How to Verify an Invoice? A Step-by-Step Guide

Does the anxiety of paying an invoice wrongly get you every time?

Don’t worry! You are not the only one. Even global companies go through it.

After all, if there is anything worse than forgetting your sunscreen on a beach day, it has to be an invoice paid wrongly.

Hence, to make sure you never need to study the laws of mistaken payments, let’s understand how to verify an invoice.

Understanding the Invoice Verification Process

Invoice verification is making sure whether the vendor is charging customers for what the customers availed. It is done by cross-checking the invoices received against the purchase order and delivery receipt. An invoice is paid only if the invoice details match the supporting documents.

And if the invoice has any discrepancies, it is rejected and the vendor is requested for the correct invoice.

Generally, companies have dedicated accounts payable managers who are authorized to verify and approve an invoice payment.

So, if you are wondering about which type of invoice verification you should practice, then let’s talk about all the significant types of invoice verification.

Different Types of Invoice Verification

The invoice-checking process depends on the nature of the trade. However, most businesses practice the following three common invoice-checking methods.

Let’s have a look at the three of them.

• Invoices based on purchase orders:
  In the purchase order (PO) based invoice verification, the invoice is matched with the PO placed. It is generally done by the authority who placed the order to avoid communication gaps. This method does not count the number of partial deliveries. It counts only the total quantity and the invoice amount.
• Invoices based on goods receipt:
  Invoice verification based on goods receipt is considered an apt option when the goods delivery is done in parts. Therefore, individual goods are invoiced separately.
• Invoices without an order reference:
  Sometimes, when PO is not available to refer to, companies verify the invoice directly to the accounts payable manager, marital accountant, or G/L accountant.

Now that you know the benefits of invoice approval, you must be eager to see the process. Aren’t you?

Alright then, let’s jump right in.

The Invoice Processing Procedure

The first step in invoice processing is to check the invoice number as soon as you receive the invoice. The invoice number has to be matched with the Purchase Order number or goods receipt number.

Now that the invoice number is correct let’s begin the invoice verification process.

1. Check invoice accuracy

   Checking invoice accuracy is the most vital step of invoice verification. Here is what you need to do to make sure that the invoice is accurate:

   • Check if the invoice you received is meant for your company or not. Sometimes a vendor may mistakenly send an invoice to the wrong client.
   • Verify the rates of services/products to see whether they match the agreement.
   • Check whether the applied tax, discount, and final amount are correct.

2. Confirm the invoice date

   Checking the invoice dates has a massive significance in invoicing because it has many benefits, such as:

   • It can make you lose or win legal battles about the transactions.
   • It helps you avoid double payments.
   • You can find invoices much easier if you want them later for auditing.
   • You can calculate taxes more accurately with correctly dated invoices.

3. Confirm the delivery with the project manager

   Confirming the delivery with the project manager keeps you away from fraudulent payments. Ensuring that you have received the services/products you are paying for is one of the best invoicing practices.

   Before greenlighting the delivery, the manager has to check the described quantity and quality of the line items in the invoice with those of the actual delivery.

   Sometimes, if the delivery is not made on time, the customer can pay less to the vendor and save the company money. And this could only be possible by confirming the delivery with authority.

4. Check the vendor information

   Checking vendor information is another easiest method to avoid fraudulent payments. You should cross-check the vendor details on the invoice with the past invoices in your accounts payable process. Check:

   • Business name
   • Logo
   • Contact number
   • Mailing address
   • Email ID

   This cross-checking not only warns you about fraud but also helps you keep your system data updated. And if it is a new vendor, you must verify the contact details before proceeding.
   Moreover, if you want to save time and avoid payment failures, you should also check invoice payment terms like:

   • Account number
   • Tax ID number
   • Preferred payment method mentioned on the invoice

5. Mark invoice due date

   Making a note of the invoice due date helps you sort out the invoice payment priority and improve cash flow. Other than that, noting the payment deadline has economic benefits for your organization too.

   It saves you from paying late payment fees and helps you avail of the early bird discounts as mentioned in the payment terms.

6. Schedule the payment

   Once all the above checks are done, the payment must be approved and scheduled by the accounts payable manager at least a couple of days prior. This gives you a window to stop the payment if there are any issues with the payment.

   As discussed, invoice verification is a crucial process, and it demands all of your attention. However, every step of the process has almost zero tolerance limits as it can cause financial accounting disasters.

Thus, a wise thing would be to run the approved invoices through a final checklist before submitting invoices to make the transaction.

So, here is a quick but essential invoice verification checklist for invoice reconciliation.

Invoice Verification Checklist

• Make sure the invoice is unpaid

  Before you submit invoices making the payment, you should confirm that the invoice is unpaid. The most accurate way to find that out is to run an invoice number check in your “paid invoices” logs.

• Clarify discrepancies

  Invoicing mistakes are not a rare phenomenon. And suppose you find any discrepancies in the invoice is verified. In that case, you should never neglect it and clarify it with the accounts payable & accounts receivable clerk, project manager, or the appropriate authority. Still, if you are facing any issues, you should contact the vendor to resolve them.

• Verify the invoice with documentation

  Once you know the invoice is yet unpaid. You should cross-verify it with all the supporting documents available relevant to the purchase. For example, it includes the PO, quotation, and delivery receipts.

Talking of documentation, do you know what documents you need to verify an invoice?

Don’t worry; we have listed all the documents here. Just have a look.

Essential Documents You Need to Verify an Invoice

• Valid trade license number mentioned on the invoice
• Quoted estimate for the same service/product
• Purchase Order Issued
• Duly signature delivery note with specifications
• Payment receipt for all the reimbursable expenses claimed

Voila!

You are done! If you have followed the above steps, you have verified an invoice successfully.

Now,

How long did it take?

Did it take longer than you imagined?

Generally, the time taken to process an invoice for a small business with limited resources is roughly 17 days on average.

So, if you want to hit top gear, download the InvoiceOwl app now!

Conclusion

Alright!

Wasn’t that simple?

In this blog, we talked about the simplest steps to avoid making invoice payment mistakes. And the benefits of invoice verification must have encouraged you to practice it already.

But, if you want to avoid all the manual invoicing tasks, generate an invoice now and eliminate the room for human errors from the entire invoicing process.