• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Tipalti
  • PRODUCT
        • PRODUCT
          • Overview
          • Supplier Management
          • Invoice Management
          • PO Matching
          • Tax and VAT Compliance
          • Global Payments
          • Self-Billing Module
          • Payment Reconciliation
          • Tipalti Detect
        • WORKFLOWS
          • Invoice-Based
          • Performance-Based
        • PLATFORM
          • Overview
          • Multi-Entity Architecture
          • Financial Controls
          • Payment API
          • Secure Cloud
          • Money Services Business
          • Pi Payables Intelligence
        • ADDITIONAL SERVICES
          • Tipalti Multi-FX Currency Management
          • NetNow Accelerated Payments
          • FX Hedging
          • Implementation Services
          • Supplier Onboarding Services
        • INTEGRATIONS
          • ERP & Accounting
          • NetSuite
          • Sage Intacct
          • QuickBooks
          • Microsoft Dynamics
          • Sage Accounting
          • Performance Marketing
          • Custom Integrations
        • WHY TIPALTI
          • Overview
          • Benefits by Role
          • AP Automation
          • Mass Payments
  • CUSTOMERS
        • BY INDUSTRY
          • Overview
          • Business Services
          • Software and Technology
          • Ecommerce and Retail
          • Marketplaces and Gig Economy
          • Video and Digital Media
          • Video Gaming
          • Financial Services
          • Online Services
          • Education
          • Healthcare
          • Advertising Technology
          • Affiliate and Influencer Networks
          • Manufacturing and Wholesale
        • Case Studies
          • Overview
        • Younique

          “With Tipalti, we have more visibility and consolidated our transactions—we’ve seen significant time savings.”

          Younique

          “A CFO shouldn’t have to spend one second talking about accounts payable—it should be a process that just happens.”

          bluTonic

          “Tipalti provides an efficient, transparent system that allows us to be more reliable with our publishers.”

  • RESOURCES
        • BLOGS
          • BoldCFO Blog
          • Financial Advisor Blog
        • PODCASTS
          • BFF Podcast
        • CALCULATORS
          • Cost Per Invoice Calculator
          • Payment Error Calculator
          • ROI Request
        • Recent Articles

          International Women’s Day

          IDC MarketScape Names Tipalti a Worldwide Leader in Midmarket Accounts Payable Applications

          24 Companies Shaping the Business World

          Driving Payables Scalability with Tipalti CMO, Rob Israch

          The Top Finance Communities to Join in 2021

          How to Build the Ultimate Finance Tech Stack

        • GUIDES
          • Compare Payment Methods
          • Cross-Border Payments
          • Invoice Workflow
          • QuickBooks AP Challenges
          • The Total Guide to ERP Integration
        • FAQs
  • COMPANY
    • About Us
    • Careers
    • Partnerships
    • Support
    • Events
    • Press
    • In The News
    • Contact Us
  • Payer Login
  • Get Started
Home / Accounts Payable Hub / Accounts Payable Invoice Approval Process

Demystifying the Accounts Payable Invoice Approval Process

The accounts payable invoice approval process isn’t a “who done it,” like Agatha Christie’s Murder on the Orient Express. You won’t find small hidden clues seeded as the long story unfolds. Instead, it’s straightforward as long as you have the basic tools and processes in place. These tools and processes include using an automated AP invoice approval workflow, electronic document capture and matching, and real-time approval requests for designated approvers. 

Because in your business story, the longer you wait to set up the accounts payable invoice approval process, the more savings and related cash flow opportunities you lose. Then you’re no longer the hero CFO or valuable payable team member. To help you avoid that, this article explains accounts payable invoice approval best practices in a simple and clear way.

How Can I Save Labor Hours and Money by Automating the Accounts Payable Invoice Approval Process?

Accounts payable automation helps you reduce the AP portion of procurement to pay (P2) cycle time–closing the books sooner.

