Sachin Sharma, founder of ProcureDesk, shows how manual invoice matching costs accounts-payable teams 15 hours a week. He outlines four fixes: automate matching to cut errors, use mobile apps to capture receipts on-site, enforce a no-PO-no-pay policy, and set up system checks to prevent duplicate payments.
Do you know how much time your A B team is spending on manually doing a three way match that is matching your invoice with the purchase order and receipts? If you don't, I'll give you a quick answer. In our recent research we found around 15 hours per week and that's equivalent to almost two working days. So if your team is struggling to match invoices effectively with purchase orders and receipts and that's impacting your month end close process, then this video is for you. Because I'm going to break down four simple strategies that you can implement today to speed up your three way match invoicing process and close your books in three to four days versus 10 days and stick till the end where I'll share one tip to make sure that your three way match process is implemented in the right way. Now, if you're joining me for the first time, welcome. My name is Sachin Sharma. I'm. I am the founder of Procuredesk, where we help growing companies control costs through purchasing and AP automation and of course three way matching process. So let's jump right in. Number one is the manual matching process. So the reason the three way match process is probably not working for you is you're doing it manually. Your team is receiving the invoice, then they are matching with the receipt, if available, purchase order and so on. And that takes time, right? So if you're processing maybe 100 invoices a month, that is not an issue. But if you're doing more than 100 invoices a month, you see that this becomes a unsustainable strategy. A simple way to do this is to automate the three way match process. So if you implement any system like Procuredesk, where you do the matching automatically, it serves two advantages, right? Number one is the data is entered and matched automatically so it avoids any data entry errors and so on. But two is now your team is focused more on looking at exceptions rather than trying to match invoices manually. So think about this way, right? The system kind of gives you a list of invoices that did not match and why and then you can just look at how to resolve them effectively rather than manually matching invoices. So strategy number one is automate wherever possible. Number two is missing receipts. So a very common problem with three way match is the receipts or the packing slips are not available for the AP team to match. And it could happen for many reasons. It could be that the vendor is sending invoices in advance and the product hasn't been Delivered. You probably have people in the field who are receiving it at the customer site and they don't have the time to go in and receive it. Number three is people just don't want to do it. Right. They procrastinate and you have packing slip sitting on the, on one side and you have to just, then you know, somebody has to go scan it, upload it into the system and you probably don't want to do that. A simple fix for this is in step one we talked about automation. So, so there you should focus on a system that also has like a mobile app so people can take picture of the packing slip from wherever they are and you don't have to worry about not having those packing slips during the invoice matching process. Everybody has a phone in their pocket nowadays. Just install an app and you're good to go. Number three is missing purchase order numbers. So your three way match process is probably not working because the vendors are not putting the purchase order number on the invoice. It could be for various reasons, the vendors don't know it or vendors are not doing it simply. Right, whatever be the case, a simple way to kind of fix that is I will give you like a two step process you can implement. The simplest thing to do is no po, no payment. So if the vendor does not put the PO number on the invoice, you simply don't pay. Now I get it, it's a little harsh, right? On your vendors. And you might not want to go with that approach on day one. So the second step in this is instead of doing no po, no pay, you can just say no PO delayed payment, right? So you can tell the vendors and say, hey, our process is to match invoices. If you do not put PO number on the invoice, we won't be able to match it. It could lead to delayed payments. So that might be a, I would say, easier strategy to start with. And then you can roll out no po, no pay over the period of time. All right, so let's now talk about number four, which is duplicate payments. So if your matching process is not working effectively, you might be paying the same invoice twice. And I'll tell you why that happens. The vendor might be sending the same invoice twice because they're looking for the payment status or the AP just process the invoice by mistake because they might think, okay, that's the right invoice and you don't have a PO invoice matching going on. Now a simple way to fix that is make sure that the invoice is matched to the po and if the invoice amount is more than the PO amount system will prompt that out. Right. Second is have a process to look for the same invoice number and amount automatically so that when the matching process is happening, it kind of flags it and say, hey, I've seen this invoice before, it might be a duplicate. So your AP team can look that as an exception and kind of go and do that. Right? So those are the four strategies that you can implement to speed up your three way match process and close your books faster. Now about the bonus tip which I talked about. A common mistake which we see with companies is especially growing companies, when they start implementing a matching process, they probably only have invoices, they don't even use purchase orders and they feel like, okay, we want to get into three way matching. So let's implement the purchase order process, make sure people are putting in receipts and then we can match invoices on paper. It makes a lot of sense. The problem with that is it's too much change for your employees if they're not even used to creating purchase orders. Now you're asking them to create receipts as well and that might not go as well as you think. So what do you do about that? Our suggestion or our experience has been that you should implement two way match. First, I know it's counterintuitive, like what's the point of doing three way, right? But if you do not have invoice purchase orders today, start with the two way make sure people are creating the purchase orders and then you can have your invoices routed for approval. Because you don't have receipts to match or packing slips to match. Let it run for a month and a half, let people get used to that process and then roll out the receipt. Because then you can just tell them and say, hey, listen, if you create a receipt in the system or a packing slip or upload a packing slip, you don't have to approve the invoice because they're already approving the invoice. You're just replacing the step and that's much easier. However, on your three way match process, it is going to give you tremendous benefit because you're able to process invoices faster. Right? So just to summarize the four strategies, make sure the matching is automated. You have, you're capturing the packing slips through like a mobile app. You're making sure that the vendors are putting the purchase order number on the invoices and you're avoiding any duplicate payments. If you like this video, feel free to hit subscribe so you get notified when we release videos like this. Thank you for joining me today and I'll see you in the next video.
