Invoice Approval Workflow
Tie invoice approval to the PO — auto-post perfect matches, route the rest to the right person.
When an invoice arrives against a purchase order, it has to be checked against the order and the goods receipt. In many companies that check is done by hand; the invoice reaches the right approver late, even small differences between the purchase order and the invoice stall the process, and nobody knows who is holding the approval. Payment is delayed as a result. The Conforcus invoice approval solution matches the incoming invoice to the purchase order (PO); it posts perfect matches automatically and routes invoices with a discrepancy to predefined people for approval or for information. The flow runs end to end inside SAP.
The delays caused by manual invoice checking
A good share of PO-based invoices contain no difference at all: the quantity equals the quantity received and the price equals the price on the order. In a manual process these invoices wait in the same queue as the ones with a discrepancy, because someone has to look at every invoice. The accounting team’s time goes into checks that require no decision.
With invoices that do contain a discrepancy, the problem is not the check itself but who owns the decision. A price difference needs to be assessed by procurement, a quantity difference by the unit that received the goods; yet the invoice often circulates by email with no clear owner. While it waits for approval, nobody knows where it is; payment to the vendor is delayed, and at period end unposted invoices make the close harder.
The problem grows with invoice volume. As the number of invoices rises, the checking queue lengthens and keeping track of invoices awaiting approval becomes a task in its own right. The accounting team has to find out where invoices are in order to answer vendors’ questions about payment.
How the solution matches the invoice to the PO and routes it
The solution is integrated with Logistics Invoice Verification (MIRO) and the purchase order, and uses three-way matching: the invoice is compared with its purchase order and the goods receipt. Where there is a perfect match, the invoice posts automatically with no user intervention. Invoices with no discrepancy therefore do not wait in a queue, and the accounting team does not have to check them by hand.
Invoices with a discrepancy enter the workflow. The workflow routes the invoice to predefined people, some of whom approve while others are only informed. Who acts as approver in which situation is determined by rules defined during implementation. Every approval step is recorded with who approved what and when, and the whole flow runs inside SAP.
What changes for accounting and procurement teams
The accounting team does not touch perfectly matched invoices and spends its time on those with a discrepancy. Because an invoice with a discrepancy reaches the right approver directly, there is no need for follow-up and reminders by email. Who is holding the approval is visible in the system; when a vendor asks about a payment, the answer comes from the invoice itself.
Procurement sees the discrepancies routed to it when the invoice arrives, not while the invoice is waiting in accounting. Because invoices are posted on time, payments are not delayed. And since the approval history is kept invoice by invoice, internal control and audit questions are easier to answer.
The change shows at period end as well. An unposted invoice appears neither on the vendor account nor in the tax records, so invoices that are still pending have to be followed one by one at close. Because perfectly matched invoices are posted without waiting, fewer invoices are left pending, and the system shows who is holding each invoice with a discrepancy.
Defining the approval rules, and who the solution suits
How well the solution works depends on approval rules being defined clearly. Which kind of discrepancy goes to whom, who approves and who is only informed are defined during implementation according to the company’s organizational structure and authority levels. These decisions belong to the company; the solution reflects them in the workflow and applies them in the same way to every invoice. For three-way matching to give sound results, purchase orders and goods receipts also need to be posted correctly and on time.
The solution suits companies that handle a high volume of PO-based invoices and currently check them by hand. It is aimed at finance directors, procurement directors, and accounts payable and procurement teams. It has been implemented in several sectors.
Benefits
- Perfectly matched invoices post automatically, untouched
- Every invoice reaches the right approver instantly, no payment delay
- Full traceability of who approved what and when
Where it sits in SAP
Integrated with Logistics Invoice Verification (MIRO) and the PO; uses three-way matching, automatic posting and workflow-based approval/notification routing.
Who it is for: Finance Director, Procurement Director, Accounts Payable & Procurement
Frequently asked questions
Which invoices post automatically, and what is the invoice matched against?
In Logistics Invoice Verification (MIRO), the incoming invoice goes through three-way matching against its purchase order (PO) and the goods receipt. A perfectly matched invoice posts automatically, with no user intervention. An invoice with a discrepancy is routed to predefined people for approval or for information.
How is the approver determined for an invoice with a discrepancy?
Approvers are defined in advance, and the workflow routes the invoice to the right person according to rules set during implementation. Those rules can rest on criteria such as amount and organizational structure. Where some people must approve and others only need to be informed, that distinction is defined in the same flow.
How do we see who is holding an invoice, and who approved what and when?
Because the flow runs end to end inside SAP, you can see on the document who currently has the invoice. Every approval step is recorded with who approved what and when. In an audit, or when a payment is queried, the approval history can be shown invoice by invoice.
What does three-way matching mean?
Three-way matching compares the invoice with the purchase order and the goods receipt. The purchase order shows what was ordered and at what price, the goods receipt shows what was received, and the invoice shows what the vendor is charging. If these documents agree, no further decision is needed for the invoice to be posted. If they do not, the document that differs from the others also indicates who needs to assess the discrepancy.
How does the solution reduce delays in vendor payments?
Delays arise mainly from invoices with no discrepancy waiting in a manual checking queue, and from invoices with a discrepancy reaching the right person late. The solution addresses the former with automatic posting and the latter with workflow routing. When an invoice is posted on time, it can also be paid on its due date.
Does the solution replace the existing MIRO process?
No. The solution works in integration with Logistics Invoice Verification (MIRO), and invoices are still posted as SAP invoice verification documents. What changes is how the posting comes about: for a perfect match the posting is created automatically, while for an invoice with a discrepancy an approval or information step comes in through the workflow.