Automated AP software verifies vendors and validates accounts payable invoices. It sends the approval requests to the right person in the organization. As an approver, you’re emailed the  information you require before approving an invoice for payment. It doesn’t matter if that’s two-way or three-way approval. (Two-way approval is invoice matching with the purchase order. Three-way approval is invoice matching with the  purchase order and receiving report.) 

When you automate the AP process, it makes an authorized approver’s job easier and quicker. It helps you avoid duplicate payments and our company can take early payment discounts to save money. You’ll avoid late payments to suppliers that could result in shipment cut-offs by vendors when you greatly exceed payment terms. The accounts payable department can escape the time-consuming, endless approver follow-up that happens with a manual invoice processing workload.

Get The CFO’s Guide to AP Automation ebook

Incorporating Business Process Improvement into Accounts Payable Invoice Approval Workflow

Business process improvement (BPI) is the analysis of methods and workflows to find opportunities for reducing bottlenecks, processing costs, and the waste of labor hours due to inefficiencies. It uses workflow diagrams to graph business processes and changes processes where needed to be more efficient. 

The accounts payable invoice approval process–which is part of the AP invoice processing and payment processing workflow–is an area that your business can streamline with BPI to yield significant cost-savings benefits. 

Deloitte issued a report titled Strategies for Optimizing Your Accounts Payable and the report cautions business readers:

“A failure to adopt effective accounts payable processes can hamper a company’s ability to process invoices on a timely basis, take advantage of available discounts and set either longer or shorter payment terms with suppliers, depending on which are most favorable. These consequences can arise when businesses:

  • Rely too heavily on error-prone manual processes to approve requisitions, scan supplier invoices, and issue payments …
  • Incorrectly load supplier and/or contract information into master data files
  • Lack processes and systems to prevent late payments, under- or over-payments, duplicate payments or missed payments.”

The Accounts Payable Invoice Approval Process in AP Automation Software

An AP automation app has built-in integration to NetSuite, Sage Intacct, QuickBooks, and some other ERP accounting systems. Look for an app that uniquely provides end-to-end accounts payable automation, starting with the self-service onboarding of suppliers. AP automation SaaS cloud software uses artificial intelligence (AI), thousands of business rules or algorithms, and robotic process automation (RPA) to automate routine payable processes. You can work anytime at your office, work remotely, or anywhere you have Internet access. Use your computer or mobile device, including a cell phone or tablet. 

Supplier Onboarding, Verification, and Supplier Management

Vendors and suppliers enter their contact information and upload invoices for invoice processing and approvals in the advanced AP system. The uploading of invoices by suppliers gets invoice data into the system, reducing manual processes of getting paper invoices into the system. It saves time by offloading some of the traditional accounts payable department workload and reduces errors. Suppliers also enter W-9 (US) or W-8 (international) tax forms, which are digitally captured. Part of the supplier management process is vendor verification using a KPMG system, which is also useful in the accounts payable invoice approval process. 

Invoice Automation including Document Matching

How do you process accounts payable invoices? Automated invoice processing is part of the payable process leading to accounts payable invoice approval. Supplier invoices​ are either entered in the system electronically through vendor upload or incorporated through OCR capture if necessary. 

The invoice data in the system include invoice number, invoice date, due date, payment terms, item number, item description, quantity, invoice amount, and related PO number. The next step is automatic electronic system matching of invoices with purchase orders (POs). WIth this is also receiving reports if relevant to substantiate ordering by an authorized company employee and receipt of goods, if applicable. The purchase orders should be matched with signed purchase requisitions by the system.

 Before payment processing, the next step is the accounts payable invoice approval process. 

Accounts Payable Invoice Approval Levels 

Who is authorized to approve accounts payable invoices in your company? A written company policy should set approval levels by invoice amount and responsibility center. The person with cost center budget responsibility should be an invoice payment approver. As the AP invoice amount reaches a higher range stated in the company policy, the company will require additional approvals. 

