How To Avoid Common Invoice Reconciliation Traps

by Tom Hespos, Sep 19, 2006, 10:45 AM

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A lot can happen between the time you sign an insertion order to book a media buy and the time you get the bill for it. If you're buying from a media vendor of significant size, odds are you're getting billed by accounting or ad ops, and there's a chance your ad sales rep won't even see the bill before it goes out to you. You may find a significant discrepancy between what you ordered, what was delivered and what you're being billed for.

This isn't always malicious, so if your bill doesn't match your invoice, don't assume 100 percent of the time your sales rep is out to screw you. The rep might not ever see the invoice until you raise an issue with it. So be sure to reconcile all invoices with what was delivered before you write any checks to media vendors. Problems do occur, and in my experience, at least 50 percent of the invoices that cross my desk have something glaringly wrong with them. These problems need to be cleared up as soon as possible, lest a neglected invoice accrue finance charges after sitting in your inbox for too long. If there's a problem with an invoice, you need to raise the issue immediately.

Here are some common issues we see on a daily basis:

Early billing. For a campaign that lasts longer than a month, our insertion order instructions call for vendors to bill monthly for contracted levels of activity. Sometimes, media vendors will bill for activity that's a month or more away from delivery. If I were to sign off on a campaign today, it wouldn't be uncommon to see an invoice arrive immediately for October media, even though it hasn't run yet. Whether or not this gets attributed to an overzealous accountant or a failure to read the billing terms on insertion orders is immaterial. Media buyers need to raise the issue immediately and get the vendor to cancel the invoice and reissue it at the appropriate time.

Billing in excess of contracted levels. A common mistake vendors make is using the aggregate total of impressions to bill, even if there are hidden underdeliveries within that total. Here's what I mean. Suppose you contract with a vendor for 500,000 impressions in each of two content areas. The vendor then delivers 1 million impressions in the first content area and none in the second, and proceeds to bill for a contracted total of 1 million impressions. This, however, neglects the fact that there was an underdelivery in one content area (and a significant bonus in another). Unless the media buyer and the vendor have made prior arrangements, the bill really should be for 500,000 impressions. This is why invoices need to be reconciled at the placement level.

Failure to include vital information. Often, we see invoices coming in that don't specify which publication the media ran in, the client the media was purchased for, the specifics of the contract, or Payment Order numbers. Lack of specificity raises red flags with client accounting, plus it could cause confusion in accounts payable if two clients advertise with the same publisher. Always delineate the level of specificity you need on your invoices within the language comprising your insertion order. If you don't do this, you may be left scratching your head when invoices come in.

These are just a few of the more common problems we encounter. There are dozens of others. Drop by the Spin blog and tell us about some of your vendor invoice reconciliation problems.

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