What is an invoice approval workflow

An invoice approval workflow is the process used to check invoices for accuracy before they are paid.

Processes vary from company to company, but typically stakeholders from accounting, finance, and legal departments are designated approvers. At each step in the workflow, approvers check to make sure invoices are correct and that information is recorded. They also make sure that the invoice approval process is compliant. If there are ever any issues with invoices or payments, managers and supervisors will collaborate with vendors to resolve them.

How to use invoice approval workflows

Companies can use approval workflows to ensure accurate and timely payments to vendors. With efficient processes in place, accounts payable employees and invoice approvers can save time and avoid late payments. Here are a few steps that a typical approval process would follow:

1. Verify invoices. Check to make sure all information is accurate by referencing other purchase-related documents.
2. Define exceptions. If any invoice fails the verification process, reach out to stakeholders and determine where discrepancies are coming from.
3. Receive approvals. Once it’s confirmed that the invoice has no obvious errors, it can be sent to approvers. Approvers make sure that all details of the purchase and the payment request match company expectations before submitting payment.

Benefits of streamlining the invoice approval processes

Because it involves many documents and layers of approval, the invoice process can be time consuming and error prone. This can lead to frustration for employees dealing with complex processes, as well as delayed payments for vendors. The best way for companies to avoid these challenges is to streamline invoice workflows. This saves valuable time, improves operations for employees, and helps ensure that vendors are paid accurately and on time.

Related Read: Simple Steps to Streamline Your Accounting Workflows

Challenges in manual invoice approval workflows

For many companies, manual invoice processes get in the way of streamlined workflows. It’s important for businesses to be aware of the challenges manual processes create, such as:

• Delays due to remote work: When approvers or accounts payable (AP) employees are offsite, it isn’t easy to sign off on hardcopy documents. This can create bottlenecks and ultimately delay invoice payments.
• Difficulty managing a high volume of invoices: Without a centralized platform to manage invoices and automate aspects of the approval process, businesses can quickly become overwhelmed during busy times. Increased stress on the AP department can result in delays and errors such as misplaced invoices and double payments.
• Increased risk of fraud: It’s easier for bad actors to interfere with invoicing activities when automation isn’t there to enforce approval policies and document what happens throughout the process. Fraud can lead to reputational damage as well as financial penalties, so it’s important for businesses to safeguard against it.

Overcoming the drawbacks of manual processes with invoice approval automation

To overcome the challenges of manual invoice approval processes, companies should automate approval workflows. Automation saves time and reduces errors for accounts payable departments and approvers, even when employees are working remotely. It makes it possible for businesses to efficiently handle a large volume of invoices while building strong supplier relationships as they scale. It also creates safeguards against fraud by leaving less room for people to change information or skip over steps in the approval process.

We’ll take a closer look at the benefits of automating invoice approvals below.

Benefits of automating approvals

Some of the most impactful benefits of automating invoice approvals include:

Faster invoice validation

With an organized and efficient automated process, companies can easily determine invoice accuracy before invoices are routed for approvals.

Streamlined invoice approval

Once documents are processed, automation platforms can route invoices for approval through email, web, or mobile applications. Automation platforms make it simple for managers and supervisors to access, read, and approve invoices from anywhere, at any time. This prevents bottlenecks and allows the accounts payable process to continue seamlessly.

Better document management

Paper invoices are often misplaced. With automation platforms, invoices and other purchase-related documents are uploaded to one central location. This ensures that all necessary documents are organized, accounted for, and secure.

Stronger vendor relationships 

Partners and suppliers get paid faster when invoice approval automation streamlines the accounts payable process. When a business delivers prompt and accurate payments, vendors are more willing to work with them in the future.

Easier regulatory compliance

Automation platforms built for regulatory compliance help companies comply with the latest industry regulations. Laws often change, and businesses that don’t adapt quickly may face fines. Compliant, frequently updated automation software provides another layer of assurance for peace of mind.

Are there security risks for automating invoice approval?

Certain platforms may put company data at risk, but organizations can secure automated workflows by investing in the right software. The best automation solutions have strong security to protect sensitive information found in invoices. Companies should make sure their automation software protects sensitive information at every step of the approval process using 256-bit encryption, the same level of security used by banks.

Related Read: Balancing Protection and Productivity for Modern Legal Workflows

Implementing automation: tips and best practices

Aside from selecting an automation platform that protects against security risks, there are a few more best practices business should keep in mind when implementing invoice automation. Here are some tips to help companies get the most out of automation software.

Set up multiple tiers of approval

Invoices often require different levels of approval depending on how routine payments are or which vendors are being used. Businesses should ensure their automation software can customize workflows according to these approval levels. This ensures that the right people are always being tasked with approving documents at the right time.

Capture information accurately

Many companies have solutions that scan and automatically enter information from invoices. As helpful as these tools are, it’s important they offer consistent reliability to build on the benefits of automation. If information from invoices isn’t carried into the system correctly, the AP team will have to make manual corrections. Effective data-capturing systems are an essential tool for getting the most time savings from automated processes.

Ensure compliance

For businesses in highly-regulated industries, compliance is a top concern. It can be very time consuming to review regulations and adjust business practices to meet industry requirements. Companies should make sure their software was built to handle the latest regulatory requirements and that it’s regularly updated to account for any new developments.

Employ user-friendly software

Invoice approval automation should make employees’ lives easier, not harder. It’s important to employ intuitive, user-friendly technology that offers full visibility into the invoice approval process. Additionally, the software should make it easy to adjust processes when things change, all from an interface that doesn’t require technical knowledge to navigate.

Automate invoice approvals with secure, time-saving software

Invoice approval workflows are an essential part of the overall accounts payable process. Because they influence how quickly and accurately vendors get paid, it’s critical for companies to streamline and automate them. The right workflow automation software can make the processes involved secure and seamless, saving time and money for businesses while strengthening their relationships with suppliers.

As companies look to scale, it’s important to remember that success depends on efficiencies built into day-to-day operations. With better processes for invoice approval, an organization brings itself one step closer to optimizing operations and maximizing revenue.