Breaking down the legal invoice handoff to accounts payable
An invoice from outside counsel is received. It’s reviewed by the in-house legal team. It’s approved (or sometimes rejected, sent back to the outside vendor for modifications, and then starts from the beginning, but you get the idea).
What happens next? The finance department or the accounts payable team needs to be made aware of the invoice, and they need to pay it!
Disparate Systems and Processes Between Finance and Legal
As autonomous departments, finance and legal function in different ways and use different applications and processes. And, although these departments need to work closely together, it does not always mean that the software chosen or processes used by each group are the most efficient.
The passing of an approved invoice generally happens in one of the following three ways:
1. Manual Handoff
A literal handoff has been happening between in-house counsel and finance for decades, maybe even centuries. I don’t have to point out that printing, stamping, signing, adjusting, and ultimately passing on a paper invoice is far from productive. It can lead to delays in payment at the very least. Finance departments are unlikely to prefer this method as this means they need to manually enter all of the invoice data into their separate system. Plus, neither department has visibility into invoice status or trail of submitted files. Check out our customer case study with AdRoll who found themselves in this exact scenario.
2. Email Handoff
A more modern approach allows legal departments to send approved invoices electronically to finance or AP for payment. Whether it be via email or via a legal e-Billing software, invoices can be sent directly to an email alias like [email protected] These must then be transferred into the correct document type for upload or, like option 1, manually entered into the AP system. This approach is better; it solves some present-day dilemmas.
Since legal and finance may not find themselves in the same building, let alone the same city, running the invoices from one floor to another may no longer be an option. Not to mention the security of the document contents. Many invoices detail sensitive company information that really shouldn’t be floating around the office. Sending them electronically insures they are handled by pre-approved personnel. It’s a much better solution than the previous, but still requires significant man hours to complete.
3. Automated Handoff
If you are lucky, your legal management software synchronizes with your accounts payable solution. As soon as an invoice is approved within your legal e-Billing solution, the file is automatically sent and retrieved by the AP system in place. By connecting these two systems and processes – with the integration type that works best for your legal team – you are able to eliminate manual re-entry of data, file uploads or status check-ins.
Unfortunately, while the third is the most desired handoff, it is not the most common. Yes, even Fortune 500 organizations still handle things in a seemingly archaic manner. But, it isn’t their fault. Legacy systems are designed based on old habits and are unable to adapt to modern workflows and recently developed AP software. There are instances where a connection can be made between the two applications, but building this connection requires significant development and coding. It isn’t always successful, and it’s definitely not scalable.
What are Corporate Legal Departments to Do?
As a general counsel or head of legal, it is important to make sure your team is set up for success. First and foremost, make sure that you have a robust legal operations platform that can synchronize with your accounts payable solution and process. For example, if you know that your finance team uses Coupa software, you would be doing yourself a favor by selecting a legal ops platform with e-Billing that integrates seamlessly with it.
No process, no problem! As your organization grows, that process will come. Partnering with a legal operations provider with a solid customer success program can help you build out the best process for you. Having a foundation that can adapt with your changing business needs means less headache and frustration down the road.