Features and Advantages of Invoice Approval Software

If your accounting department starts to look a little on edge at the end of a month or quarter, it’s a sign that your company’s processes may be due for an upgrade. In terms of value for effort, optimizing the invoice approval and payment process can deliver huge relief to the team while opening the door to a range of benefits for the organization.

A streamlined invoice approval process takes the burden of paper chasing, research, and repairs off of the accounts payable department, clearing the way for them to tackle other, more meaningful (and more gratifying) projects. Bringing on an invoice approval software solution further enhances these benefits.

Let’s take a look at invoice approval: how it works, where it can be improved, and how technology can make it truly streamlined.

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What is invoice approval software?

Invoice approval is the process of reviewing, verifying, and approving invoices coming into your accounting department. In an approval process, incoming invoices are accepted, checked against existing purchase requisition or purchase order info, and routed to the appropriate stakeholders for payment approval.

Software automates this process to take the burden of processing off AP’s shoulders. Invoice approval software ensures that all charges are accurate and documentation is complete before processing payments. Additionally, invoice approval software typically includes features such as digital audit trails, real-time invoice tracking, and integrations with accounting systems. Enhancing efficiency, reducing errors, and enforcing financial controls play a crucial role in optimizing accounts payable processes.

Steps in the invoice approval process

Invoice approval should be a repeatable and scalable process to ensure all invoices receive the same scrutiny and timely attention. The outline of the invoice approval workflow will vary slightly depending on your business model and — in some cases — the dollar value of the invoice in question.

In general, every invoice should proceed through the following verification steps:

1. Acceptance

Collect invoices through whatever delivery means the company accepts. Although many businesses are moving away from paper invoicing, as many as 48 percent of vendors still mail or fax invoices. Collecting invoices through a standardized process ensures you capture all necessary data (and capture it only once).

2. Data capture

Once a paper or electronic invoice enters the accounting system, extract the data necessary to approve and process payment. For physical invoices, this often requires capturing data through optical character recognition (OCR) technology. If vendors invoice through a centralized portal or electronic system, all data will be available electronically. A centralized platform is the optimal route for invoices, as the verification, approval, and payment workflows occur digitally without human intervention.

3. Invoice verification

Perform invoice verification to ensure each invoice matches the corresponding purchase order and delivery documentation. Verification checks details such as vendor information, quantities, prices, terms, and conditions against the company's records. Accounting can then research and resolve discrepancies before proceeding to payment. Verification prevents overpayments and helps detect issues like procurement fraud.

4. Departmental approval

Once an invoice passes initial verification (to weed out issues or duplication), route it to the relevant department head or manager for review. They can assess the invoice against departmental budgets and project allocations and confirm the goods or services were received and meet the agreed-upon standards. This step ensures expenses are authorized and fall within the purchasing policy before the accounting team processes the payment. For big-ticket invoices, the purchase might also proceed through IT and security assessment, legal review, and finance team approval.

Approval should be documented through a digital signature or email confirmation, providing a clear audit trail. This safeguards against unauthorized spending and ensures financial accountability within each department, aligning expenditures with organizational objectives and constraints.

5. Payment

After an invoice receives all necessary approvals, process the payment according to the invoice terms. Swift AP processing and approval help companies take advantage of any early payment discounts offered and prevent cash flow issues like late payment fees. In this step, accounting also records the payment for future invoice reconciliation and spend analysis. Using AP automation allows accounting to perform these tasks and record remittances automatically.

7 Benefits of invoice approval software

The shift towards automation in invoice approval processes is a game changer for businesses aiming to scale efficiently. Invoice automation software opens the door to flexible workflows while significantly reducing the likelihood of errors. With over 20% of invoices suffering from substantive exceptions, the value of automation pays dividends over time.

With automated approval, companies can focus on growth without getting bogged down in tedious and error-prone invoice management. This technology empowers businesses to maintain financial health and compliance, enhances operational efficiencies, and ultimately drives development by allowing the reallocation of valuable resources to more strategic areas.

Implement automated invoice approval to take advantage of these benefits:

Streamlined approval: Automated invoice approval features accelerate the approval workflow by instantly routing invoices to the relevant approvers without the need to check a list or dig through an email chain. This reduces the time it takes to process ebilling and helps teams create more visibility and order in the procurement and finance functions.

Reduced processing costs: Manual processing is expensive, requiring hours of data entry, research, and cross-checking. Eliminating manual entry and processing significantly reduces labor costs associated with traditional invoice management. It also boosts team productivity so accounting departments can work on more meaningful and high-value projects that drive growth.

