Invoice processing, also called invoice-to-pay, refers to all tasks related to issuing an invoice payment. In other words, invoice processing is the handling of invoices from submission to payment.
The invoice processing workflow encompasses the following tasks:
- Receiving the invoice from a payee (such as a vendor, supplier, or a freelancer)
- Matching the invoice with supporting documents, such as a purchase order
- Verifying that the invoice is authentic if a purchase order wasn’t issued
- Inputting the invoice into accounting software
- Routing invoices for approval
- Sending payment to payee
Each task or step in an invoice processing workflow is meant to ensure the accuracy and validity of an invoice as well as address issues that delay payment processing. Accounts payable should have processing procedures for other situations that affect the processing an invoice, such as verifying vendors and flagging incomplete invoices.
Invoice processing workflow should strike a balance between ensuring the accuracy of an invoice payment and disbursing the funds promptly. That’s why many companies are turning to digital and automated technology for efficient invoice processing. Here are best practices that are helping businesses improve their invoice workflow efficiency:
- Require invoices in a digital format. Technology can quickly extract information from electronic invoices, eliminating the need for manual transfer of data.
- Establish policies and procedures for invoices without a purchase order. Locating documents for invoice matching is another bottleneck that often occurs in accounts payable. Establish a system for resolving invoices without a purchase order as part of the invoice processing workflow.
- Include payee notifications or payment status updates in your workflow. Processing an invoice isn’t just about how quickly accounts payable sends the payment. An efficient workflow also means that accounts payable and payees can quickly identify the status of an invoice. Companies have been increasing visibility into their invoice processing with supplier self-service portal, which enables payees to check the status of their invoice payment.
- Turn invoice processing into a revenue-generating opportunity by automating data entry and manual tasks. Invoice processing can be more than an efficient workflow; it can improve the company bottom line. By reducing the time spent on tracking and entering data, accounts payable can focus on identifying opportunities for early payment discounts.