We have a consultant/contractor who wants to send only one invoice for the full amount for services to be rendered during his contractual period and for our company to partition the amount on a monthly basis. What should we look out for?


The answer to your question depends on your accounts payable system's capability. If your system will allow, setup a recurring payment that is evenly split over the consultant's engagement period and set a flag where the recurring payment stops in the last month of the engagement-that is one way to handle it. For instance, if the consultant is charging you $20,000 for a 4 month engagement beginning September, then you could set up a $5,000 payment starting September and ending December. The invoice number to enter into your system could be the date of the "retainer" payment. You can document on the invoice from the consultant when the payment starts and when it finishes and how much is paid each month. If your management process requires a purchase order, then you could create a purchase order with the payment schedules documented and attach the consultant's invoice to the P.O. as your backup.

Another control you may want to consider is to have whoever is working with the consultant send an internal document indicating that the milestone established each month for the consultant to deliver is met. If not, then you could hold up the payment until it's done. This ensures that consultant does not continue to get paid if they are not properly completing the deliverables of the engagement.

Have more questions? Submit a request