"The ability to simply flip an electronic purchase order into an invoice with a click of the mouse. With paper invoices, it can take weeks or months to get paid. In addition, it is always know when we will get paid, which is a great help in forecasting cash flow”

‘PO Flip’ in simple terms refers to the process of ‘Flipping’ a PO to create an invoice by the vendor so that the invoice can then be dispatched to a customer.

To understand better, let’s take a business case:

ABC Confectionary is in the business of manufacturing and selling cookies. To manufacture cookies, ABC Confectionary needs to procure 5 tonnes of sugar from Alpha Sugars. So, to complete the procurement process, ABC Confectionary submits a purchase order (PO) and submits to Alpha Sugars for5 tonnes of sugar. Now, the modern electronic tools allow ABC to submit the PO electronically directly into the accounting system of Alpha Sugars.

Alpha Sugars, can then ‘flip’ the PO received and flip the PO to create an electronic invoice which can then be immediately submitted to ABC Confectionary to be recorded in their Accounts Payable (AP) system.

Now, having receiving the invoice, the Finance Team of ABC Confectionary can review the purchase and authorize an immediate electronic payment through a click of a button thus reducing the amount of administrative effort that would have to be invested by the Finance Department.

     

 

Benefits

In a lot of organizations, especially in manufacturing sector, the number of POs that are raised by the Buyers and the invoices that are sent by Suppliers can run into several thousand a month. The Finance team can spend their time into analyzing and optimizing the payment of the invoices received by considering the discounts available rather than spending time on tracking the invoices received from Suppliers.

• Duplicate invoice payments
• Missing Payments due to invoices not recorded at all or not recorded properly.
• Missing or Duplicate Invoices
• It eliminates errors and exceptions
• It establishes the most value relative to Early Payment Discount opportunity. 
• Suppliers can create invoices in seconds rather than re-typing data that is already on the PO which saves time and cost in AR process.
• Finally it ensures the vendor will be paid on time or early which is purpose of PO Flip.

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