Invoice Processing Template for Trades & Construction
A standardised procedure for receiving, validating, coding, approving, and recording supplier invoices to ensure accurate and timely payment.
Purpose
To ensure every supplier invoice is captured, verified against purchase orders or contracts, correctly coded to the chart of accounts, approved by authorised personnel, and entered into the accounting system within agreed timeframes.
Scope
Covers all supplier and contractor invoices received via email, post, or electronic portal from receipt through to approval and posting. Excludes payment execution, which is handled by the Vendor Payment Processing SOP.
Prerequisites
- Access to the accounting or ERP system with appropriate user permissions
- Current chart of accounts and cost-centre structure available
- Approved purchase orders or contracts on file for matching
- Delegation of authority matrix defining invoice approval limits
Compliant with Safe Work Australia requirements, state WHS legislation, and Building Code of Australia (NCC) documentation standards.
Step-by-Step Procedure
Receive and Log the Invoice
Collect invoices from all channels (email, post, supplier portal) and log them in the invoice register with a unique reference number and receipt date.
- 1.1Check the shared finance inbox and physical mailbox daily
- 1.2Stamp or digitally mark each invoice with the date received
- 1.3Assign a sequential reference number in the invoice register
- 1.4Scan paper invoices and save to the central job card management folder
- Set up email rules to auto-sort supplier invoices into a dedicated folder
- Use OCR scanning to speed up data extraction from paper invoices
Validate Invoice Details
Check the invoice for completeness and accuracy including ABN, correct entity name, GST treatment, line-item descriptions, quantities, and unit prices.
- 2.1Confirm the supplier ABN is valid using the ABN Lookup tool
- 2.2Verify the invoice is addressed to the correct legal entity
- 2.3Check that GST amounts are correctly calculated where applicable
- 2.4Ensure the invoice date, due date, and payment terms are stated
- Keep a supplier master list with verified ABNs for quick reference
- Flag invoices without a valid ABN for PAYG withholding obligations
Match to Purchase Order or Contract
Perform a two-way or three-way match of the invoice against the original purchase order and goods receipt or delivery docket to confirm that goods or services were ordered and received.
- 3.1Locate the corresponding purchase order number referenced on the invoice
- 3.2Compare invoice line items, quantities, and prices against the purchase order
- 3.3Verify goods receipt or service completion sign-off is on file
- 3.4Investigate and resolve any discrepancies before proceeding
- Job card all variances and obtain written explanations from the supplier or requestor
Code the Invoice
Assign the correct general ledger account codes, cost centres, job codes, and tax codes to each line item on the invoice.
- 4.1Select the appropriate expense or asset account from the chart of accounts
- 4.2Apply the correct cost centre or crew code
- 4.3Assign a job code if the expenditure relates to a specific job
- 4.4Apply the correct GST code (GST-free, input-taxed, or standard)
- Refer to the coding guide for frequently used account and cost-centre combinations
- When in doubt, escalate coding queries to the Finance Manager before posting
Submit for Approval
Route the coded invoice to the appropriate approver based on the delegation of authority matrix, including all supporting documentation.
- 5.1Attach the purchase order, delivery docket, and any variance notes to the invoice
- 5.2Identify the correct approver based on dollar value and crew
- 5.3Submit via the approval workflow in the accounting system or email
- 5.4Set a follow-up reminder if approval is not received within two business days
- Automated approval workflows reduce bottlenecks and provide an audit trail
Review and Approve
The designated approver reviews the invoice, coding, and supporting documents and either approves, queries, or rejects the invoice.
- 6.1Confirm the expenditure was authorised and is within budget
- 6.2Verify the coding is appropriate for the nature of the expense
- 6.3Check that the matched documentation supports the amount claimed
- 6.4Record approval with signature or electronic approval stamp
- Do not approve invoices if supporting documentation is incomplete — return for correction
Post to the Accounting System
Enter or finalise the approved invoice in the accounting system, ensuring it is recorded in the correct period and the accounts payable ledger is updated.
- 7.1Enter all invoice details into the accounts payable module
- 7.2Verify the posting date falls within the correct accounting period
- 7.3Confirm the supplier ledger balance has updated correctly
- 7.4File the digital copy of the invoice and approvals for audit purposes
- Run a batch posting at end of day to ensure all invoices are captured in real time
Schedule for Payment
Add the posted invoice to the payment schedule in accordance with the agreed payment terms, ensuring it is ready for the next payment run.
- 8.1Check the invoice due date and assign it to the appropriate payment batch
- 8.2Flag any invoices eligible for early-payment discounts
- 8.3Confirm that the supplier bank details on file are current
- Prioritise invoices with early-payment discounts to maximise savings
Quality Checkpoints
Common Mistakes to Avoid
Expected Outcomes
Invoices are validated, approved, and posted within three business days of receipt.
Fewer than 0.5% of invoices processed are identified as duplicates.
At least 98% of invoices are correctly coded on first entry with no reclassification required.
Frequently Asked Questions
What is the policy for invoices received after the period-end cut-off?
Invoices received after the cut-off should be accrued in the period to which the expense relates if material. Follow the accruals procedure and post the invoice in the subsequent period.
How often should the invoice register be reconciled?
The invoice register should be reconciled to the accounts payable sub-ledger at least monthly as part of the end-of-month reconciliation process.
How do I handle an invoice from a supplier without an ABN?
If a supplier does not provide an ABN, you are generally required to withhold 47% from the payment under PAYG withholding rules. Confirm the obligation with your Finance Manager and apply the withholding before scheduling payment.
What should I do if an invoice does not reference a purchase order?
Contact the supplier to request the purchase order number. If no PO exists, follow the retrospective purchase order process and obtain written approval from the budget holder before processing.
Can an invoice be approved by the person who raised the purchase order?
No. Segregation of duties requires that the approver is different from the person who raised the purchase order. The delegation of authority matrix defines the correct approver.
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