Invoice Processing SOP

Letterhead

{{company_name}}

{{company_address}}

Phone: {{phone}}

Email: {{email}}

1. Purpose

The purpose of this SOP is to establish a standardized procedure for handling and processing all incoming invoices, from receipt to payment. This ensures consistency, reduces errors, prevents fraud, and maintains good vendor relationships.

2. Scope

This SOP applies to all employees involved in the invoice processing workflow within the finance department and other relevant departments at {{company_name}}.

3. Definitions

• **Invoice:** A commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices for products or services the seller had provided the buyer.

• **Purchase Order (PO):** A commercial document and first official offer issued by a buyer to a seller indicating types, quantities, and agreed prices for products or services.

• **Goods Received Note (GRN):** A document prepared by the receiving department to confirm that the goods ordered have been received in good condition.

4. Responsibilities

• **Accounts Payable Clerk:** Responsible for receiving, logging, verifying, and preparing invoices for payment.

• **Department Managers:** Responsible for reviewing and approving invoices related to their respective departments.

• **Finance Manager:** Responsible for final approval of payments and overseeing the entire invoice processing function.

5. Procedure

**5.1 Invoice Receipt**

a. All invoices should be sent to {{accounts_payable_email_address}} or mailed to {{company_address}}.

b. Upon receipt, the Accounts Payable Clerk will stamp the invoice with the date of receipt.

**5.2 Invoice Logging**

a. The Accounts Payable Clerk will log all received invoices into the {{accounting_software_name}} system, capturing key details such as:

• Vendor Name

• Invoice Number

• Invoice Date

• Due Date

• Total Amount

• Purchase Order (PO) Number (if applicable)

b. A unique internal tracking number may be assigned if not automatically generated by the system.

**5.3 Three-Way Matching (for PO-based invoices)**

a. For invoices with a corresponding Purchase Order (PO), the Accounts Payable Clerk will perform a three-way match:

• Match the invoice with the Purchase Order (PO) for items, quantities, and prices.

• Match the invoice with the Goods Received Note (GRN) for received quantities.

b. Any discrepancies must be investigated and resolved with the vendor and/or relevant department before proceeding.

**5.4 Non-PO Invoice Verification**

a. For invoices without a Purchase Order, the Accounts Payable Clerk will verify the legitimacy of the expense and ensure it aligns with company policies.

b. These invoices require appropriate departmental manager approval.

**5.5 Invoice Approval**

a. Once verified, invoices are routed electronically or manually for approval:

• Invoices associated with a PO: Approved by the Department Manager who initiated the PO.

• Non-PO Invoices: Approved by the responsible Department Manager.

• All invoices exceeding {{approval_threshold_amount}} require additional approval from the Finance Manager.

b. Approvers must review the invoice for accuracy, completeness, and adherence to budget.

**5.6 Payment Processing**

a. Approved invoices will be scheduled for payment according to their due dates and agreed payment terms.

b. Payments will be made via {{payment_methods}}.

c. The Accounts Payable Clerk will generate payment runs in the {{accounting_software_name}} system.

d. All payment runs must be reviewed and authorized by the Finance Manager.

**5.7 Record Keeping**

a. All invoices and supporting documents (PO, GRN, approvals) will be digitally archived in {{document_management_system}} and/or physically filed for a period of {{retention_period_years}} years as per company policy and regulatory requirements.

6. Exceptions

Any exceptions to this SOP must be documented and approved by the Finance Manager, with clear justifications.

7. Document Review and Revision

This SOP will be reviewed annually or as needed to ensure its continued relevance and effectiveness. Any revisions will be documented and communicated to all relevant personnel.

Signature Block

________________________

{{approver_name}}

{{approver_title}}

Date: {{date}}