Every business that deals with invoices have a certain procedure in place for the same. The process is called invoice processing workflow.

Invoice Processing

By definition, Invoice processing is the function performed by the accounts people on an invoice.  A business is usually generating or receiving invoices or both in most cases. Invoice processing is the process done with the received invoices. When a business draws an invoice upon the other business/person or entity for the goods and/or services it extended, it is done with its job, now it has to wait for the payment to be received. In the meanwhile, it may have to revise the invoice if required but that’s not happening every time. But it is not the same when a business receives an invoice. An invoice that is to be paid is usually a short-term liability and is treated as invoice payable. So it can be said that invoice processing is the function of accounts payable.

Invoice Processing Workflow

When a business receives an invoice from its supplier or vendor against the goods/services, it has to go through the whole invoice processing cycle. This process has to be done according to some procedural protocol. This is what we call invoice processing workflow.  

The invoice processing workflow is the set of specific steps that an invoice has to go through within an organization. It begins with an invoice being received and ends when the same is paid and finally recorded in the general ledger.

Invoice Processing can either be manual or automated (done through some software), but the essence of the process remains the same. The major steps are the same in both cases. As an overwhelming majority of businesses in general and large businesses, in particular, are using automated invoice processing solutions so our main focus would also be the same.

Steps of Invoice Processing Workflow

A typical invoice processing workflow has some core steps (functions), that are as follows;

• Invoice Reception
• Invoice Validation/Approval
• Invoice Payment

Invoice Reception

A supplier invoice can be coming from multiple channels, i.e.

• Printed/Handwritten Invoice received manually/via courier/mail
• Printed/Handwritten/Scanned Invoice received electronically via email/fax or some other electronic medium
• Invoice directly submitted by the supplier in the invoice portal

Upon its reception, it can be dealt with accordingly. It can be acknowledged and entered into the system by the organization’s staff. An invoice can be entered into the system through one of the following ways;

• Data entry via computer or mobile device (by accounts staff or directly by the supplier)
• Digital capture via camera, scanner using OCR

Once the invoice is received and entered into the system, the next process begins.

Invoice Validation/Approval

Depending upon the specific workflow requirement, this can either be a single step or can be divided into multiple steps. There can be an individual or multiple individuals, even multiple organizations (in a cross-organizational workflow scenario). This step can be divided into two substeps.

• Invoice Validation
• Invoice Approval

Invoice Validation

Invoice validation is the process that verifies the content of the invoice against multiple criteria. The supplier credentials, P.O matching,  delivery receipt matching, amount of the invoice, and/or any mathematical error or discrepancy. In that case, the supplier is contacted for revision/correction. Once the invoice is verified, it is sent for the next action.

Invoice Approval

 A verified invoice requires the approval of the concerned authority to be okayed for payment according to the terms. Depending upon the organizational hierarchy, the approval can also be done by a single or multiple designations. It may also involve a third party approval in case of a cross-organizational scenario. The approved invoice is then sent for payment to the concerned person.

Invoice Payment

An invoice with the final approval becomes ready for payment. The process of payment can be different depending upon the payment terms and method. There are multiple ways an invoice payment can be made with.

• Cash payment
• Cheque issuance
• Account adjustment
• Through some connected payment gateway

Once an invoice is paid or assigned for payment, the invoice processing workflow completes. The above workflow though mentioned for an automated solution remains almost the same in the case of manual invoice processing. The only difference is that the process is done manually.

It is worth mentioning here that manual invoice processing is not feasible beyond a certain volume. Any business with a significant number of invoices has to adopt invoice automation to remain efficient, economical, accurate, and scalable. Manual invoice processing is a resource-intensive, error-prone and costlier method. More on this subject can be read here.

InvoiceMate is the next-generation invoice management system on blockchain that offers cutting-edge technology and unmatched features that not only provides the complete invoice processing solution but also facilitate efficient invoice management.

Want a demo of the future of invoice processing or want to know more about InvoiceMate by MateSol, please feel free to write us at:

mate@invoicemate.net