Invoice payment process

Submitted as an expense. I paid the driver in Turkish Lira plus a tip. The Lira Euro exchange rate changed in favor of the Lira either that day or the next, so the amount is slightly higher. (Noted in FreeAgent.)

Proposal: Requesting and processing payments in Edgeryders: a minimally bureaucratic solution

Edgeryders projects enjoy full autonomy, but they still share basic company infrastructure, including the bank account. All payments are processed centrally, and finally made from the Edgeryders account at LHV Bank. The actual person manning the bank account is always a company director: this is necessary given that directors are legally responsible for stewarding the company’s assets. However, project autonomy means that the director making the payment does not necessarily know the context in which the payment is requested.

In Edgeryders, it is the project manager’s (PM) job to approve a bill or other expense for payment. Once approved by the PM, the paying director (PD) will simply execute the payment, and only ask questions if something smells wrong. The process works like this:

  • Someone completes some tasks and issues a bill to ER.
  • The PM approves it: this means that the collaborator or subcontractor has delivered what she should have delivered. The payment is authorized.
  • The PM, or the collaborator herself, uploads the bill onto FreeAgent. It is important to assign the bill to the correct project.
  • The PM, or the collaborator herself with the PM’s explicit authorization, creates a Dynalist task in the Payment Queue. The task need only contain two pieces of information: the deadline and the link to the FreeAgent bill. Instructions for how to create the task are in Dynalist. The typical task will look like this:
  • The PD processes the payment queue. She will typically ask questions to the PM if need be, then proceed to pay all upcoming payments, then ticking off the payment requests as done.
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I kind of like this new system … since @alberto has already implemented it via a “Payment Queue” section in Dynalist, we have to update the “Submitting a Payment Request” documentation very soon to avoid confusing people about which process to follow.

However, let’s first try this proposed process (I just did) and discuss necessary improvements:

As somebody who invoices Edgeryders, I want to be able to submit that damn invoice somehow and be done. I do not want to have to talk to the Project Manager to get her approval for the invoice, and her explicit authorization that I may create a payment queue task for it, because that means waiting for some hours or days for an answer before I’m done with submitting the invoice.

From that perspective, the option in your process of just sending the invoice to the Project Manager (who will then approve it, upload it and create a payment queue task) seems better. But it puts all the load on the project manager – exactly what we wanted to avoid with giving everyone access to FreeAgent.

What alternatives do we have? Here’s my idea:

  1. People upload their invoices to FreeAgent by themselves, and that is all they have to do to submit their invoice.

  2. All project managers log in to FreeAgent once per week until Sunday evening and authorize invoices they find there related to their projects. This is done by adding "authorized by " to the description, so that the bills overview list already shows which bills are authorized and which are not. Dynalist can contain tasks with deadlines for each project manager, so reminder e-mails are sent before each weekly deadline (in the next version of Dynalist Companion that @anu is about to finish).

  3. The Paying Director logs in to FreeAgent on Monday and pays the outstanding, authorized bills if there are no apparent issues with them. Similarly, weekly Dynalist notification e-mails can be sent.

This process forces Project Managers to take a look at FreeAgent weekly, which is “not necessarily a bad thing” :laughing: The proposed means of expressing authorization could easily be forged as FreeAgent has no version history of bills records – but the same problem applies to payment queue tasks created in Dynalist. I do not think we need to have a tamper-proof system here at the moment, as forgery would lead to ending a relation with a contractor immediately. However if we want a tamper-proof system in the future, we can easily create one: project managers would add a TAN (a single use transaction number, as used in online banking until recently) to each authorization, and the paying director would confirm that it’s a valid TAN of that project manager by looking it up in a secondary access-protected list, and then deleting it from there to prevent double use.

Matt, do we really need to structure the process for the PM? Why not “each PM can do whatever they want, as long as the approved payment request gets to the PD in the requested format”?

If you can think of another option how submitting a bill to Edgeryders is a single action for the issuer, without unacceptable back and forth communication with anyone … then we could give project managers a choice. (Options involving e-mails with attachments don’t count, right?)

Even then, do we really want to expose collaborators to a potentially different process for each project?

(As an addendum to my proposal above, creating Dynalist tasks for authorization and payment can be done automatically and only when there is a bill to process. But it’s more of a far future thing for us.)

TBH I don’t care. If things are unacceptable for the collaborators and/or PM, they will complain to each other and find something that works for all parties. When I am project managing myself, I ask people to upload their own bills, then I process them (informally, like “ah, yeah, that’s done. Let’s pay it”).

But I do care. What made some projects unenjoyable was always bad process (not limited to payment processes though).

