Are you struggling with the intricate steps of your invoice processing? Do you want to simplify your company’s accounts payable workflow to enhance your organization’s overall efficiency? Well, you should have adequate knowledge of the invoice processing steps to improve your company’s growth and profit. Once you have sufficient knowledge, then by implementing the best invoice processing software, you can improve the overall efficiency.
What is invoice processing?
Invoice processing comes with the steps required from receiving an invoice through paying it. Though this seems simple at first, there are a chunk of steps in between. Depending on the size of your organization, these in-between steps may get complicated. These days, you may get various types of invoices, including emails, PDFs, and even paper. Before payment, someone needs to file and approve them.
Let’s dig deeper and find out what are the steps of invoice processing.
Step 1: You receive an invoice from a vendor
- Once the work is completed, vendors need to send invoices for their products or work.
- Invoices come in either mail (paper document) or email (PDF document) format.
- Your accounting system should be updated with this invoice information. This work is manually done by an AP clerk, bookkeeper or in smaller businesses, a receptionist is responsible for this kind of job.
- Unfortunately, the manual data entry process is slow. Sometimes, this manual entry may cause mistakes.
- Most importantly, the time spent manually entering invoice data may cost your company’s money.
Step 2: A copy of the vendor’s invoice is placed or scanned into your filing system
- While entering the data from the invoice into your system, don’t forget to make a scanned copy of the invoice into your paper or electronic filing system. This may serve as a backup. This step is imperative in case of discrepancies that are discovered later.
- By filling multiple rows of cabinets, you are making and storing paper copies. You need to keep all these paper copies in an organized way so that your auditors can find them as per the requirements.
- Many companies are investing in an electronic invoice filing system. But still, you need to keep everything organized. Moreover, you should be careful about scanning and filing your invoices.
- This is a time-consuming and laborious process. But you need to spend even more time searching for a lost invoice or a copy of an invoice.
- But by implementing the invoice automation software, you can automate this entire process.
Step 3: Invoice approval
- Now, your accounting systems have all the details of the invoice and a copy of the invoice is also filed. In the next step, you need to get it approved.
- Small businesses usually authorize 1 or 2 people for the approval of the payment of invoices.
- Small businesses often manage the approvals by simply having the bookkeeper or AP clerk walk the invoice over. They keep it to the approver to initial or sign.
- But this practice is not recommended anymore. Because invoices kept in approvers’ in-boxes may get lost or forgotten. This can lead to late payment penalties. This approach also encourages forgery. A fraudulent person can forge the approver’s initials or signature.
- On the other hand, many small or mid-sized companies often send a PDF email copy of the invoice to the approver. The approver then replies to the email saying ‘approved’.
- But sometimes, emails may get overlooked or deleted, unfortunately. As a result, a vendor goes unpaid.
- In both processes, an AP clerk or accountant needs to chase the process for approvals. He/she needs to constantly monitor which invoice approvals are outstanding and whose desk or email box they are remaining.
- The amalgamates or big companies follow a complex set of rules in determining who needs to authorize the invoice. They may authorize 2 or more people for the approval of the same invoice. If everything goes manually, then this can mess the entire process.
- Thus, every company should adopt an EDI invoice or digital invoice to make the approval process simpler. Moreover, invoice processing software solutions also prevent forgery and discrepancies.
Step 4: The payment of the invoice
- After getting approval from the concerned person, the invoice needs to be paid. Now, you need to send the invoice to the right person or department to get it cleared.
- This is another time-taken process as people may displace paper or emailed approval requests. Sometimes, the managers often overlook these invoice approvals at busy times.
To simplify the invoice processing software, many big companies have invested a hefty amount in implementing invoice automation software solutions. But because of their limited budget, small and mid-sized companies have not yet adopted automation solutions. Many software companies are planning to launch budget-friendly accounts payable solutions for small to mid-sized companies.
Invoice automation software solutions manage and automate every invoice process step.
Automated data capture
You need to simply email or upload your invoices to accounts payable cloud-based service.
Automated invoice approval
- Here, approvers are automatically notified that they need to approve pending invoices. With a single click, approvers can approve it by sitting anywhere in the world.
- The invoice then goes to the accounting department for clearance.
Now, with invoice automation software, you don’t need to struggle with your accounts payable process. This software can save a chunk of time that you can utilize another way.
Hubbroker embraces customers with invoice automation software solution PDF2XML that collects computer-generated PDF files sent by customers or suppliers and converted into a unique format and are then imported directly into your ERP system.
Visit the website of the company to know more details about it.