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Invoice Troubles – Where’s the Error?

errorDid you know that about one third of the invoices retailers receive from their vendors have some type of discrepancy with the actual order received. If that is surprising, what's even more alarming is the time it can take to track down and fix the error – time that translates into, money of course.

The majority of errors, by the way, have to do with the quantity of items (a smaller percentage of discrepancies are the by-products of pricing errors), and an error can occur at any juncture. Did employees in the retailer's warehouse incorrectly count items as they were unpacked from an incoming shipment? Did they count correctly but record it wrong, and then hand that incorrect amount to accounts payable? Did the vendor ship the wrong amount? Or perhaps the carrier who delivered the goods made a mistake?

Finding where the discrepancy occurred might be painless, but it also might be time-consuming and costly. That's because the investigation requires plenty of manual processes, including re-counts, phone calls, account reviews, etc. The longer it takes, the more likely more serious problems can crop up. If fewer goods were received than ordered, customers might find empty shelves and take their money elsewhere. If too many goods were received, there might be overstocks.

It's important to note that the more manual processes involved in ordering and invoicing – within both the retailer's and vendor's operations – the greater likelihood for errors. Using automated EDI systems can help. An advanced shipping notice (ASN), or EDI 856, provides the retailer with clear and detailed information about what to expect when the shipment arrives. It tells them how the how the goods were packed for shipment and how many items will be in the shipment, and often includes product descriptions, carrier information, and even order information. An EDI 856 also alerts the retailer that the goods have been shipped so they are ready to receive them.

ASN data can be loaded into a warehouse management system so when shipments are received and employees begin unpacking and counting them, they can see the amount that's expected, and any discrepancies can be flagged immediately. ASN data also can be loaded into accounts payable systems to automate correlation between information from the warehouse and information from the vendor. All of the automation drives up efficiencies and accuracies, which ultimately save time and money.
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