Peeriosity Insights: Recent Research Findings Summarized insights. To view detailed research results, contact us to inquire about membership.

Company Practices in Handling Problem Invoices

Continuous process improvement, reengineering, challenging the status quo, and delighting the customer are concepts that the world’s best companies both embrace and pursue vigorously.  For the Purchase-to-Pay process, and specifically for Accounts Payable, navigating the achievement of these objectives is complicated when it comes to the right approach for resolving invoices with obvious errors, including missing purchase order numbers, incorrect bill-to name or supplier name, or incorrect currency.  Returning the problem invoice to the supplier for resolution is appealing (since they want to get paid action is almost guaranteed); however, the root cause might not be with the supplier, and regardless, depending on what is being purchased the consequences to the business can be severe.

Like most problems, determining the best approach is much easier when you have deep insight into the experiences of others.  Recently, using Peeriosity’s iPollingTM  capabilities, we were able to quickly and easily research this issue. Within a few hours of releasing two simple polling questions, all member companies had direct insight into the actual experiences of peers, with the ability to see who responded and what company and region they represented, along with the option to contact peers directly using Peeriosity’s built-in communication tool, Peer MailTM.   

The first polling question asked whether or not problem invoices are returned to the supplier.  Almost every option was equally represented, with 40% of Accounts Payable organizations reworking invoices, 30% that return the invoices without further rework, and 30% where depending on the specific circumstances, it varies between returning and reworking problem invoices.

ipolling does your accounts payable department return invalid invoices to suppliers Practices in Handling Problem Invoices

In instances where invoices are returned, only 14% of member companies report that they typically return the invoices in hard copy via the postal service.  For 72% of member companies, the most common approach is to return problem invoices using email- with 58% reporting that this return email process is manual and 14% indicating that the email is created automatically.  Here are the details:

if your company returns invalid invoices, what are the Practices in Handling Problem Invoices ipolling results

The poll generated a healthy discussion among participants.  Here are some of the many comments added by iPollingTM participants:

  • The return method depends on how the invoice was delivered to us.  Invoices received as paper in the mail are returned by mail, emailed invoices are returned by email, EDI invoices are rejected and the supplier is sent an EDI 824 message with the rejection details.
  • In North America, if the information is missing, the invoice is parked in SAP until the problem is resolved offline. Typically, the first few attempts are through e-mail before we pick up the phone to resolve.
  • Invoices are sent back via a case management tool.
  • We do not have the capability to do this automatically, so it is a manual email back to the vendor.  If we don’t have an email address we mail via the postal service.
  • We reject invoices back to the supplier when the invoice contains an invalid PO, no PO, or an incorrect bill-to address. For indirect purchases, exceptions are followed up on internally by AP.  For direct material invoices, we pay the invoice in full and debit the supplier back on the same payment for pricing overcharges and material shortages.
  • We have various ways of notifying the suppliers of our returned invoices. A daily email notification is produced directly from the system, and the rejected invoices are also identified on the remittance advice to the supplier where they are processed through the system at zero dollar value with a suffix added (a rejection code) so the supplier can easily see which invoices have not been processed for payment. The buyers also notify suppliers for indirect purchases since the buyers are responsible to reject the invoices if they cannot be processed.

Does your Accounts Payable organization return problem invoices to suppliers?  What efforts do you take to understand the root cause for the error, so that the number of errors can be reduced or eliminated? 

Who are your peers and how are you collaborating with them?


 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

Peeriosity members are invited to log into to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.

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