Yes, with a few months of friction and unsatisfactory conditions before. People don’t complain right away esp. when there is a power imbalance. So there may be duplicate payments, delayed payments due to miscommunication and whatever little messups we had so far until something changes.

I don’t see a good reason against a good default … people rarely change defaults, so that would be the process to stick to except a project manager has a reason to change it and invests the work to build and document it.

I’m not fully satisfied with any of the proposals above yet. New attempt, without requiring project managers to log into FreeAgent on Sunday, and also working for people without FreeAgent access (like one-time collaborators):

  • If you don’t have access to either FreeAgent or Dynalist:

    1. Send your bill to your project manager by e-mail.

    2. The project manager uploads it to FreeAgent and adds the “mark of approval” in the comment field.

    3. The paying director pays at next payment day.

  • If you have access to FreeAgent and Dynalist:

    1. Enter and upload your bill into FreeAgent.

    2. Create a Dynalist task in the “Payment Authorization Queue” section for your project manager, with a link to the bill on FreeAgent. The project manager will automatically notified by Dynalist Companion.

    3. The project manager adds the “mark of approval” to the bill in the bill in the comment field in FreeAgent.

    4. The paying director pays at next payment day.

If that sounds good, I would change our documentation accordingly.

Ok, go for it. I would suggest this is presented as a suggested arrangement. Also, your latest versions overlook the Dynalist payment queue, which is the only “rigid” part of the process.

Sure, can do that. I’ll then also include that project members should speak up early if they see the process used in their project turn out to be a mess.

In the spirit of minimal bureaucracy, I replaced it with the queue of authorized bills in FreeAgent.

I followed the process outlined by Alberto above - worked nicely for me. As for need for PM to explicitly review and ok an invoice - not sure what other option would be there in order to ensure we are delivering what we as a company are paid for? Or maybe I am not understanding properly… find what you outline above a bit confusing to be honest…

Sure, that’s needed and also in my proposal:

The difference is only how the project manager should review and ok the invoices. I prefer a process where (1) we have a track record of that, (2) know where to find that track record in each case, but (3) don’t force the project manager to do a regular task like “log into FreeAgent on Sunday”. That’s how the last proposal came up.

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Dear project managers and management board (@anique.yael, @hugi, @noemi, @alberto, @nadia, @johncoate): I updated the wiki at the start of the topic with the documentation of the bills payment process. So that’s our new default now – please make sure all our collaborators are aware of the changes. It’s simpler than before, with some potential for further automation.

This is all according to the discussion with Alberto etc. a week ago, which incidentally also moved to this topic now. Note the paragraph in the wiki about project managers being free to organize things differently, and the one telling people to complain if the processes don’t work :slight_smile:

And one more adjustment proposal, to be discussed with @alberto: Does it make sense that the payment manager marks bills as paid in their comment field in FreeAgent? Would prevent accidental double payments if there are multiple payment managers (or one payment manager who can’t remember making the payment), in the time span before the next reconciling of bank transactions in FreeAgent.

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Thanks Matt! Now it comes down to sticking to it.
It’s not so different from the past, so most of our current collaborators should find it acceptable.

I wouldn’t mark things as paid - I usually look into the account statement on the online bank to check if something has already been paid. Plus tasks are checked off from dynalist when done, so we have two ways of seeing it.

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Not exactly. Dynalist contains only the authorization tasks now. There are no payment tasks in Dynalist in the current process – that’s the difference from Alberto’s original proposal. Now, every due bill marked “AUTHORIZED” in FreeAgent is ready for payment.

Anyway, thanks for the insight re. marking as paid or not. Since it’s not really needed, we avoid it, in the interest of a simple process.

Ah one more thing: A nice looking flowchart or other diagram to illustrate the process would help returning visitors to remember the process without having to read everything again. If anyone wants to create one … (@anu?).

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And yet some tasks in Authorized are marked off as done. who marks them off, if not the person making the payment?

The person making the authorization (= the project manager) marks the authorization task as completed.

Most of the completed tasks you see right now in there are remainders of Alberto’s system, i.e. payment tasks … to distinguish them from authorization tasks, I added “Pay” resp. “Authorize” to them.

This is super clear now @matthias thank you!

I just added new, more detailed information about VAT rules for on invoices we receive to the manual above in section 2.4. It’s written as instructions for suppliers, but use them also to check invoices by suppliers who are not supposed to read them (caterers etc.).

hi @noemi do you format the bank statements from the LVH in any particular way in order for them to be uploaded into freeagent?

You need to download and run a script:
see Reconciling bank statements section here in the Company Manual.