Spending management in a nutshell: making sure that the spending is necessary, is happening with the right suppliers and for the right price; truly an essential part of safeguarding an organisation’s financial health. And it starts on the demand side, meaning all Purchase Orders must be raised, reviewed, and approved in an organised, well-defined manner – before they enter your finance system and get sent to the suppliers.
But it is equally important that all incoming invoices are matched with their corresponding Purchase Orders which, of course, need to carry the seal of approval.
There are good reasons for having this matching functionality as well as an efficient approval process in place for all invoices/Bills. In an ideal world, all your Bills have a perfect 1:1 match with your approved Purchase Orders. In reality, there will always be invoices that differ from the Purchase Orders you agreed to.
For example, maybe your supplier decided on partial billing for just a part of the whole Purchase Order because they didn’t deliver all the goods or services you ordered. Maybe it’s the other way round and your supplier sends you a single invoice that covers all goods or services you’ve ordered via multiple Purchase Orders – making their job easier but leaving you to figure out exactly which Purchase Orders you are being billed for.
Or maybe you use Purchase Orders not for line-by-line ordering but as a kind of spending budget (bucket) for each supplier so that you’re controlling how much business all in all you’re placing with this particular vendor while not focusing on the details of every single order.
Whatever it is, you need to make sure that there are no unintended, or even fraudulent, statements in any of your incoming invoices.
To support you every step of the way and make your job considerably easier, the ApprovalMax Bill approval workflows provide a sophisticated functionality called Bill to PO Matching.
How it works
As part of the approval process, ApprovalMax picks up all Bills in Xero that are Waiting for Approval and routes them to the designated Approvers. In the first approval step, Bills can be matched with the respective Purchase Orders. This Bill to PO Matching can take place in the following three scenarios.
Please note that the description below provides an overview of both the GA functionality and that of the upcoming ApprovalMax’s product release.
The first scenario covers manual matching of Bills and POs, for which Bills must have the status “Not Fully Billed”. ApprovalMax presents you with a list of all Purchase Orders and filters them based on parameters that should be the same in both the Purchase Orders and Bills you’re about to match, for now these are Supplier and Currency.
The second scenario works for Bills that a have perfect match with previously approved Purchase Orders. Using a set of configurable matching parameters (such as Supplier, Total Amount, Currency, Quantity, Price, etc.), a single Bill can be automatically matched with a single Purchase Order, and even get selected for Automatic Approval to save time.
The third scenario is perfect for those cases when Purchase Orders are used as a placeholder/budget for controlling the total spend with a particular supplier: when a Bill is matched with a Purchase Order, the remaining balance for the particular Purchase Order (which stands for a certain budget amount) will be calculated – taking into account any Bills that have previously been allocated to this very same Purchase Order. If the current Bill amount exceeds the remaining balance of the Purchase Order (i.e. budget), it can be mapped to multiple other Purchase Orders in the system (any new Purchase Orders that are not yet in the system would of course have to pass the appropriate review and approval process first).
This kind of Purchase Order can be marked automatically as Fully Billed in Xero when they’ve been matched with the corresponding Bills, are fully approved, and the Purchase Order balance/budget has been completely consumed
