Strategic Guide to e-Procurement
Payment Methods and Tools
Recurring Payments
Recurring payments are used in instances where an agency needs to make a specific number of payments for a fixed amount over a fixed period. Benefits of using a recurring payment are that it negates the need to process multiple invoices or create a purchase order.
Recurring payments are set up in the FMIS/ERP where a fixed payment is made for a period of time to the supplier
Recurring payments can be established through the agency FMIS/ERP. To establish a recurring payment the following information must be known:
- supplier name
- supplier number
- number of payments
- dollar amount of payments (which must be constant)
- payment start date
- payment end date.
To implement a recurring payments program the following actions must occur:
- establish whether or not a purchase order or contract will be required of a supplier
- create a form for stakeholders to complete to initiate a recurring payment
- the form should be approved by the appropriate delegate
- accounts processing would need to initiate notification approximately 30 days before the recurring payments are scheduled to expire.
Suitable Categories
A number of specific criteria must be met in order to use recurring payments.
Because the payments must be fixed and made repeatedly on set dates, they are typically used for:
- Subscriptions
- Newspapers
- Outsourcing
- Property
- Cleaning
- Parking
- Fleet
- Rent/Leases
- Utilities
- Mobile Phones
- Insurances
Recurring payments can only be used where payments are fixed and the number of payments required is also known
Benefits of using Recurring Payments include:
- reduce administration for ongoing payments once they are established
- eliminate the need for regular invoices to be sent by suppliers.
Challenges of using Recurring Payments include:
- the payment amount must be the same for the entire payment period
- recurring payments may need to be reviewed on a periodic basis to ensure they do not continue beyond the life of the contract.
Consolidated Electronic Invoicing (CVI)
Consolidated Electronic Invoicing is where multiple orders across billing codes are consolidated into one bill and sent to accounts processing
Electronic Invoicing is the act of suppliers electronically transmitting an invoice to agencies. In advanced methods of electronic invoicing, the buying organisation is enabled to receive and process the invoice using fully automated processes.Consolidated Electronic Invoicing is where multiple orders across billing codes are consolidated into one bill and sent to accounts processing. The consolidated electronic invoice is structured so that it may be automatically uploaded into the FMIS/ERP system and appropriated to cost centres.
There are multiple options for transmitting and receiving an electronic invoice.
Option 1: Email invoice as PDF or electronic document
This method is only slightly more efficient than sending a paper invoice, but can speed up the cycle time. The electronic document is sent via email to the agency and their accounts processing department print it out and key it in to the FMIS/ERP system for payment.
Option 2: Email spreadsheet in CSV format for upload
Some suppliers with high volume transactions consolidate monthly invoices in a spreadsheet in CSV format that is then automatically loaded into the agency FMIS/ERP system through a simple upload program. This is a common method of receiving invoices from high volume suppliers.
CSV: Comma Separated values is a text file format where each line consists of multiple fields, separated by commas to delimit the data points
Option 3: Send Invoices in XML format
Extensible Markup Language (XML) is a standard way or formatting text files for data interchange
Invoices sent electronically in XML format rather than CSV format have similar benefits to the CSV option but can be more flexible and robust. Relatively few suppliers are invoicing their customers in XML format at this time, but this is expected to increase over time.
Option 4: Invoicing via Supplier Portal
Suppliers logon to the Supplier Portal via a secure Internet web site and submit their invoices through the web site directly to the buying organisation. This has the advantage that any supplier who has access to the internet can use the supplier portal, and the invoice can be loaded directly into the buying organisation’s ERP system. The disadvantage of this method is that the suppliers need to key in the invoices manually to the supplier portal system.
Benefits of using Consolidated Electronic Invoicing include:
- can be a low cost method of processing invoices through one consolidated upload into a FMIS/ERP system
- many FMIS/ERP systems include a “bulk upload” facility as a standard feature
- many suppliers are able to provide consolidated invoicing in a standard electronic format at minimal cost.
Challenges of using Consolidated Electronic Invoicing include:
- significant work may be required to allocate the individual invoice components to the appropriate cost centres within the agency
- some suppliers may need to put in place special invoice processes to use consolidated invoicing outside their normal billing process
- setup of consolidated invoicing requires thorough testing to ensure that the data interface is working smoothly and accurately.
Contact for information on this page: ICT Procurement