Improved accuracy: Automated invoice processing reduces human error through digital data capture and matching of purchase orders, receipts, and invoice data. The system ensures every payment gets verified and processed accurately.

Enhanced visibility and control: Data capture and reporting make real-time tracking possible. Using an automated approval system, stakeholders can easily review invoice statuses and comprehensive digital audit trails, enhancing transparency and financial oversight. Automation also enables a range of reporting and spend analysis activities for better financial planning.

Better compliance and risk management: Automating approval workflows and keeping detailed records of all transactions helps enforce regulatory compliance and internal controls. It makes it easier to spot financial risks such as duplicate payments, procurement fraud, and out-of-policy spending.

Stronger vendor relationships: Automating the approval process ensures timely payment to vendors. This can improve vendor satisfaction and lead to more favorable payment terms, higher-quality service, and more strategic supplier relationships in the long term.

Process scalability: Manual invoice approval and payment isn’t scalable. As a business grows and its procurement volume increases, the struggles of manual invoice management begin to compound. Automation helps companies adapt to growing business needs without a significant increase in processing costs or time. It allows accounting stakeholders to focus their efforts on revenue-generating and cost-saving activities.

Beyond approval automation: building flexible workflows

Implementing an invoice automation system with flexible workflows empowers organizations to tailor processes to their needs. This adaptability ensures systems work for the individual business, increases the efficiency of the accounting function, enhances control over financial operations, and supports dynamic business growth. With a flexible system, streamlined approvals, reduced errors, and improved financial management become even more achievable.

Look for automation that can deliver these flexible features in your invoice approval and processing:

Custom approval rules based on invoice amounts to ensure higher-value invoices receive additional scrutiny
Dynamic routing of supplier invoices to relevant approvers based on project codes or departmental budgets
Integration with other financial reporting and planning systems, such as enterprise resource management (ERP) tools, to automatically match purchase orders with incoming invoices for verification
Automated notifications for approvers to ensure timely processing of invoices
Customizable dashboards for real-time tracking of invoice status and approver workload
Role-based access controls to secure sensitive financial information and enforce segregation of duties
Multi-currency support for businesses operating in global markets
Scalable workflow configurations that adapt as the business grows or changes operations
AI-driven analytics for identifying bottlenecks in the approval process and suggesting efficiency improvements

Case studies: invoice processing platforms in action

Nothing illustrates the value of procurement automation like seeing how Order.co performs for real customers. Check out these two recent success stories from our clients:

ZeroCater

A growing business creates an increasing flow of invoices. At some point, the volume of purchases overwhelms AP departments. They need help and, ideally, automation. Corporate catering brand ZeroCater experienced just this issue, with manual invoicing taking up numerous valuable hours each month. Adding to that, a hazy approval process gave maverick spend an opportunity to creep in.

ZeroCater reached out to Order.co to get control of its purchasing and invoicing workflows. With the platform, the company reduced its cycle times, turned the payment processing system into a well-oiled machine, and onboarded all its employees to the new, simpler process.

As a result, ZeroCater saw improvements like:

A reduction of monthly invoices from over 200 to just three or four
A smoother, more streamlined payment process
More visibility and consistency in procurement functions

Free from the chaos of manual invoice management, the AP department now spends its time improving financial performance and adding value.

[solidcore]

Gyms and wellness centers need a wide variety of supplies to keep their businesses running. Usually, this means buying across many vendors. Pilates studio [solidcore] faced this challenge with the added complexity of a high-volume procurement function for its 50 locations.

To keep invoices and payments moving efficiently at this scale, the AP team needed consistency and automation. [solidcore] partnered with Order.co in 2018 to smooth out its disorganized purchasing process and bring visibility to its accounting function.

With help from Order.co, [solidcore] saw benefits like:

Automation for 16 of the company’s highest-volume vendors
A savings of over 350 purchasing hours every month
100% line-level spend visibility for a granular understanding of purchasing

With invoice approval automation, the company successfully manages procurement for all its locations using a streamlined purchasing and payment process.

How Order.co streamlines invoice processing

Order.co streamlines the procurement process from the time a stakeholder clicks “order” by creating a fully documented, scalable system for purchasing that brings valuable information into one place. A procurement platform like Order.co allows businesses to balance access with accountability and visibility through smart procurement and approvals using features like:

Centralized order intake from any vendor, with a customizable procurement workflow that adapts to your company’s individual processes
Automatic GL coding for line-level accuracy in every purchase
Automated order approval processing to reduce cycle time for purchases
Three-way matching for confidence when paying invoices
Consolidated billing features to pay multiple invoices at once, even across vendors

Want to improve the invoice approval system with automation and next-level features that make every part of the procurement process easier? Get a demo of Order.co today.

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