM may approve the charge, but they may also disagree with the charge.  If they disagree, they’ll hold the invoice and contact the vendor.  The invoice is still pending in accruals.
5. Once the vendor invoice is approved, the PM sends/marks the vendor invoice as approved and sends back to Finance – via email or by physical paper copy.
6. Finance receives the vendor invoice as approved to pay.  They update their accrual log and enter in the vendor invoice into AP in the finance system.  The vendor invoice sits in an AP folder awaiting payment.
7. The vendor payment is completed and a copy of the payment is attached to the vendor invoice and backup as proof (for audit) of completeness and validity.

There are a number of inefficiencies and issues with the above process. One of which is that the invoice has to pass through many hands before it can be verified to pay. 

4castplus introduces significant streamlining of the AP process, along with vast reductions in errors, and a faster turnaround time to get vendors paid. It not only reduces the steps and simplifies the process, but it also provides the ability to work on the vendor invoice collaboratively, in a digital form, which delivers full visibility into its status. 

Here’s what the same process looks like in 4castplus:

1. Vendor delivers goods, leaving a packing slip with the shipper/receiver (S/R) as above. The S/R in this case, enters the receipt directly into 4castplus by selecting the vendor and/or the purchase order and specific line item. 4castplus will apply financial controls against the quantity received compared to what was committed. It will also incur an accrual (and cost) on the project. He can also scan/upload the packing slip, photos, OS&D, etc. into 4castplus as documents associated to the receipt.
2. Some weeks later, AP receives an invoice for the goods received. This could be emailed or paper or other form. AP will use the 4castplus Vendor Invoice Matching module to match the invoice with the accrual (receipt) entered by the S/R and the PO. This is all electronic, so no data is lost or mismatched. If there is not an exact match, either the invoice can be rejected; or an adjustment will be automatically generated in 4castplus (such as for extra freight, for example) to account for any differences.
3. Once matched, the invoice is sent through an electronic approval workflow that can include multiple individuals and paths (including the project manager).

And that’s it! Those are the three steps as they are in 4castplus. As you can see, there are not only fewer steps, but there’s less chance for error. The system additionally takes on the burden of matching, organizing and makes collaboration seamless. There’s no rekeying of data or moving from system to system. It all remains in the same centralized database where your project purchase orders are knit together with the project codes, vendors, accruals, customers, and much more. The system applies financial controls at every step to ensure nothing is received, approved or paid without the appropriate oversight. And because 4castplus is in the cloud, all this can happen from anywhere – office, home, on the road or even in the car – of course, as long as you’re not driving while approving an invoice.

To learn more about how 4castplus can improve and streamline your AP invoice processing – and much more – please feel free to contact us and we’ll be thrilled to give you a live demo!