All About Non-PO Invoice

By Annapoorna


Updated on: Nov 29th, 2021


4 min read

When a business department needs to make a purchase, they usually opt for a well-defined purchase process by creating a purchase order. Some purchases are unique which require an alternate route through a non PO invoice.

Meaning of Non-PO Invoice

A non-PO invoice doesn’t have any associated Purchase Orders (PO), and these are usually the result of spending outside of the usual procurement process. These are also known as expense invoices and are typically used for indirect purchases. Some of the expenses which require non PO invoice includes:

  • Facility maintenance and cleaning
  • Utility payments such as water, electricity, telephone, broadband, etc.)
  • Legal services
  • Advertising expenditures
  • Travel and food reimbursements

Instances that require Non-PO Invoice

Urgency – When something is required urgently, the staff cannot afford to waste time looking for approvals from various parties.

Immaterial Value – A PO purchase is a best practice. However, a purchase order doesn’t make sense for smaller purchases. A small purchase doesn’t justify the efforts that are involved in the PO process.

Business and travel-related expenses – These charges, along with proper authentication, are also routed for payment through non-PO invoicing.

Advantages and disadvantages of raising Non-PO Invoice

A request for purchase via PO would require every stakeholder’s approval; the same would circulate across departments and several corners of the organisation. This process would be even more cumbersome and time-consuming if many stakeholders are large and work in different departments.

Some of the other benefits to using this system include:

  • Faster payments to the suppliers
  • Better transparency in the invoice payment process

Some of the other problems with non-PO invoices include:

  • As the non-PO invoices lack an associated purchase order, these invoices at times require more work in processing, creating a host of issues along the way. 
  • Determining how to route the non-PO invoices could be a challenging task, particularly when these invoices fail to include crucial information required for payment processing.
  • Also, when an invoice is fully approved, the accounts payables team performs header-level data entries. In the case of non-PO invoices, the crucial details of the purchase aren’t available, which denies the team to enter all the crucial information into the system.

Impact of Non-PO invoice on the buyer

The non-PO invoice processing can offer shortcuts and be convenient for some within a business unit but laborious and painstaking for others. In a manual setup, the workload increases intensely for processing the non-PO invoices. This delays proper accounting for the cost and means that the invoice might be sitting for weeks without resulting in a delay in payment.

Also, the delay in payment might invite several calls from the vendor or submission of a duplicate invoice, leading to duplicate payment.

Non-PO invoice processing

A non-PO invoice, as opposed to a PO-based invoice, hasn’t been pre-approved and, therefore, needs to go through the invoice approval process within the purchasing department.

A non-PO invoice typically undergoes a review and approval after the receipt by the business department who ordered such a purchase. Usually, the accounts payable department applies the coding and identifies the approver based on the information available on the invoice and to the best of their knowledge. 

In case the invoice details are limited, this could become a tricky situation. If the invoice doesn’t include some references of the customer, department, or business unit which placed such order or if the invoice consists of the wrong name, then someone from the accounts payable team has to follow up and identify the approver of the invoice.

Usually, there are internal approval guidelines that specify invoice amounts that require multiple approvals. Once all the required invoice approvals are obtained, the invoice moves to the accounts payable team for its final booking and, consequently, the payment.

Even the large and well-established companies process both the PO invoices and non-PO invoices day in, day out. But they’re fundamentally different and need different workflows. Though companies develop various policies and processes preferring PO-based purchases over non-PO, non-PO spending still cannot be eliminated. Non-PO invoices could only be limited but cannot be stopped completely.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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Quick Summary

Non-PO invoices are used for expenses outside regular procurement process. Advantages include faster payments, transparency while disadvantages are processing challenges. Impact on buyer can lead to delays and duplicate payments. Processing involves invoice approval, coding, and multiple approvals.

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