As an accounting professional, you’re likely aware of the importance of an efficient and smooth procurement process. This starts from the initial ordering of goods or services to the receipt of invoices and finally the timely payment for them. To ensure your processes are running as efficiently as possible in your accounts payable department, it is important to have a clear understanding of how purchase order (PO) invoices and non-PO invoices differ in terms of processing.
In this blog post, we will provide an in-depth guide on PO vs Non-PO invoices covering everything you need to know as an accounting professional; from what they each mean when they should be used and their practical differences when processing them correctly through your accounts payable workflow.
What Are PO Invoices and Non-PO Invoices?
PO (purchase order) invoices and non-PO invoices are two of the most commonly used types of invoices in business accounting. PO invoices are those that are generated when a buyer has placed and approved an order with a seller.
Non-PO invoices are invoices that cover costs for services and products that often fall under general and administrative (G&A) costs like utility bills and building maintenance.
The key difference between PO invoices and non-PO invoices is that the latter does not require pre-approval from the buyer before it can be processed.
As such, it is considered less secure for buyers who may not have visibility into what they will be paying for until after their order has been shipped or delivered.
When it comes to processing these two types of invoices, best practice procurement processes require that all purchases must go through an approval process before being processed. This is especially important for non-PO invoices since they allow buyers to incur additional costs without prior authorization. For example, buyers should ensure that any non-PO invoice requests must be verified by someone with purchasing authority before being accepted, in order to prevent any unauthorized purchases or expenses. By doing this, businesses can ensure that their procurement processes remain transparent and secure while still meeting their spending objectives.
Read more: The Accounts Payable Glossary: Everything You Need to Know About AP Automation
Key Differences Between PO and Non-PO Invoices
A PO invoice is created when an organization places an order for goods or services from a vendor. It includes the details of the items being purchased, quantity, prices, and payment terms. A non-PO invoice is sent by a vendor to an organization for goods or services that were not covered by a purchase order. They can also be used for additional orders that have been placed outside of the original PO.
For PO invoices, organizations need to confirm that the order was shipped and received according to the original purchase order before they approve it. Non-PO invoices require manual entry into the accounts payable system and often require review by more than one person in order to sign off on them before they can be processed. The best practice procurement process requires that all purchases should be made through a formalized PO system as it allows organizations to track all their spending more easily and helps ensure accurate billing.
Automating Invoice Approvals with AP Automation Software
In order to streamline the invoice approval process, companies are increasingly turning to automated systems that can automate the review and approval of invoices. AP automation software can help reduce human error by ensuring accuracy in data entry as well as expediting payment terms for suppliers for both PO and Non-PO invoices. The system can also keep track of all outstanding invoices and send notifications when invoices are due for payment. Automated invoice approval systems also provide companies with real-time visibility into the status of their accounts payable, helping to reduce costs associated with manual processing.
Automating PO and non-PO invoice approvals make for faster and more efficient invoice cycles because they do not require manual processing.
This means that companies can process more invoices in a shorter amount of time, freeing up resources for other tasks. Automated systems also help ensure accuracy, reducing potential fraud and disputes with suppliers. Finally, automated invoice approval systems allow for better visibility into accounts payable and the ability to identify discrepancies quickly and easily.
In conclusion, PO and non-PO invoices both play an important role in the procurement process. Companies must be diligent in reviewing all documentation associated with both types of invoices to ensure accuracy and compliance with government regulations.
Automated systems can help streamline the invoice approval process, allowing companies to take full advantage of all cost savings opportunities for better cash flow. By taking these steps, companies can protect themselves from incurring unnecessary expenses related to incorrect payments or delayed payment cycles. Additionally, automated systems can provide real-time visibility into the accounts payable process, allowing companies to make more informed decisions about their finances. Ultimately, having a well-defined process for managing PO and non-PO invoices will benefit businesses in the long run by saving the company time and money.
So are you ready to automate? Contact us to schedule a demo.
Not convinced yet? Read our blog post Why Every Accounting and Finance Department Needs Accounts Payable Automation.
