10 Steps You Can Automate for Partial Invoices and Shipments

Automate Accounting for Partial Invoices and Partial Shipments

Supply chain issues are forcing many vendors to make partial shipments to fill customer orders. Partial shipments complicate the AP and invoicing process, and accounting documents must be changed. Stampli’s AP automation and invoice management software makes accounting changes much easier and you can even automate the process of paying for a partial shipment.

One of the ways Stampli helps streamline partial invoices & partial payments is that it offers flexibility and visibility to everyone involved in the process. If a shipment is late or incomplete, you’ll need to communicate with the vendor and with spending approvers. The AP department needs to document changes as they occur. These issues apply whether or not you use a purchase order (PO) to buy items from a vendor. This is all possible within the Stampli platform.

To illustrate, assume that Prestige Remodeling is working on the Jones kitchen remodel and sends a purchase order to Reliable Appliances on March 1st:

Purchase order #615Date: March 1st
Sub Zero Refrigerator$3,000
Amana Dishwasher$400
Whirlpool Double Oven$1,700

On March 20th, Reliable ships the dishwasher and the oven to Prestige and sends an invoice that matches the original PO. Reliable also provides a shipping receipt that describes the items that were shipped.

Invoice #3002
Client: Prestige Remodeling
Invoice Date: March 20th
Due Date: April 20th
Sub Zero Refrigerator$3,000
Amana Dishwasher$400
Whirlpool Double Oven$1,700

Communicating and Documenting Changes

The partial shipment must be communicated to all parties and documentation must be changed. Stampli’s invoice page allows you to view the invoice, all approvals, and questions about the invoice on one screen. You can also access the PO, review each line item, and make changes. The vendor, on the other hand, can access information using the vendor portal.

Assume that when Prestige Remodeling receives appliances for a customer remodeling job, the company posts an entry to appliances (an inventory account), and increases accounts payable. The appliances are assets until they are used for a particular customer job. When the appliances are installed, Prestige increases the appliances expense account and reduces the appliances inventory account.

A business can account for a partial shipment in several ways.

Waiting for the Remaining Items

Prestige may choose to wait until the remaining items are shipped and then pay the invoice in full. The company notes which items were received on the PO and the data on the PO and the invoice remains the same.

Additionally, if using Stampli you can note which items were received directly on the invoice page. This means that the vendor and your staff can easily check the status of any partial deliveries and partial payments

Note: This method may create a cash flow problem for the vendor, particularly for a large order. Rather than receiving a partial payment, the vendor will not receive any cash after the dishwasher and oven are shipped. If it takes 60 more days to ship the refrigerator to Prestige, the vendor must plan for the delay in payment.

To maintain a good relationship with the vendor, Prestige may instead choose to pay for the items received on March 20th.

Paying for the Partial Shipment

Paying for partial shipments is often very manual and requires multiple actions. Here are the accounting steps needed to pay for the dishwasher and the oven after they are delivered:

  • New invoice: Reliable cancels invoice #3002 and issues a new invoice #3010 for the two items received. When the refrigerator is shipped to Prestige, Reliable will create a separate invoice. 
  • Purchase order: The dishwasher and the oven are removed from purchase order #615, so that the only item remaining is the refrigerator. 
  • Receipt of items: When the warehouse manager confirms that the dishwasher and the oven were received, Prestige should increase the appliance- inventory account by $2,100, and increase accounts payable for $2,100.
  • Payment: Prestige’s CEO reviews the purchase order, new invoice #3010, and the shipping receipt for the dishwasher and the oven. The CEO approves a $2,100 payment for the new invoice.
  • Accounting entry: Prestige reduces accounts payable by $2,100, and reduces cash by $2,100.

This list summarizes the typical steps required to pay for a single partial shipment:

  1. Cancel old invoice
  2. Issue new invoice
  3. Document invoice changes
  4. Confirmed that items were received
  5. Remove received items from PO
  6. Accounting entry to increase accounts payable
  7. Send documentation to approver
  8. Obtain approval 
  9. Pay vendor invoice
  10. Accounting entry to reduce accounts payable and reduce cash

Each step must be documented so that the accounting department has an audit trail of what occurred. Everyone involved in the process must communicate with each other and those communications should be documented. 

If you’re completing any of these steps using a manual process, the risk of error is higher. You can reduce the number of hours worked and increase accuracy using automation.

How Stampli Makes the Process Easier   

Stampli provides AP automation that makes it easier for AP teams to collaborate as they verify invoices and gain control over the invoice lifecycle. Businesses use a single platform to process invoices and payments. As this podcast episode points out, using technology gives businesses the ability to scale.

Sync to your ERP data 

The Stampli AP automation tool syncs to your ERP system. Your general ledger accounts, vendor list, invoices, and open POs are posted to Stampli, and data between the two systems is constantly updated. If you make changes due to a partial shipment, both the ERP system and Stampli are updated automatically.

Real-time data capture and machine learning

When an invoice is uploaded, Stampli uses AI and machine learning to auto-populate fields, such as the invoice number and GL accounts. Stampli will recommend approvers, based on past invoices. You can add purchase orders and other documents as attachments. 

Dynamic approval to identify the right people for faster decisions

Stampli’s tools speed up the invoice coding process, allowing users to get invoices to approvers faster. You can send invoices to multiple approvers, and the entire process is automated.

Central communication hub to answer questions and provide updates

Poor communication slows down the invoice review and approval process. Companies that don’t use automation may send emails, text messages, or make phone calls to verify the receipt of goods, or to ask other questions.

Stampli provides a communication hub with each invoice, and each step in the process is documented. Questions and answers are listed, so that everyone can review the status of an invoice. You’ll also have access to past invoices, supporting documentation, and activity history.

Using the vendor portal

Vendor relationships are important, and Stampli provides each of your vendors access to a vendor portal. Vendors can see the status of invoices that are being processed in Stampli. They can view each invoice, the processing status, and ask questions.

Stampli’s AP system can automate each step required to pay a vendor for a partial shipment.

Save time, increase accuracy, scale your business

Stampli’s end-to-end platform gives you full control and visibility over all of your corporate spending- all in one place. With Stampli, you can sharply reduce the time needed to process an invoice, eliminate manual errors, and set up your business for future growth. Don’t just manage spend, control it with Stampli.

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