Invoice Verification Checklist | Complete Guide to Invoice Review

Before you approve that invoice, have you checked everything?

Invoice verification is your last line of defense against errors, fraud, and overpayment. Yet it’s often rushed or incomplete.

This guide provides a comprehensive verification checklist.

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What is Invoice Verification?

Definition

Invoice verification is the systematic review of an invoice to confirm its accuracy, legitimacy, and compliance before approval.

Why It Matters

Risk	Consequence
Paying wrong amount	Financial loss
Paying wrong vendor	Fraud victim
Paying duplicate	Double payment
Missing compliance	Audit issues

Verification vs. Matching

Activity	Focus
Verification	Is the invoice valid?
Matching	Does it match our records?

Verification comes first, matching second.

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The Complete Verification Checklist

Section 1: Vendor Verification

Check	What to Look For
☐ Vendor name	Matches approved vendor list
☐ Vendor address	Consistent with previous
☐ Contact information	Valid and current
☐ Tax ID	Matches registration
☐ Bank details	Matches on file (if shown)

Red Flags:

• New vendor with no contract
• Bank details changed recently
• Address differs from usual

Section 2: Invoice Details

Check	What to Look For
☐ Invoice number	Unique, follows pattern
☐ Invoice date	Recent, within terms
☐ Due date	Matches payment terms
☐ Currency	Matches agreement
☐ Payment terms	Matches contract

Red Flags:

• Duplicate invoice number
• Date in the future
• Terms changed without notice

Section 3: Order Reference

Check	What to Look For
☐ PO number	Valid and active
☐ PO exists	Actually on record
☐ PO authorized	Approved by appropriate level
☐ PO not closed	Still open for invoicing

Red Flags:

• Missing PO reference
• PO already fully invoiced
• PO issued after invoice date

Section 4: Line Items

Check	What to Look For
☐ Descriptions	Clear and specific
☐ Quantities	Reasonable and accurate
☐ Unit prices	Match agreement
☐ Line totals	Correctly calculated
☐ Tax per line	Appropriate rate

Red Flags:

• Vague descriptions (“miscellaneous”)
• Round numbers only (¥10,000 exactly)
• Unusual quantities

Section 5: Calculations

Check	What to Look For
☐ Subtotal	Sum of line items
☐ Discounts	Applied correctly
☐ Tax rate	Appropriate for goods/services
☐ Tax amount	Correctly calculated
☐ Grand total	All components sum correctly

Red Flags:

• Rounding errors
• Missing discounts
• Wrong tax rate

Section 6: Supporting Documents

Check	What to Look For
☐ Delivery note	Quantities match
☐ Receiving report	Goods accepted
☐ Contract	Terms match
☐ Quotes	Prices match
☐ Approval emails	Authorization exists

Red Flags:

• No supporting documents
• Documents don’t match
• Altered documents

Section 7: Compliance

Check	What to Look For
☐ Tax invoice requirements	All legal elements present
☐ Retention rules	Stored appropriately
☐ Approval authority	Correct level approved
☐ Separation of duties	Different people ordered/received/approved

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Common Errors to Catch

Calculation Errors

Error	Example
Multiplication	10 × ¥1,000 = ¥10,050
Addition	Subtotal doesn’t sum to lines
Tax	10% tax on ¥10,000 = ¥990
Rounding	Accumulated rounding errors

Data Entry Errors

Error	Example
Transposition	¥12,345 → ¥12,435
Decimal shift	¥1,234.56 → ¥123,456
Wrong quantity	100 → 1000

Intentional Errors (Fraud)

Fraud Type	Signs
Inflated prices	Higher than contract
Ghost items	Items not delivered
Duplicate billing	Same work billed twice
Kickback schemes	Unusual vendor, no competitive bid

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Verification by Invoice Type

Goods Invoices

Additional checks:

• Physical delivery confirmed
• Condition of goods acceptable
• Returns/damages credited

Service Invoices

Additional checks:

• Work actually performed
• Deliverables received
• Time/expense reports match

Recurring Invoices

Additional checks:

• Subscription still active
• Rate changes disclosed
• Usage matches plan

One-Time Purchases

Additional checks:

• Competitive quotes obtained
• Budgeted and approved
• Not split to avoid approval thresholds

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Streamlining Verification

What Can Be Automated

Task	Automation Potential
Vendor verification	✅ Against master data
Calculation checks	✅ Rule-based
PO matching	✅ System lookup
Duplicate detection	✅ Invoice number check
Tax rate verification	✅ Rules engine

What Needs Human Review

Task	Why Human Needed
Service quality	Judgment required
Unusual items	Context needed
New vendors	Risk assessment
High-value invoices	Materiality

The 80/20 Rule

80% of invoices are routine—automate these. 20% need attention—focus your time here.

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AI-Assisted Verification

How AI Helps

Verification Task	AI Capability
Extract invoice data	OCR + understanding
Compare to PO	Automated matching
Calculate verification	Automatic checks
Flag anomalies	Pattern detection
Route for approval	Workflow automation

Totsugo Workflow

1. Upload invoice
2. AI extracts all data
3. AI verifies calculations
4. AI matches to PO/delivery
5. Flags issues for review
6. Approve clean invoices with Enter

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Building a Verification Culture

1. Clear Policies

Document what must be checked for each invoice type.

2. Training

Ensure all approvers understand verification requirements.

3. Checklists

Provide standardized checklists for each invoice category.

4. Consequences

Define what happens when verification fails.

5. Continuous Improvement

Track errors caught and adjust processes.

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Summary

Verification Checklist Summary

Section	Key Checks
Vendor	Name, address, tax ID
Invoice	Number, date, terms
Order	PO exists and open
Line Items	Description, qty, price
Calculations	Subtotal, tax, total
Documents	Delivery note, contract
Compliance	Legal requirements

Key Takeaways

1. Verification before matching—is the invoice legitimate?
2. Systematic approach—use checklists, not memory
3. Automate routine checks—save humans for judgment calls
4. Document everything—audit trails matter

Don’t rubber-stamp invoices. Verify before you pay.

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