SAP Ariba Solutions
Steps to Success for Non-PO Invoicing
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Table of Contents
2
Gain Visibility and Control Over Your
Non-PO Invoices
3
Improve Efficiency of Non-PO Invoicing
5
Maximize the Benefits of Your New
Invoicing Process
Gain Visibility and Control Over
Your Non-PO Invoices
Improving your processes for managing invoices that don’t have associated purchase
orders (POs) can help you maximize invoice processing efficiency and reduce maverick
spend. By combining the right software with a clear and tightly managed policy, you
can gain visibility and control over non-PO spend and benefit from reduced paper-based
processing, efficient online approvals, and historical reporting.
Non-PO invoicing refers to invoices that are not
related to a PO or an existing contract, and such
invoicing occurs in exceptional cases where formal
sourcing and procurement processes are not
req­­uired. In an ideal world, every invoice would neatly
match a PO or correspond with a well-sourced and
negotiated contract. In reality, however, not all of
your spend can be governed by such a formal process – and it might not make financial sense to try.
Executing sourcing events, negotiating contracts,
and creating POs all take time and incur real cost
for your business. Some purchases are so small,
and some suppliers so infrequent, that you just
can’t justify the expense.
Even so, you can still maintain control over this
process.
SAP® Ariba® solutions support your organization by
helping you move non-PO invoices onto the network
and into your approval workflow. They allow you to
define rules and require approvers to keep a close
eye on what can be a difficult-to-manage buying
channel. By moving these purchases off paper and
onto the network, you can also monitor spend
volumes using management reporting tools.
These solutions will never make non-PO invoicing
as desirable or beneficial as other channels that
provide better control over cost and compliance.
However, they do represent an important step away
from the inefficient and opaque paper world and
can help you realize significant accounts payable
efficiencies in the process.
SPEND TYPES FOR NON-PO INVOICING
•• One-time and infrequent suppliers
•• Employee reimbursements
•• Freelancer payments
•• Tax remittances
•• Charity contributions
•• Suppliers without negotiated contracts
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Improve Efficiency of Non-PO Invoicing
FIRST STEPS TO NON-PO INVOICING
You can support your non-PO invoicing processes
by using functionality from SAP Ariba Procurement
solutions and completing these steps:
1. Craft your policy: Decide who should be allowed
to create non-PO invoices – suppliers, accounts
payable staff, the business users initiating the
original purchases, or a combination. You can
also define which categories of spend your
organization should allow through the non-PO
invoicing process.
2. Implement the technology: Amend your buyer
account configuration to allow suppliers to submit
non-PO invoices, as desired. Set the appropriate
permissions for accounts payable or business
users. Finally, define the rules that should govern
non-PO invoice approvals.
3. Educate all stakeholders: Depending on your
policy choice above, you may need to provide
guidance to users or suppliers on the proper
steps and required information for creating
and submitting non-PO invoices.
HOW NON-PO INVOICING WORKS
There are two elements involved in the non-PO
invoicing process using SAP Ariba solutions:
invoice creation as well as review and approval.
Invoice Creation
You can create non-PO invoices in four ways:
•• Sent through cXML or EDI directly from
your supplier to Ariba Network, which is our
recommended best practice
•• Manually entered into Ariba Network by your
supplier if direct integration is not possible
•• Automatically created from a paper invoice using
the SAP Ariba invoice conversion services add-on,
if purchased
•• Manually entered into the SAP Ariba Procurement
solution or Ariba Network by your accounts
payable team or the original purchaser, based
on a paper invoice received from your supplier.
Although this sacrifices the efficiency gains of
automation, it preserves the visibility and process
control of online review and approval. Direct entry
through Ariba Network requires appropriate
access and permissions, which may not be in
place for these users.
Moving non-PO invoices onto the network and into your
approval workflow using SAP Ariba solutions allows you
to define rules, require approvers to keep a close eye on
this buying channel, and monitor spend volumes using
management reporting tools.
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Non-PO invoicing does make sense in some cases.
