Q. (cont.) What is best practice? The last company I was at they never hit Accounts Payable. Everything was auto debited from our bank account but I don't know if/what the review/approval process was. The company I am at now required the HR VP to approve every invoice. She since does not want to approve the weekly invoices, so has approved a Purchase Order and delegated someone on her team to approve the invoices against the PO. Now we want to get away from a PO because our CEO has to approve that. Hence, I'm being asked by our CAO to come up with a new process for paying these types of invoices.
A. Judy Bicking, our practitioner expert, says this:
I would consider:
- Keeping the PO process, but changing your HR VP’s level of authority for just this Vendor so only she needs to approve. Basically, because your CEO should have signed the contract, there's no need to involve the CEO again. The PO provides an audit trail and is used most often when there is a contract in place. It also records the full amount of the contract for a year, and not just the monthly amount for cash management purposes.
- Otherwise, another process would be to have the VP create an in-house invoice. Do you have a check requests form with a recurring payment feature? This would follow the same logic: since a contract has (or should have) been signed, raise the HR VP’s level of approval for just this vendor and set up the recurring payment. This also provides the total spend for the year for cash management.
This should satisfy everyone involved.