By Mary S. Schaeffer, Institute of Management and Administration (IOMA)
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Additional info for Accounts Payable: A Guide to Running an Efficient Department
2 Alternatives to the Three-Way Match evaluated receipt settlement (ERS), also known as paperless invoicing, invoiceless processing, and pay-on-receipt. ” In theory, this is true. It assumes, of course, that purchase orders (POs) are filled out completely and that terms of sale are included on the PO. For ERS to work, this is essential. The underlying principle behind ERS is simple. When a company receives something it ordered, it pays for it as agreed in advance with the seller. Becker explains the concept in a little more detail, as follows: (a) HOW ERS WORKS.
In order to make sure that everyone abides by the ground rules, consequences must determined, and then be paid, by those who go outside the proper channels. This, of course, is very difficult in the corporate environment; but perhaps a charge could be leveled against the personal bottom line of the executive who is ultimately responsible. Or if a bonus is tied to bottom-line profitability, this might be an effective route. Getting such a policy implemented will be virtually impossible for an accounts payable manager without strong upper management backing.
An anonymous accounts payable manager from Chicago does not seem to agree. “I think they’re a dumb idea! They simply tell a vendor that someone may order up to some amount from you, but often there are no controls in place to check to see whether expenditures are adding up to or exceeding the approved amount. Purchasing people like them because they think it helps control expenditures. , the control issues). Review your own operations before deciding whether blanket POs will work in your organization.
Accounts Payable: A Guide to Running an Efficient Department by Mary S. Schaeffer, Institute of Management and Administration (IOMA)