How does invoice processing work?

A woman wearing a leather jacket and glasses uses her laptop to learn how invoice processing works.

For businesses, the processing of invoices isn’t as simple as sending a check in the mail. Learn how invoice processing works so that you can keep up with proper accounting practices.

What is invoice processing?

So, what is invoice processing? At its simplest, invoice processing is the method of handling invoices from the moment they arrive until they’re paid and filed away. Smooth and streamlined invoice processing is the key to paying invoices on time and reducing accounts payable errors.

How invoice processing works step by step.

While there’s no standard method for invoice processing, there are a few steps that every business should follow to stay organized:

  1. Prepare purchase orders. Purchase orders (POs) help businesses track payments and shipments when ordering from a vendor.
  2. Receive shipping documents. This helps ensure you’re getting the exact goods you ordered.
  3. Get the invoice. The vendor will write an invoice and send it to your accounts payable department, typically after the products or services have been rendered.
  4. Match invoice to purchase order. Make sure all the numbers match between the PO, shipping documents, and the invoice.
  5. Verify and review. If all numbers match and the invoice is accurate, you can pass it to an accounts payable manager for approval and processing.
  6. Enter the invoice into the system. Once approved, the AP manager will enter the invoice into the general ledger and schedule payment.
  7. Send invoice payment. Scheduled payments are sent to a higher financial officer (typically a CFO or Controller) for final approval to send payment to the vendor.

Ways to speed up invoice processing.

To speed up invoice processing while avoiding the delays caused by physical signatures in digital accounting software, consider alternative strategies. As you can see, invoices need a lot of approval from the invoice approval workflow. Generally, managers authorize approval with a signature. If you use digital accounting software, printing and scanning documents for signatures can slow down the payment process.

Besides using a digital signature, there are other ways to speed up invoice processing, such as automated data entry with OCR technology streamlining approval workflows, encouraging electronic submissions, using electronic payment methods, and enabling real-time collaboration. All of these strategies help with the efficiency of the invoicing processing workflow.

Best practices for processing invoices.

Efficient invoice processing not only ensures that timely payments are made to suppliers but also helps maintain strong vendor relationships, prevents costly errors, and aids in strategic financial planning. To optimize your invoice processing, consider the following best practices:

Optimize invoice processing with Adobe Acrobat.

By using e-signature software like Adobe Acrobat, accounts payable managers can approve payments throughout every step of invoice processing right from their computer. It’ll help streamline the process and let you pay vendors in a timely manner.

Discover more about how Adobe Acrobat can help you simplify invoice processing.