Checking vendor bills and paying them in one SEPA batch

On payment run day, incoming invoices from purchasing, the warehouse and projects are waiting. Accounting is supposed to create a bulk transfer, but for some invoices it is unclear whether the goods arrived, whether the price is correct or whether the invoice has already been paid. If you pay without checking, you pay for it later: recovering payments, queries to the supplier, correcting entries. If you only check during the payment run, you hold up payment for everyone. The solution is a fixed checklist that you work through before the payment run.

Receipt: Is the invoice formally complete?

Situation: An invoice reaches accounting by email, post or as an e-invoice. Before anyone checks the content, accounting clarifies the form.

Check:

1. Are the names and addresses of your company and the supplier correct?
2. Are the invoice number, invoice date, date of supply, quantity, amount charged and tax shown?
3. Is the supplier's tax number or VAT ID number given?
4. Is the format readable? For an e-invoice (ZUGFeRD is a PDF with embedded structured data, XRechnung is a pure XML file), check whether the file can be opened and read.

Rule: If mandatory details are missing, do not post the invoice and do not pay it. Request a corrected invoice, because input tax deduction is generally only possible with a formally correct invoice. Clarify open cases with your tax advisor.

Content: Does the invoice match the order and the delivery?

Situation: The warehouse has accepted a delivery, purchasing placed the order beforehand, and now the invoice has arrived. Accounting compares three things: order, goods receipt, invoice (the so-called three-way match).

Questions to check:

• Is there an order for the invoice? If not: who placed the order?
• Do the quantity and price match the order or the framework agreement?
• Was everything that is being charged actually delivered? For partial deliveries, only the delivered part may be paid.
• Are cash discount, rebate and freight calculated as agreed?
• Has the invoice already been recorded? Check supplier and invoice number for duplicates.

Rule: If quantity or price differ, do not include the invoice in the bulk payment run. Clarify the matter with the supplier and record the reason.

An example from the operations of a solar PV installer: The invoice for modules states a higher number of units than the goods receipt in the warehouse. It helps here if projects, warehouse and accounting see the same data, as is possible with software built for this kind of business. Accounting then checks the goods receipt itself instead of asking the warehouse.

Approval: Who may pay?

Situation: An invoice is correct in content, but someone has to approve it as to substance. The four-eyes principle requires that the same person does not order, check and pay.

Questions to check:

• Has the responsible person or department confirmed that the invoice is correct as to substance?
• Does a value threshold with a second approval apply to the amount?
• Is the person who triggers the payment a different person from the one who placed the order?

In Simplify-ERP, you can set up approvals in purchasing based on value thresholds. This maps the four-eyes principle in the system. In paper-based processes, an approval stamp with name and date does the same job.

Rule: If approval is missing, the invoice stays out of the payment run.

Bank details: Is the payee correct?

Situation: A supplier notifies you of new bank details by email. This is a common route for fraud.

Questions to check:

• Does the IBAN on the invoice match the IBAN in the supplier master record?
• If not: was the change confirmed by phone, using a known number rather than the number from the email?
• Who is allowed to change bank details in the master record, and is the change logged?

Rule: If the IBAN has changed, pay only after confirmation through a known channel.

Defects: What happens to disputed invoices?

Situation: The check reveals a defect, such as a wrong price or missing goods. Without a clear process, such invoices sit around and are later paid anyway or forgotten.

Procedure:

1. Mark the invoice as "to be reviewed."
2. Tell the supplier the reason, using a fixed set of reasons (price discrepancy, quantity, missing order number, formal defect).
3. Remove the invoice from the payment run.

For this, Simplify-ERP offers predefined reasons in the bank connection that are sent to the supplier; the invoice is marked as to be reviewed. A table with the columns "Reason" and "Status" serves the same purpose.

Payment run: Selection and export

Situation: All checked and approved invoices that fall due this week are to be paid together.

Steps:

1. Filter for due, approved invoices. Take cash discount periods into account.
2. Check the total against available liquidity.
3. Export the selection as a single SEPA XML file (the transfer format used in European payments).
4. Upload the file in online banking or transmit it via EBICS (a standard for data exchange with the bank).
5. Approve the payment according to the bank's requirements.

In Simplify-ERP, you select the supplier invoices due this week together and export them as a single SEPA XML transfer file.

Rule: If an invoice still has open questions after selection, remove it before the export, not only at the bank.

After the run: Reconciliation

Situation: The bank statement shows the debit as a single collective entry or as individual items.

Questions to check:

• Does the total in the file match the debit?
• Are all invoices marked as paid and the suppliers' open items cleared?
• Are there any returned payments from the bank?

Your next step

Take the most recent incoming invoices that were queried or paid twice, and assign each case to one of the sections above: form, content, approval, bank details or defect. The section with the most cases goes first on your checklist. Write down two to three questions to check for each section and decide who ticks them off before the next payment run.