Standard operating procedure
Vendor Invoice Approval
1Purpose
This procedure explains how vendor invoices are received, verified, approved, and scheduled for payment. It protects Meridian from duplicate or unauthorized payments and makes sure vendors are paid accurately and on time.
2Scope
Applies to all vendor invoices for goods and services charged to any Meridian cost center. It does not cover employee expense reports (SOP-FIN-009) or payroll.
3Roles and responsibilities
| Role | Responsibility |
|---|---|
| AP specialist | Logs invoices, performs the three-way match, checks for duplicates, and routes for approval. |
| Cost center manager | Confirms the goods or services were received as ordered; approves invoices up to $5,000. |
| Finance director | Approves invoices from $5,000.01 to $25,000. |
| Chief financial officer | Approves invoices over $25,000 and any exception to this procedure. |
4Definitions
| Three-way match | Confirming that the purchase order, goods receipt, and invoice agree on item, quantity, and price. |
| PayFlow | Meridian’s accounts payable system, where every invoice is logged and approved. |
| Tolerance | The allowed variance between PO and invoice: the lesser of 2% or $100. |
5Approval thresholds at a glance
| Invoice amount | Required approver | Target turnaround |
|---|---|---|
| Up to $5,000 | Cost center manager | 2 business days |
| $5,000.01 – $25,000 | Finance director | 3 business days |
| Over $25,000 | Chief financial officer | 3 business days |
6Procedure
Figure 1. Invoice approval screen in PayFlow. Numbers refer to the steps and callouts below. (Illustration of a fictional system.)
Log every invoice in PayFlow within 1 business day of receipt. Invoices emailed to individuals must be forwarded to ap@meridianridge.example.
Control: Every invoice receives a unique PayFlow ID; nothing is paid outside the system.
PayFlow flags invoices with a matching vendor, amount, and date. Review every flag before continuing.
Control: Never override a duplicate flag without a second AP specialist’s review.
Compare the PO, goods receipt, and invoice (callout 3). Variances within tolerance may proceed; others go on hold.
PayFlow routes by amount and cost center (callout 4). Add a note for anything unusual.
Confirm the goods or services were received as ordered, then select Approve or Return with a reason (callout 5).
Control: Approvers may not approve invoices for purchases they requested themselves.
Approved invoices join the next weekly pay run (Thursdays). Early-payment discounts are captured when available.
PayFlow stores the invoice, PO, receipt, and approval trail together for seven years.
7Decision flow
8Exceptions
Invoices without a purchase order require written CFO approval and a completed PO exception form. Urgent payments outside the weekly pay run require finance director approval and must be documented in PayFlow.
9Records and retention
Invoice records, approvals, and supporting documents are retained for seven years in PayFlow, in line with Meridian’s records retention schedule.
10Revision history
| Rev. | Date | Change | Author |
|---|---|---|---|
| 1 | Mar 15, 2024 | Initial release | J. Turner |
| 2 | Oct 1, 2026 | Raised manager threshold to $5,000; added PayFlow duplicate check | S. Martins |