A Supplier Invoice Policy is one of those documents that every business should have. If you don’t have one yet, we have two tools to help. The first is our Supplier Invoice Policy template. The second is our Invoice Policy Builder. They’re based on the knowledge we’ve gathered from decades of working with thousands of companies to manage their accounts payable process.
Why Do You Need a Supplier Invoice Policy?
When you first start out in business, the chances are it was just you and a few close associates. When it came to supplier invoices, you all had an instinctive understanding of the process to follow and your company values in relation to purchases.
As you grow – and things get busier – this changes. There’s so much going on and keeping tabs on supplier invoices is just one of a thousand things that need your attention. Plus, as the team grows, the instinctive understanding of how things work gets lost. It means that confusion reigns and cost control and cashflow suffer.
A Supplier Invoice Policy helps you regain control. It helps you clearly define your accounts payable process. It means:
- All employees are aware of the invoice policy lifecycle and what steps they need to take at each stage
- Back-up documentation attached to an invoice like account codes, approvals, or other notes is accounted for
- You will speed up processes and reduce the risk of late financial reporting and payment
- Your finance team will be able to easily find documents needed for research and auditing purposes
- Senior management will be able to better access invoice and supplier data
A Supplier Invoice Policy should contain:
- Statement of purpose
- Company expectations and policy compliance
- Areas of ambiguity
Beyond that, there are a number of other factors it could also cover. Let’s take a look at each of the big areas and the optional extras in turn.
Introduction and Statement of Purpose
The opening section of your Supplier Invoice Policy sets out the purpose of the policy and who it applies to. It covers the basic guidelines and is factual and clear.
Company Expectations and Policy Compliance
This section of your Supplier Invoice Policy explains your company’s expectations for managing the receipt and storage of all Accounts Payable documents, the responsibilities every employee has when they handle a supplier invoice for any reason and what happens when someone does not comply with the policy.
Areas of Ambiguity
Your Supplier Invoice Policy gives you the ideal opportunity to explain any common areas of confusion. These might include who has delegation of authority, segregation of duties, what happens if there is a purchase price variance and what happens if there’s a challenge to the policy.
Additional Areas to Consider
The first three sections of your Supplier Invoice Policy cover the basics. There is a wealth of other subject areas you could consider. These include creating purchase orders, sending invoices from accounts payable to the appropriate party for action and back again, coding invoices, approving invoices, recording results of exception handling, retention periods, payment terms and many more.
An Invoice Policy is Just the Start
Having an invoice policy in place is the first step to gaining more control over your spend. To get started, use our Supplier Invoice Builder.
Invoice automation takes you to the next level. It gives you more efficiency, puts you in control and gives you a clearer picture of where your money is going and where you might be able to reduce costs.