By incorporating strategic invoice verifications into the accounting process, an organization can significantly reduce the cost to process transactions and eliminate man-hours dedicated to invoice dispute and resolution. This paper discusses various types of automated invoice verification process, their purpose and the advantages stemming from a strategically implemented electronic payment program.

1. Administrative Cost Savings through
Invoice Verification

2. The cost of doing business.
• The average company spends between three to 15 dollars processing
a single invoice1.
• The paper invoice, which continues to account for 95 percent of all
business-to-business invoicing practices in Europe and the United
States1.
• Approximately 13 percent of all invoices encounter a processing road
block2.
• Strategic invoice verification processes can reduce the cost to produce
transactions.
1http://www.unece.org/press/pr2007/07trade_p02e.htm
2Gartner industry estimate. 2003.
http://www.gartner.com/press_releases/pr24june2003e.html

3. Transaction data defined.
The data captured during a transaction is merchant-dependent.
• Level I data - basic transaction data received on a consolidated
monthly credit card bill: purchase amount, date of purchase, merchant
name, date charge/credit.
• Level II data - all of level I data plus: sales tax, additional merchant
information, purchase order info and other basic data elements.
• Level III data - Levels I and II data plus line-item detail (i.e. itemized
receipt-level detail).
However, the detail of transaction information required to facilitate payment
is reliant upon corporate accounts payable procedures.

4. The tiered approach.
Three levels of invoice verification
• Invoice compliance
• Bill duplicate filters
• Product-price verifications
Each tier represents an organization’s procurement process and
the level of verification needed to ensure accuracy.

5. Invoice compliance.
This first level of invoice verification ensures that invoices submitted for
payment are compliant with corporate policies.
• Complete
• Valid
• Accurate

6. Invoice compliance: complete.
The most basic form of invoice compliance is ensuring that the
invoice submitted is complete.
• All data fields required to process transactions are provided.
• More detailed information itemized prior to releasing payment.
Invoices that do not meet the customer’s basic data requirements
should be rejected prior to invoice submission. By automating
this process, the administrative costs associated with manual
exception management is significantly decreased.

7. Invoice compliance: valid.
Once it is confirmed that all required data fields have been
completed, the next level of invoice verification requires that
information provided be valid.
• Purchase Order (P.O.) number should adhere to the buyer’s formatting
standards.
• Transaction date should adhere to universal date formatting and
represent an accurate historical date.
• Merchant or customer identifier must match an existing record within
the accounting database.

8. Invoice compliance: accurate.
If valid data has been submitted for all of the required invoice fields,
the system should then check for accuracy.
• Price x quantity = subtotal
• Percentage sales tax x subtotal = sales tax charged
• Subtotal + sales tax = total

9. Bill duplicate filters.
Filtering processes reduce the number of duplicate invoices
submitted to an accounts payable department.
• Minimizes accounts payable workload.
• Increases efficiency and reconciliation processes in 87 percent of
organizations studied3.
• Offers cost savings and staff reduction opportunities in 76 percent of
organizations3.
3Associationfor Financial Professionals. Electronic Payments
Survey. 2008. pg 3, 12.

10. Product-price verifications.
The processes to determine that the price charged is appropriate
for the product purchased are numerous, and it is at this point in
rule-development that verification procedures can become
extremely complex.
• Contract price verification
• Product-price tolerances
• Merchant-product verification

11. Product-price verifications: contract price.
If an existing contract for the specified product exists between the
customer and the merchant, the system identifies the
transaction as a contracted purchase and ensures that only
approved products are purchased against the existing contract.
The billing and payment system then verifies that the price
charged matches the fee specified in the contract.

12. Product-price verifications : product-price.
If your organization is likely to purchase a specific set of products
regularly, your transaction database can be built to understand
the typical price range for a specific product and flag purchases
made outside of that product’s minimum and maximum price
threshold.
The system should track both high and low tolerances to ensure
that settlement is not conducted on an erroneous transaction
that will later be corrected or reprocessed.

13. Product-price verifications: merchant-
product.
Merchant-product verifications can be based upon merchant
standard industrial classification (SIC) codes, geographic
location, or other similarities between collections of suppliers.
For example, the transaction database for a billing and payment
program can be built to understand that your employee did not
purchase a new luxury sedan from the local stationary shop nor
a ream of paper from the local car dealership.

14. Cost savings that cannot be taken for
granted.
Rejected invoices or invoice disputes create unnecessary repetition
within the payment process. An effective invoice processing
solution can significantly reduce the cost to process transactions
and eliminate man-hours currently dedicated to invoice dispute
and resolution – a cost-savings that should not be undervalued.

15. Multi Service. Innovation Where it Matters.
Multi Service specializes in the design, implementation and management of
custom billing and payment solutions. The company collaborates with clients to
isolate specific commercial credit and payment issues and design tailored
payment solutions to meet business objectives
Thank you for your interest in this free presentation. We welcome your
comments, feedback and suggestions. Please consider sending us a note
about how this presentation has helped you. Check out the Multi Service
commercial payments blog at multiservice.com. If would like to contact a private
label business development analyst directly, you can call +1-913-451-2400 or
email contact-private-label@multiservice.com.