Published: | Time to read: 4 minutes

Invoice Processing Time: Why It Matters and Strategies for Reduction

Matt Wald
Author:Matt Wald

Reducing invoice processing time is a strategic imperative that has far-reaching implications for your organization’s financial performance.

The speed at which an organization processes invoices is more than just a measure of its back-office efficiency. Invoice processing tome is a vital indicator of its financial health, cash flow management, and relationship with suppliers.

And for organizations dealing with hundreds or even thousands of invoices monthly, invoice processing time can significantly impact the bottom line.

This article will discuss the importance of invoice processing times and share actionable strategies to reduce them.

Understanding Invoice Processing Times

Understanding time to process invoices

Invoice processing time refers to the duration it takes for an invoice to be received, processed, and paid. This process involves several steps:

  1. Invoice Receipt: The company receives an invoice via mail, email, or electronic submission.
  2. Invoice Verification: Details on the invoice are checked for accuracy against purchase orders or contracts.
  3. PO Matching: In a PO purchasing process, PO line items must be matched to invoice line items.
  4. Approval: The invoice must be approved by the relevant person or department within the organization.
  5. Payment Processing: Once approved, the payment is scheduled and executed.
  6. Record Keeping: The transaction is recorded in the company’s accounting system.

Long invoice processing times can create several issues for an organization:

  • Delayed Payments: If invoices take too long to process, payments can be delayed, potentially incurring late fees and damaging supplier relationships.
  • Cash Flow Uncertainty: Slow processing times make it challenging to predict cash flow, which is essential for managing operations and planning investments.
  • Operational Inefficiencies: Long processing times often indicate inefficiencies in the accounts payable process, which can have knock-on effects throughout the organization.
  • Fraud and Compliance Risks: A slow or outdated process is more susceptible to fraud and less likely to comply with changing regulations.

Interested in AP Automation? Find out more!

Why Reducing Invoice Processing Times Matters

Running in a park sunset time

Financial Benefits

Reducing invoice processing times can significantly improve a company’s cash flow. By processing invoices quickly, businesses can take advantage of early payment discounts and avoid late payment penalties. This can also lead to better credit terms and more favorable negotiations with suppliers.

Improved Supplier Relationships

Suppliers value reliable and predictable payments. They appreciate these faster processing times as it improves supplier confidence and leads to stronger business relationships. In times of supply chain disruption, suppliers may prioritize customers who pay promptly.

Enhanced Efficiency

A streamlined invoice processing system reduces administrative burden and allows staff to focus on higher-value activities. It also reduces the risk of errors associated with manual entry, which can lead to further delays and complications.

Strategic Decision Making

Quick invoice processing contributes to real-time financial data, which is crucial for making timely business decisions. This agility can provide a competitive edge in the marketplace.

Click here to find out more about the Accounts Payable Automation Process.

How to Reduce Invoice Processing Times

Robot processing invoices

Automate the Invoice Process

Implementing invoice automation software is one of the most effective ways to reduce processing times. Automation can handle data entry, match invoices to purchase orders at the line level, and route invoices for approval, all with minimal human intervention.

Use our savings calculator to see how much you could save

Standardize Processes

Develop clear and standardized procedures for handling invoices. Ensure that all staff know exactly what to do when an invoice is received, reducing confusion and preventing delays.

If you implement invoice automation software process standardization will come included. Otherwise you’ll need to set up and enforce strict standard operating procedures.

Implement Electronic Invoicing

Encourage or mandate that suppliers submit invoices electronically. E-invoicing reduces the time spent on manual data entry and helps to prevent invoices from being lost or delayed in the mail.

Streamline Approval Workflows

Design an efficient workflow that reduces the number of touchpoints required for invoice approval. Setting threshold levels for automatic approvals can also speed up the process for smaller, routine invoices. Again, invoice automation software includes workflow automation.

Train Staff and Suppliers

Ensure that everyone involved in the invoice processing chain, including suppliers, understands the process and how to use any automated systems. This training is essential to prevent errors that can lead to delays.

If you implement invoice automation software, make sure the system is intuitive to use. Overly complicated software will make user adoption more difficult.

Regularly Review and Optimize

Regularly assess the performance of the invoice process and seek areas for improvement. Performance metrics can include the average time to process an invoice, the rate of errors, or the percentage of discounts captured.

World class invoice automation software includes the ability to track these KPIs in real time using simple yet powerful dashboards.


Reducing invoice processing time is not just a matter of administrative efficiency; it’s a strategic imperative that can have far-reaching implications for an organization’s financial performance, supplier relationships, and operational agility.

By embracing automation, streamlining workflows, and maintaining clear communication channels, businesses can transform their invoice processing from a bottleneck to a competitive advantage.

This outcome is a leaner, more dynamic organization that is better equipped to navigate the challenges and opportunities of today’s economic landscape.

Get a free consultation with an AP automation expert