What is Invoice Approval? A Quick Guide to Invoice Approval Process

How to Make Invoice Approval a Breeze?

Today, organizations need to do more with less and do it efficiently. As a result, organizations have started to take a closer look at how they manage their spend, especially their payables.

Even today, the invoice approval process at most organizations is a manual, paper-intensive process. It takes so long, costs too much, demands a lot of exceptions, and offers little to no visibility.

Invoice Approval

Businesses cannot afford to have a subpar invoice approval process without facing consequences like inaccurate cash flow forecasts, unanticipated liquidity shortages, and unexpected cash crunches.

A recent Paystream Advisors report shows a steady stream of organizations adopting invoice approval automation in order to address these challenges.

Can automation really ease the burden and make the invoice approval much more manageable? Let’s take a closer look.

What Is an Invoice Approval?

Invoice approval is the process of reviewing and approving supplier invoices before the payment is processed. Typically, the invoice approval process begins once the buyer receives (through email, post, etc.) a supplier invoice. The invoice is then sorted into the specific category and forwarded to the respective stakeholder for approval.

While SMBs use their finance person or a member of the admin team to process invoices, enterprises have a specific department called the accounts payable (AP) department to take care of the invoice approval process.

Steps to Create an Invoice Approval Process

Most businesses have a clear process in place to handle incoming invoices. While the processes vary from one organization to another, it can be generally categorized into two:

  • Invoices that have a purchase requisition or purchase order
  • Invoices without an associated request or purchase order

Here are a few clearly defined steps organizations can use to ensure faster and more accurate approval of invoices:

1. Create an invoice

For an invoice to be processed on time, all relevant information listed in the invoice should be captured or manually fed into an organization’s invoice approval loop.

2. Validation or PO matching

The next step of the process is to categorize the invoice. It involves the process of identifying and linking other related purchasing documents like purchase orders, order receipts, purchase requests, and more.

3. Define exceptions

When invoices fail the validation stage, due to any discrepancy or missing information, they should be forwarded to specific people who can fix errors and reroute them for approval.

4. Route approvals

Once invoices are validated and matched, they are routed to the specific approvers based on the information mentioned in one of the purchasing documents (such as PO number, requester name, department).

5. Process payment

If an invoice is approved, it should be automatically forwarded to the finance team for payment processing. Once the payment is processed, an invoice can be closed.

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Pain Points of a Manual Invoice Approval Process

Traditional invoice approval processes are filled with a number of process gaps and inefficiencies. PayStream’s 2016 workflow automation report shows that organizations that use manual and semi-automated invoice approval tools experience more delays than those businesses that use an invoice workflow automation tool.

When businesses were asked about the top three challenges they face in invoice approval workflows, manual routing of invoices bagged the top spot. It was closely followed by manual data and inefficient processes.

Manual Invoice Approval Process Problems

Benefits of Automating the Invoice Approval Process

Automated invoice approval solutions combine data capture, workflow management, contract management, and integration capabilities in a single platform.

Invoice approval automation eliminates paperwork, reduces manual keying of information, accelerates the approval cycle, and increases straight-through processing.

Enterprises and SMBs alike can enjoy innumerable benefits by automating their invoice approval process. An automated invoice approval process:

  1. Improves regulatory compliance (SOX, FASB)
  2. Enhances visibility over liabilities
  3. Increases employee productivity
  4. Lowers processing costs and time
  5. Reduces the chance for errors and fraud
  6. Eliminates late payment penalties
  7. Streamlines reconciliation

Take Back Control of Your Invoices With Automation

For most businesses, irrespective of industry, the invoice approval process is a challenging, yet necessary part of doing business.

The good news is that invoice approval doesn’t have to be complex, costly, or time-consuming. With the right invoice approval automation software, organizations can organize, access, and process invoices in an accurate and timely manner.

An automated invoicing solution like KiSSFLOW can classify invoices, extract key information (invoice number, PO number, total value, etc), validate the obtained information against business rules, route invoices through automated workflows, and enable seamless data exchange with other existing software like ERP systems, accounting solutions, etc.

As all invoice are stored in a central location, employees don’t have to waste their precious time and resources hunting inboxes and spreadsheets. So that, if an audit comes up, everything will be in place.

With KiSSFLOW, organizations can approve invoices from anywhere, on any device, at any time. Bid goodbye to invoice processing delays and switch to automation.

Take a look at KiSSFLOW and see how it makes the invoice approval process a breeze!

Streamline Your Procure-to-Pay Process With Kissflow

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