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The path to a clear statement

Matching invoices to actual orders sounds dull but is vital to site efficiency. By Tim Cole

The matching of invoices to order and delivery information is a widely used internal control mechanism in the purchase to pay process.

Despite the growing use of back office technology, this has remained a largely manual process. The problem is not our failure to want a world in which invoices instantly match and clear themselves ready for payment. The problem is that we are not universally taking the steps to move in that direction.

The need for checks and balances within the invoice clearing process arose as soon as trading evolved from being a single, face-to-face transaction into a series of increasingly arms-length activities.

It is little wonder that the confidence gained from cross-matching is seen as the gatekeeper to the payment of an invoice. Both the buyer and seller benefit from an effective matching process and both lose where this takes too long.

This is an issue that was raised more than 10 years ago and yet we have not really changed course.
Those happy people who developed data exchange standards recognised that data matching required a “key” that would clearly tie together items from an order through to corresponding items on a delivery note and invoice.

Let’s use an example: the purchase order may include an item for 150 hard hats priced at £5 each. The delivery note may cover a partial delivery including 80 HH47Bs and the invoice could show two boxes of HH47Bs priced at £200 per box.

Computers are smart, but not smart enough to work out that these three disparate bits of information refer to one and the same thing.

Given that we normally manage to work out which items match to which, the clues must be there. The purchase order was hopefully quoted on the delivery note and invoice.

The price may give us a clue and we can even look at the item to confirm that an HH47B really is the hard hat we ordered. But let’s not pretend that Agatha Christie works as well in the workplace as on the television.

Accountants, buyers and project managers have too many transactions to clear to enjoy the thrill of unravelling the clues.

Universal reference

What we need is something that is referenced universally and that ties everything back to the specific ordered item. And that should be the key pair of “order number” and “order line number”.

This simple key could be used to tell you all you need to know when trying to match a delivered or invoiced item to its original order. But then there was that accuracy point. You may well have spotted that the example I used would still struggle to fully match.

The key pair of order number and line number would find the right item but fail to match the quantity. Well, there are ways we could enhance the key pair and we would at least be looking at the right item.
For now, let’s just remember that the manual process is not perfect and we should not fall into the trap of refusing to make progress until the road leads to perfection. If we all committed to implementing the key pair, then we really could look to take a big step forward and lay the ground for some welcome cost and time savings.

Tim Cole is director of ebusiness solutions at Causeway Technologies.