It’s hard to imagine, but most IP owners we talk to have little to no review process for their invoices, particularly annuity invoices. Everything gets submitted through the legal e-billing system and then – wait for it – gets paid.
Our data shows that organizations with no invoice review process pay more than their peers with some level of review- normally 5 to 10% more.
If you don’t have a process, don’t despair – you don’t need to spend big money or enlist a team of consultants to audit invoices (although you can). You can do a basic audit yourself. To help out, we’ve assembled our top 5 tips for spot-checking patent annuity invoices.
Tip # 1: Keep It Simple
Your goal should be to spend the minimum possible time searching for a few red flags. Don’t worry about what happens if you find the red flags, and don’t get overwhelmed by the size of your invoice; just keep it simple and get started. You should be able to spot one or two red flags in less than 10 minutes. Once you get experienced at checking invoices, you can expand the scope, but initially, it can be overwhelming. Tips two through five will reinforce this theme of simplicity.
Tip # 2: You Don’t Need To Look At Every Charge
In a perfect world, you would analyze every patent annuity line item – but that can take days or weeks with a large portfolio. The reality is that you are just looking for red flags (back to keeping it simple); you only need to check a handful of cases. If you find one red flag, we can guarantee you that there are more. If you find two or three red flags across different currencies (see tip #3), we can guarantee that there is much more.
Tip #3: Think in Terms of Currencies, Not Patents
In most invoices we review, currency charges are the number one source of above-market costs. If you have a large international portfolio, you’ll have several different international jurisdictions, some of which share a common currency for PTO payments. European countries are a prime example of this – and you can take advantage of this to simplify your validation process.
The exchange rate for your French patents will be the same as for your German and Netherlands patents – so you only need to pick a patent or two in one country and you can effectively audit currency costs for all of Europe.
Tip #4: Start Small
The easiest way to quickly validate whether you are being charged too much is to check a couple of cases from jurisdictions where direct payment is possible. This means that your vendor paid the PTO directly and eliminated the middleman. If you are invoiced in the US Dollar, German, and United Kingdom patents are great for auditing. If you are invoiced in Euros, United Kingdom patents and United States patents are good for auditing.
The fees for these jurisdictions are easy to find and you should be able to use a free currency conversion site to determine how much you would have been charged at the bank rate. This will quickly let you know if your vendor is charging a lot for currency.
Tip #5: Just Start
Even looking at just one transaction in your invoice can have a huge impact on your bottom line and can typically be done in less than 5 minutes. Once you have mastered this, looking at 5 or 10 additional transactions isn’t a major stretch. Chances are pretty good that those 5 to 10 transactions will give you a really good understanding of what is going on across your invoice.