Meaning
Verification steps involve a review by a finance officer or an automated system to confirm that the prices and quantities on the document are accurate. Before an invoice authorization occurs, the billing is compared against a purchase order and a receiving report to form a three way match. This internal control prevents overpayment and protects the cash flow of the purchasing organization.
Approval Workflow
The document moves through a chain of command where different levels of management provide sign off based on the total value of the transaction. For an invoice authorization, the department head who requested the service must first certify that the work was completed satisfactorily. This step creates a clear audit trail that links the expense to a specific project and budget line.
Discrepancy Resolution
Errors found during the review phase trigger a hold on the payment until the vendor provides a correction or a credit note. When invoice authorization is denied, the procurement team contacts the supplier to investigate why the shipped quantities differ from the billed amounts. Communication continues until the records in both systems are reconciled.
Resolving these issues before the payment run maintains the integrity of the accounting records and prevents future disputes.
Payment Execution
Once the final approval is recorded in the enterprise resource planning system, the debt is scheduled for settlement according to the vendor’s credit terms. Timely invoice authorization allows the company to take advantage of early payment discounts and avoid late fees. The finalized record serves as a primary source document for tax audits and financial reporting.
