How does invoice processing work?
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?
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.
Steps to process invoices.
While there’s no standard method for invoice processing, there are a few steps that every business should follow to stay organized:
- Prepare purchase orders —Purchase orders (POs) help businesses track payments and shipments when ordering from a vendor.
- Receive shipping document — This helps ensure you’re getting the exact goods you ordered.
- 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.
- Match invoice to purchase order — Make sure all the numbers match between the PO, shipping documents, and the invoice.
- 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.
- Enter invoice into the system — Once approved, the AP manager will enter the invoice into the general ledger and schedule payment.
- Send payment — Scheduled payments are sent to a higher financial officer (typically a CFO or Controller) for a final approval to send payment to the vendor.
As you can see, invoices need a lot of approval. Generally, managers authorize approval with a signature. If you use digital accounting software, printing and scanning hard copies for signatures can slow down the payment process.
By using e-signature software like Adobe Sign, 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 Sign can help you simplify invoice processing.