What are the Invoice Processing Steps?

We’ll go through the typical invoice processing steps 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. Someone must file, record, and approve them before payment.

The bigger the company, the more complex this simple task becomes.

Let’s dive into this in more detail…

Step 1: You Receive an Invoice from a Vendor

Vendors send an invoice once their work is completed, their service is provided, or their product is delivered.

Invoices typically arrive via mail (paper document) or email (PDF document).

The invoice information must be input 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 Approval

Now 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!

Larger businesses have 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. 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.

READ MORE: 9 Reasons to Automate Your Accounts Payable Process

Step 4: Invoice is Paid

Once the correct person or people authorize 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. And people lose paper or emailed approval requests. Or they get pushed down the manager’s inbox at busy times.

Summary of Invoice Processing Steps

These are the general steps to invoice processing:

• Receive Invoice
• Copy and File Invoice
• Invoice Approval
• Invoice Payment

Again, depending on the size of the company, the rules and hierarchy can make this a far more complicated process than it seems.

We can show you how we automate all of these steps.

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! A/P One is an AP automation solution that was specifically designed and built for small to medium sized companies…and their budgets!

READ MORE: Accounts Payable Department – Optimization Tips and Tools

How to Automate Invoice Processing

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 you save each year is up to you!

How A/P One Works

A/P One is simple to use and automates each invoice processing step.

Automated Data Capture

Simply email or upload your invoices to A/P One’s cloud-based service. CoreIntegrator then automates the invoice registration, data entry and invoice filing process.

The CoreIntegrator Verified AP Data Capture Service enters invoice data into your system within one business day. This service automates data entry with 99.9% accuracy verified by up to 4 human reviewers.

DID YOU KNOW?
Our data capture service is now available in a stand alone product!

So when your book keeper or AP clerk logs into A/P One, they see a list of invoices in their work queue with the data entered and verified. The system files the invoice electronically. Then it waits for review and approval.

Automated Invoice Approval

Once the accounting department reviews the invoice data, the system routes invoices for approval based on your business’ specific invoice approval rules.

And you can easily configure the approval matrix based on a multitude of rules, such as:

• Person
• Amount
• Location
• Invoice type
• Vendor

Approvers are automatically notified that they have invoices to approve. And they can then approve invoices with a single click on any device from anywhere in the world!

Automated Invoice Payment

The invoice goes to the accounting department’s work queue. Ready to be paid.

A/P One automates each invoice processing step! And it does all this for only a couple dollars (at most) per invoice.

At that point the AP clerk simply pushes the invoice to an ERP or accounting system for payment.

Or you can use CoreIntegrator’s OnPay Solution to automatically make electronic payments by check, ACH or wire transfer. This saves somewhere between $2 and $4 for each manual check you currently cut. So the savings add up fast.

Or, even better, why not use virtual credit cards and receive a 1% rebate on every payment you make!? That’s right, suddenly your AP department will be ADDING to your organization’s bottom line every time they pay a bill!

Our AP/One Explainer Video

Watch this brief video to see how A/P One for small and medium sized businesses automates the entire procure to pay process:

Bottom Line – What are the Invoice Processing Steps?

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.

CoreIntegrator is a SOC 2 certified company.