Invoice routing describes the workflow and handling of invoices, which includes how accounts payable forwards invoices for review or approval. Invoice routing also refers to the procedures for situations that delay or hamper payment disbursement, such as receiving incomplete invoices. The efficiency of the invoice processing workflow depends on invoice routing; sending documents to correct the department or individual at the right time avoids potential delays, thus enabling accounts payable to disburse remittances promptly.
Accounts payable establishes the rules regarding where an invoice goes (usually a department or an individual) when specific conditions are met (or not met). In a sense, invoice routing serves as a check and balance in the invoice processing workflow because it ensures a separation of duties—meaning that different individuals complete tasks in the invoice processing workflow—between the payment approval and disbursement of funds. Invoice routing is often associated with approving invoices for payment, but it is also common for resolving invoice errors.
Invoice routing to a specific department or individual occurs at any stage during the invoice processing workflow depending on the rules set up by accounts payable. An automated accounts payable system executes those invoice routing rules, so instead of accounts payable manually sifting through an invoice to determine what it needs, automated accounts payable software automatically forwards the invoice for review, completion, or approval.
Effective invoice routing procedures should speed up the invoice arrival-to-post process. These best practices can help accounts payable identify the ideal timing and business rules for routing invoices:
- Reduce paper invoice routing. Paper invoices can get lost in the mail or on an approver’s desk, but an automated system can track the location and status digital invoices, giving greater visibility into invoice approvals.
- Ensure that the digital trail of invoice routing is easily accessible in case of an audit.
- Implement a notification system for routed invoices that haven’t been sent back to accounts payable. Many automated programs will send an email notification to the approver if the invoice hasn’t returned within a specific period.