Receiving an invoice is the first step in the AP payment process, but many people do not understand all the steps necessary in receiving, verifying, and tracking those invoices.

It can be a complicated process and involves many steps that are crucial in maintaining accurate financial records. Manual invoice processes can present challenges to staff and cause delays in the entire payment process.

Adopting automation practices for receiving and storing invoices can help improve company visibility, productivity, and cost-effectiveness.

In this article, we describe what is involved in processing vendor invoices and describes ways in which your business can optimize the entire process.


Invoice 101:

What it is and What it Does

So what exactly is an invoice and what does it do?

An invoice is a bill sent by a company or vendor that has sold a service or product to another company.

The information contained on the invoice can vary based on the needs of the vendor, the type of transaction, and preferences of the purchasing company.

One of the problems with invoices, particularly paper invoices, is that they do not always contain the same information. If your AP department is processing dozens of invoices at once, this can become difficult.


Receiving Invoices:
Verifying and Tracking Information

The most important aspect of the invoice is to give the purchasing company the information they need to verify the purchase, ensure correct payment, and deliver payment on the agreed upon terms.

Invoices should include the following information to help both the vendor and the company (purchaser) track expenses or inventory, and update financial records:

  • The date the vendor created and sent the invoice.
  • The contact information of both the vendor and the purchasing company, particularly the billing information and point of contact.
  • Information about the goods or services purchased, including the agreed prices and other information.
  • Payment information.

If an invoice does not contain the payment due date, for example, it would be difficult for your AP department to keep an accurate schedule for outgoing payments. If the invoice does not contain information about products, it is hard to verify that the company did receive the goods and check the payment amount. ACOM’s AP Automation solution increases visibility throughout the verification process, so staff can quickly access and relay information about vendor payment statuses. Even better, vendors can independently check invoice progress, which can avoid the need to contact the purchasing company in the first place.

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Approving Invoices:
Forwarding and Receiving Approval Information

Once the AP department verifies invoice information, it needs to be submitted for approval before they can send payment. It may not sound complicated, but slow approval processes can have a significant impact on payment turnaround times and revenue. A paper invoice could sit on a busy employee’s desk for days, and an invoice traveling from desk to desk can be lost or misplaced.

It is hardly worth the AP department’s time to manually track down paper documents or spend time requesting invoice copies from the vendor. The last thing any business needs is to shake the confidence a vendor has in them by sending invoice after invoice to replace an original lost copy.

Automated invoice approval processes, however, resolves this problem. ACOM’s AP Automation solution digitally captures paper or electronic invoices and routes them through custom-designed workflows to speed up the entire approval process. Since ACOM works to transition the majority of a company’s vendors to electronic payments, your business can reduce or eliminate the need for paper invoices, which lowers outgoing costs.


How AP Departments Store and Retrieve Invoices

The invoice has reached the end of its life cycle: after the AP department receives, verifies, and routes an invoice for approval, they send payment.

What happens to the invoice now? Since completed invoice information is required for any number of financial activities, including tracking expenses, doing taxes, and verifying purchases, your company needs a secure way to store them. Once again, this is where manual, paper-based processes can cause problems.

Storing paper invoices can be costly, take up space, and introduce filing errors. A misfiled invoice could take hours to locate, and an unexpected audit could present logistical problems for a busy AP staff.

With electronic AP solutions invoice data is automatically entered and stored for easy access.


Understanding Invoices and Improving the Process

Invoice processing is a complicated and critical component of the AP payment process.

After checking an invoice’s information, it needs to be recorded, routed, and stored for future retrieval. Streamlining this process can drastically improve the functionality of your department, which is why identifying major invoice challenges is essential.

Your business can optimize each step by adopting an automation solution, which brings down costs associated with labor and fixing mistakes. Deliver better service, improve your cost savings, and increase response times by using an automation solution for your vendor invoice and payment processes.

Interested in learning more?  Contact ACOM Solutions today!

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