The other approvers should be designated managers who supervise the original approver. Large invoice amounts may require preauthorization and CFO, CEO, and perhaps the Board of Directors’ approval for strong internal controls and corporate governance.

As part of your approval process, you can also control costs for low-cost, repetitive items purchased like office supplies. Your policy and supplier approval process can include automatic ​business rules ​for adequate cost control management of tail spend, without requiring too much human time spent on approvals. 

Once the accounts payable invoice approval process is complete for an invoice, automated payment processing begins. Look for the choice of efficient large batch payments or individual bill pay when it’s needed. AP automation software should provide an audit trail, which also improves internal controls. 

Now that we’ve demystified the accounts payable invoice approval process, learn about more features and benefits of AP automation and global mass payments software. You don’t need to rely on your standard outdated manual data entry system for accounts payable. 

After you start using your cloud SaaS subscription that’s available as an app from your preferred ERP accounting software vendor or through the developer, you’ll have extra time to binge on Netflix or curl up with your favorite mystery novel. And you’ll gain some finance cred as a decision-making  FP&A analyst and company strategist, having to explain less unfavorable budget variances. 

About the Author

Barbara Cook

Barbara is currently a financial writer working with successful B2B businesses, including SaaS companies. She is a former CFO for fast-growing tech companies and has Deloitte audit experience. Barbara has an MBA degree from The University of Texas and an active CPA license. When she’s not writing, Barbara likes to research public companies and play social games including Texas hold ‘em poker, bridge, and Mah Jongg.


RELATED ARTICLES

15 Key Best Practices to Improve Accounts Payable in 2020 Accrued Expenses vs Accounts Payable: What's the Difference? Accounts Payable vs Accounts Receivable: What's the Difference? What is Robotic Accounting & What are its Key Benefits? AvidXchange vs Bill.com What is Invoice Matching? | Invoice Matching Process Explained How to Leverage the Power of Cloud for Spend Management What is the Full Cycle of Accounts Payable? What is Source to Pay (S2P)? What is Multilateral Netting? Netting's Advantages for AP What is Vendor Management? Payment Strategies for 2020 What Are Accounts Payable? What Is 3-Way Matching in Accounting? Guide to Going Totally Paperless with Accounts Payable Document Management in a Paperless AP Organization

Footer

WHY TIPALTI

  • Overview
  • Benefits by Role
  • AP Automation
  • Mass Payment
  • Bill.com Alternative

COMPANY

  • About Us
  • Careers
  • Partnerships
  • Support
  • Events
  • Press
  • In The News
  • Contact Us

CUSTOMERS

  • Overview
  • Business Services
  • Software and Technology
  • Ecommerce and Retail
  • Marketplaces and Gig Economy
  • Video and Digital Media
  • Video Gaming
  • Financial Services
  • Online Services
  • Education
  • Healthcare
  • Advertising Technology
  • Affiliate and Influencer Networks
  • Manufacturing and Wholesale

PRODUCT

  • Overview
  • Supplier Management
  • Invoice Management
  • PO Matching
  • Tax and VAT Compliance
  • Global Payments
  • Self-Billing Module
  • Payment Reconciliation
  • Tipalti Detect
  • Invoice-Based
  • Performance-Based

RESOURCES

  • BoldCFO Blog
  • Financial Advisor Blog
  • BFF Podcast
  • The Total Guide to ERP Integration
  • FAQs

PLATFORM

  • Overview
  • Multi-Entity Architecture
  • Financial Controls
  • Payment API
  • Secure Cloud
  • Money Services Business
  • Integrations
  • Pi Payables Intelligence

ADDITIONAL SERVICES

  • Tipalti Multi-FX Currency Management
  • NetNow Accelerated Payments
  • FX Hedging
  • Implementation Services
  • Supplier Onboarding Services
CONTACT US
LinkedIn Instagram Facebook Twitter YouTube
Tipalti
We Handled It.™
Privacy Policy
|
Payer / Sender Rights
|
Customer Assistance Policy
© 2010–2021 Tipalti Inc.