Automating Your AP Automation Internal Control Checklist

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An accounts payable internal control checklist allows you, as the CFO or controller of your organization, to achieve the goal of strong internal controls.

Accounts payable is one of the most vulnerable areas for fraud for any business. And errors or fat finger mistakes can cost your business money, time and embarrassment.

AP must be managed effectively. So having strong controls, proper processes and procedures, checklists and regular audits is essential.

Obligation to Pay Controls
Obligation to pay controls are your front line defense against fraud and mistakes in the AP department.

These controls ensure that the right amount gets paid to the right person or entity.

This section of the checklist can be broken down into four specific controls:

PO approval
Invoice approval
Three-way matching
Duplicate payment search
PO Approval Control
The PO purchase process provides improved accuracy in both inventory and financial management. It provides for better planning and budgeting, since funds need to be available before a PO is issued.

It’s also allows for faster delivery since POs help vendors schedule production and/or delivery when the buyer needs it.

PO approvals are a critical component of the PO process, but manual PO approval processes provide poor internal controls and can result in fraud, errors and missed opportunities.

On the other hand, automating PO approvals creates an easily auditable paper trail and provides massive efficiencies to the PO approval process.

Using AP automation, managers approve POs from anywhere in the world on any device with a single click. That’s why managers and executives love PO automation.

AP automation also provides total transparency into the approval process for each and every PO.

Invoices must be paid. This is relatively simple in a PO process because the PO has already been approved.

But there is no pre-approval of a non-PO invoice.

Therefore, non-PO invoices need to go through an invoice approval process within the buying organization before being paid.

Typically, the AP team will apply the appropriate accounting codes to non-PO invoices. And then they identify the invoice approver(s) based on the information on the invoice to the best of their knowledge.

This can be a complex process.

If done manually, this process is fraught with potential for errors.

Internal approval hierarchies can be based on location, invoice amount, invoice type, cost center or any other criteria. And based on these criteria they will need to go through multiple approval steps in the internal hierarchy.

But AP automation makes invoice approvals simple and 100% auditable – even in real time!

AP automation solutions like CoreIntegrator Enterprise and A/P One cloud based subscription service makes invoice approvals simple for approvers.

They will be able to see an image of actual invoices from anywhere in the world and approve them with a single click, even from home or on a mobile device.

Further, approvers get immediate insight into an invoice status from our AP automation solutions. That’s handy for those awkward moments when managers, salespeople or executives are talking to impatient vendors who want to know when they will get paid.

Three-way Matching Control
Two or three-way matching is a critical control to avoid fraud and mistakes in the PO process.

Matching the PO or packing slip/receipt to an invoice is a 2-way match. And matching the PO to the PO invoice and the packing slip or receipt is a 3-way match.

This control identifies any discrepancies in your purchasing documents.

But with so many details to review, 3-way matching can be a tedious process if done manually. And it is highly prone to error.

But CoreIntegrator Enterprise for enterprise-sized companies as well as A/P One AP automation for small and medium sized companies provide automated PO matching.

Our systems can automatically compare the three critical PO documents and highlight any discrepancies between them.

And, thanks to a revolutionary advance in technology called SmartMatch, PO matching is more automated and easier than ever before.

This brings massive efficiency to processing PO invoices, freeing your AP staff up to save your company money!

More importantly, it allows you as the CFO or controller to have total confidence and transparency into in this internal purchase document matching AP control.

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Duplicate Payment Search
A duplicate payment search can help reduce double payments and also serves as an additional layer of protection against fraud.

But with manual AP processes duplicate payment searches are somewhere between difficult and impossible.

AP automation performs duplicate payment searches automatically. And it doesn’t just flag potential duplicate payments – it then prevents them from being processed at all.