We shared a list of various entities which may exist for your client, http://faoblog.com/processes-ap-entities/
Another key thing to note is the approval matrix. The approval matrix is critical to understand as eventually, your AP process is responsible to clear genuine invoices and claims.
In this section, we purport to map a global client approval structure. Since we have already defined the locations and the personnel, we need to define the corporate approval matrix.
We have identified the following bases which may exist in an organization:
- Based on value of the invoice
- Based on priority or criticality
- Type of invoice
- Location based
- Supplier Based
Value based approval
The value based approvals would be a prime business rule to be addressed. Depending upon the sanction limit, the invoices will be routed to various concerned authorities.
Each rule will have one or more approvers attached to it. This would depend on the business authorities of the client, duly approved by the business leaders. Various situations in this could be:
- One person could be authorized to approve
- 2 or more personnel could be authorized, mandatory condition, all need to approve
- 2 or more personnel could be authorized, any one to approve
- 2 or more personnel could be authorized, mandatory condition, combination of any 2 or any three etc. need to approve
This will normally be enforced by specifying the mandatory approvers, followed by the optional approvers. This will then be supplemented by the minimum number of approvals required for a value level.
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