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How To Improve Your Invoice Approval Process

Hugh Grant

Invoice approval can be an annoying, time-consuming process – and one that's prone to a host of manual errors as well. Fortunately, you can improve your invoice approval process with a handful of simple, strategic changes and new tools.

Let’s get started.

The Goals of Improving Invoice Approval

There are a few central goals in improving your invoice approval.

Hopefully, your optimization will allow you to:

· Reduce costs. There are a few costs associated with invoice approval, including the costs of labor, processing costs, potential late fees, and more. Reducing these can allow your organization to operate more cost efficiently.

· Save time. Better invoice approval can also save time, which can help you in many ways. You can reduce labor costs, free up time for your accounting professionals to spend on more important matters, and expedite the process overall, making your vendors happier.

· Reduce errors. Any error during the invoice approval process can lead to headaches that your accounting department will need to correct. Reducing errors helps this process run much more smoothly.

So how do we achieve these goals?

Go Paperless

First, consider going paperless. Immediately, going paperless can save you money on paper products, postage, and more. It can greatly expedite the invoice approval process, since you won't be waiting days or weeks for things to be sent by mail. And you can cut down on errors by keeping things contained to a consistent digital system. On top of that, you'll be increasing your environmental friendliness by reducing your reliance on paper products.

Optimize Your Invoice Approval Workflows

Depending on how your organization works, you may require different workflows for PO and non-PO invoices. For example, with a PO invoice, the workflow could go something like this: issue the PO > confirm with the vendor > ship and receive goods > receive a PO invoice from the vendor > verify and pay the invoice. With a non-PO invoice, the workflow could go something like this: identify needs and make a purchase > receive an invoice from the vendor > review the invoice > approve the invoice > pay the invoice.

You can optimize your invoice approval workflows with the following:

· Minimize steps. Keep the number of steps in your invoice approval processes to a minimum. Each step is going to add complexity and time to the process, so do a thorough review of your existing workflows and see if anything can be trimmed or combined. The simpler your processes are, the better.

· Expedite each step. Next, you can work on making modifications to expedite each step, accelerating the time frame in which you can pay invoices.

· Formally document and train. It's important to formally document your workflows and properly train your employees so they can follow those workflows appropriately.

Once you have a sketch of your ideal workflows in place, you can incorporate accounting automation to make them flow much more smoothly.

Automate Every Step You Can

AP automation has the power to help you achieve all of our preliminary goals.

· Save money. Automation handles various steps of the invoice approval process without requiring any manual effort, thus saving you money.

· Reduce manual labor. When your accounting staff members aren't forced to deal with tedious invoice approvals, they can spend their time and mental energy on more important tasks.

· Eliminate errors. You can make mistakes when incorporating automation into your organization, but the system itself isn't going to deviate from how it's been programmed. You can eliminate most, if not all errors by automating tasks.

Define Clear Roles and Responsibilities

Automation should reduce your need for manual intervention in the invoice approval process. But right now, automation technology can't do everything. You're going to have at least some staff members involved in the invoice approval process, so it's important for you to define clear roles and responsibilities for those people. Who is responsible for what? How quickly do they need to act? What should they do if there's an issue? Who do they report to?

Integrate Your Invoice Processing With Your Accounting Software

Another solid move is integrating your invoice processing with your centralized accounting software or ERP software. This way, all your data is going to be kept in one place and your employees won't have to switch back and forth between different systems. If your systems are incompatible, consider switching to a platform that can do everything – or switching to platforms that support easier integrations.

Collect Feedback and Fine Tune

Honest employee feedback is one of the best tools you have for ongoing improvements. Keep in touch with your accounting employees and ask them if they have any recommendations for how you can improve invoice approvals. When you hear good ideas, incorporate them.

With the help of automation software, formally documented workflows, clear roles and responsibilities, and integrations, your business can save money, save time, prevent issues, and ultimately operate more efficiently. If you're willing to commit to ongoing improvements to your invoice approval process, you'll see even more benefits in the future.

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