We’ll go through the typical steps of invoice processing and then show you ways to improve the process.
Are you are a business owner overwhelmed by the growing complexity of your invoice processing? Or someone tasked with creating efficiency in your organization’s accounts payable workflow?
Your first step is to understand the invoice processing steps as well as the inherent inefficiencies and risks they create.
Once you understand that, you should consider creating total efficiency and implement best practices with accounts payable automation software.
What is Invoice Processing?
So let’s start at the very beginning: what is invoice processing?
Invoice processing involves the steps required from receiving an invoice through paying it. This may seem simple. But there are a few steps that go in between and these steps can quickly get complex depending on the size of your business.
Invoices come in all variations these days, such as emails, PDFs, and even paper. With a growing company, these need to get recorded and approved by the right person before being paid.
The bigger the company, the more complex this simple task can take.
Let’s dive into this in more detail…
Step 1: You Receive an Invoice from a Vendor
Once a vendor’s work is completed, their service is provided or their product is delivered they will send you an invoice.
Invoices are typically sent to you via mail (paper document) or email (PDF document).
The invoice information needs to be added into your accounting system. This work is typically done manually by an AP clerk, bookkeeper or in smaller businesses sometimes even a receptionist.
Unfortunately, manual data entry is slow. And often results in ‘fat finger’ mistakes.
And all that time spent manually entering invoice data costs your company money.
Quick Fact: Processing a SINGLE invoice can cost your company anywhere from $14 to $20. If your company processes 25,000 invoices per year at $15 per invoice, they will spend $375,000 on invoice processing.
Step 2: A Copy of Vendor Invoice is Placed or Scanned Into your Filing System
As well as entering the data from the invoice into your system, best practices dictate that you make a copy or scan the invoice into your paper or electronic filing system as a backup. This is necessary in case discrepancies are later discovered. And it’s proper procedure for audit purposes.
If you are making and storing paper copies this means using rows and rows of filing cabinets. And keeping all of the paper copies organized so that you and/or auditors can easily find them if need be.
Perhaps your company has spent money to invest in an electronic invoice filing system. That’s great! But you still need to keep it well-organized and be vigilant about scanning and filing your invoices properly.
These steps take time and effort. But far less time and effort than searching for a lost invoice or a copy of an invoice when you need it!
The good news is that there is AP software that can automate this entire process for you!
Step 3: Invoice is Sent for Approval
Once the invoice details are in your system and a copy of the invoice is filed, the next step of the process is getting it approved.
In a small business there might be 1 or 2 people who have the authority to approve the payment of invoices.
Many smaller businesses manage approvals by simply having the book keeper or AP clerk walk the invoice over and leaving it for the approver to initial or sign.
This is NOT best practice. Invoices left in approvers’ in-boxes get lost or forgotten leading to late payment penalties. Worse, this approach is ripe for fraud as it’s not terribly difficult for a bad actor to forge an approver’s initials or signature.
Other small to medium sized businesses email a PDF copy of the invoice to the approver. The approver then replies to the email saying ‘approved’.
But again, emails get ignored or accidentally deleted meaning a vendor goes unpaid.
And in both processes, the accounting or AP clerk has to constantly chase after approvals – if he or she can keep track of which invoice approvals are outstanding and whose desk or email box they are lingering in!
For larger businesses there are usually a more complex set of rules to determine who needs to authorize the invoice. Sometimes 2 or more people have to approve the same invoice. In these cases a more robust process invoice approval is required. Using a manual/paper process in these cases is a recipe for disaster.
Once again, however, AP automation solutions can make the approval process not only simple, but secure from fraud.
Step 4: Once approved, Invoice is Paid
Once the correct person or people have authorized the invoice for payment, it needs to be paid. And this may involve sending it to the correct person or department to get it paid.
This step of the process can also take some time. An email can sometimes get lost. Or be pushed down the inbox at busy times.
Summary of Invoice Processing Steps
These are the general steps to invoice processing:
- Receive Invoice
- Copy of Invoice is Filed
- Invoice is Approved
- Invoice is Paid
Again, depending on the size of the company, the rules and hierarchy can make this a far more complicated process than it seems.
Large companies have been able to afford the high costs of setting up invoice process automation for some time.
Until now AP automation solutions were out of reach of small to medium sized organizations.
But now there is A/P One, an AP automation solution specifically designed and built for small to medium sized companies…and their budgets!
Work Smarter, Not Harder with A/P One!
CoreIntegrator’s automated invoice processing solution, A/P One is easy and quick to setup, and your small to medium-sized business will only pay a small fee (under $2) for each non-PO invoice you process.
And the best part is that you can be up and running in days! So you will start saving your company time and money immediately.
A/P One lets companies work smarter, not harder because it does the work for you.
It automates each of the invoice processing steps.
What you do with all of the money and time saved each year is up to you!
How A/P One Works
A/P One is simple to use and automates each invoice processing step.
Your non-PO invoices are sent to A/P One’s cloud-based service where CoreIntegrator automates the invoice registration, data entry and invoice filing process.
The invoice data is then pre-populated into your system within one business day. So when your book keeper or AP clerk logs into A/P One, they will see a list of invoices in their work queue with the data entered, the invoice filed, and waiting to be reviewed and approved.
With the powerful CoreIntegrator Workﬂow engine built-in to A/P One, once the accounting department reviews the invoice data, invoices will be routed for approval based on your business’ specific invoice approval rules.
And you can conﬁgure the approval matrix based on a multitude of rules, such as:
- Invoice type
Approvers are automatically notified that they have invoices to approve. And they can then approve invoices with a single click. And they can approve invoices on any device from anywhere in the world!
Once approved the invoice re-appears in the accounting department’s work queue ready to be paid.
A/P One automates each invoice processing step!
So if you are struggling with an out-of-control manual AP process, take a look at how quickly A/P One can automate your process to best practices.
Just think of all the extra projects your company can work on with the employee time saved when processing invoices with A/P One.