Think about ordering lunch for your staff at the end
of the quarter: it costs only a few hundred dollars,
you are unlikely to have added a local restaurant’s
menu as a procurement catalog, and your order is
made by telephone rather than PO. If catered lunch
were a daily or weekly occurrence, a formal process
to obtain multiple bids and negotiate more favorable
pricing would be justified because of the total dollar
spend (and the potential dollars to be saved). In situations where purchases are low dollar and sporadic,
This lack of supporting documentation is the main non-PO invoicing is sufficient to provide visibility
reason that you should limit use of non-PO invoicing. and keep track of spend.
The lack of control means that you have not had the
opportunity to enforce the use of a preferred supplier
or to secure the best-negotiated pricing. As such,
you should use this method only in situations that
do not fit into traditional PO-based procurement
processes.
Review and Approval
One you have created a non-PO invoice, the functionality in your SAP Ariba Procurement solution
routes it for approval. For two reasons, the approval
flow is typically simpler than for other types of
spend. First, there is no PO or contract to match
the invoice against. Second, receipt of goods or
services for these low-dollar transactions is usually
assumed, rather than reflected in a formal receiving
document.
You can support your non-PO invoicing processes by using
functionality from SAP Ariba Procurement solutions and
completing three steps: crafting your policy, implementing
the technology, and educating all stakeholders.
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Maximize the Benefits of Your
New Invoicing Process
BEST PRACTICES FOR NON-PO INVOICING
The non-PO invoicing functionality of SAP Ariba
solutions is an invaluable tool for your business. The
steps below can help you achieve the best results
possible from your non-PO invoicing processes:
••Limit your non-PO invoice use: This method
should be the exception, not the rule. Repeat
suppliers and those with high spend volumes
should not be eligible for non-PO invoice submission. Likewise, your organization should not
allow this approach in categories that have been
sourced or for which catalogs are in place.
••Review your spend profile: Before deciding
on limits and thresholds, look at your spend to
understand where cutoffs should be. How many
suppliers send you fewer than five invoices per
year? Fewer than 10? On the dollar volume side,
with how many suppliers do you spend less than
$20,000 annually? $5,000? Understanding this
profile can help you define the right set of rules
to keep non-PO invoicing in check – and use it
in situations that can drive the biggest financial
benefit.
••Implement annual limits: To prevent non-PO
invoicing from becoming the method of choice
for avoiding formal procurement processes, put
an annual cap on spend with a non-PO supplier.
For example, require POs on all purchases from
suppliers with whom you spend $5,000 or
more annually.
•• Make supplier management a partner: Because
you should use non-PO invoicing only for one-time
or infrequent suppliers, there is a high likelihood
that these suppliers do not exist in your purchasing
systems. Supplier management needs to be
inclu­d­ed in the process. Consider adding suppliers
to the approval workflow to ensure that you add
new ones as part of the trackable workflow and
remove any duplicates.
••Have buyers do some legwork: The business
user who originates a small-dollar or low-volume
purchase is in the best position to know where
costs should be allocated. By allowing the frontline purchaser to create a non-PO invoice in the
system, you can remove the burden of initial
creation and coding from your accounts payable
team while still allowing them to review the invoice.
••Alter approval thresholds: You can increase
control and compliance even further by customizing your solution. As another risk-mitigation
mechanism, apply lower approval thresholds than
you currently do for PO-based purchases. For
instance, if you require manager-level approval
for PO purchases over $5,000, require managerlevel approval for non-PO purchases over $1,000.
Add a second level of approval at the director
level for any non-PO purchases over $2,500.
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FIND OUT MORE
To learn more about how SAP Ariba solutions can
help you manage non-PO invoicing and related
processes, please consult:
•• Our Invoice Management page, which details
the breadth of our capabilities
•• The Help section of your Ariba Network buyer
account (requires login), where you can find
online help and detailed guides on:
––Invoicing and payment processes
––Creating and managing invoices
––Reconciling invoices
•• Our master “Buying Process Playbook” and our
“Steps to Success for Invoice Against Contract”
document for a preferred alternative to non-PO
invoicing with repeat suppliers
•• Your SAP Ariba account executive for information
on training through our SAP Ariba Best Practices
Center service, configuration assistance through
our solution optimization service, or strategic
guidance from SAP Consulting services
Non-PO invoicing is suitable for situations that do not fit
into traditional PO-based procurement processes. Where
purchases are low dollar and sporadic, non-PO invoicing
provides visibility and helps you keep track of spend.
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