What Is Invoice Management? A Practical Guide for EU Businesses

Efficient invoice management promotes strong vendor relationships, smoother cash flow, and stress-free EU compliance.

However, for many growing EU businesses, manual data entry and increasing invoice volume quickly lead to mistakes, delays, and rising pressure on AP teams.

In this guide, you’ll learn what invoice management is and how automation can cut errors, speed up approvals, and reduce AP workload. Plus, we’ll share what to look for in an invoice automation solution that helps you tackle manual processes.   

What Is Invoice Management?

Invoice management is the process of receiving, verifying, approving, and paying vendor or supplier invoices. 

Also called invoice processing, invoice management is a core operation within accounts payable (AP). 

An efficient workflow is crucial to ensure timely, accurate payments and strong vendor relationships. 

A well-managed invoicing process also promotes auditability across your AP management cycle, helping you comply with European Union (EU) directives and access clear cash flow data to manage financial obligations. 

What Does the Invoice Management Process Look Like?

The invoice management process is the steps you take from receiving to paying and recording invoices.

The invoice management process is the steps you take from receiving to paying and recording invoices.

By effectively executing each step, clients get paid faster, and your records stay up to date for EU regulatory and tax compliance. 

^{Here’s how a typical invoice workflow looks:}

Here’s how a typical invoice process works: 

There are two main ways of managing your invoicing process: manually or with AP invoice automation. 

Manual processing involves one or more of your AP team members entering data, reviewing, and paying each invoice individually. 

Automation software performs these tasks automatically, with less need for human intervention. 

According to research by the Institute of Financial Operations & Leadership (IFOL):

• Almost 23% of businesses rely on manual AP processes. 
• 41.4% plan to automate within the next 12 months.
• 40% of businesses that have already implemented automation prioritise invoice management.

Soon, we’ll look at the challenges of manual processes and how automation software solves them. First, let’s discuss why effective invoice management is crucial for EU businesses.

The Importance of Effective Invoice Management for EU Businesses

Getting invoice management right keeps money flowing smoothly, reduces risk, and promotes strong supplier management. 

If any part of your payable process is inefficient, it can lead to late payments, data errors, and strained relationships—all roadblocks to a healthy business. 

Here’s why effective invoice management matters to EU businesses—legally and operationally. 

Adhering to EU E-Invoicing Legal Frameworks

The EU has introduced different legal frameworks to foster widespread electronic invoice adoption (and move away from paper-based invoices). 

Adhering to these regulations is critical when sending, receiving, and managing invoices. Failure to do so can result in a penalty fine.  

Here are the frameworks that apply to invoice management:

To ensure compliance with these legal frameworks, you must: 

• Give consent to vendors to supply invoices.
• Check the legibility and authenticity of invoices.
• Securely store invoices and make records available for tax authorities (and relevant parties) for auditing.
• Comply with the General Data Protection Regulation (GDPR) to protect and lawfully process invoice data.

Note: While these rules apply across the EU, some regulations may differ depending on your member state. Consult national legislation to familiarise yourself with specific requirements.

Meeting EU Late Payment Directive Requirements

The Late Payment Directive (2011/7/EU) protects European businesses—particularly small-to-medium enterprises (SMEs)—against cash flow disruption caused by late payments.

The European Commission states the main provisions are:

• Public authorities must pay for the goods and services they procure within 30 days or, in exceptional circumstances, within 60 days.
• Enterprises must pay their invoices within 60 days unless expressly agreed otherwise, and provided it’s not grossly unfair.
• Automatic entitlement to interest for late payment and €40 minimum as compensation for recovery costs.
• Statutory interest of at least 8% above the European Central Bank’s reference rate.

The Commission also notes that: 

“EU countries may continue maintaining or bringing into force laws and regulations which are more favourable to the creditor than the provisions of the directive.”

For smaller businesses, prompt payments can be the difference between solvency and insolvency.

Effective invoice management gives vendors and suppliers the cash flow they need to manage obligations, while protecting you against the consequences of missed deadlines.  

Complying with DAC7 EU Tax Transparency Rules

If you run an online platform, DAC7 rules require you to collect and report seller and transaction data to EU tax authorities.

This process includes storing information such as:

• Names and addresses
• Tax Identification Numbers (TINs)
• VAT numbers
• Bank details

Depending on national legislation, you’ll need to retain records for 5–10 years. Your invoice processing practices also need to comply with GDPR. 

Accurate invoice management is essential to ensure you collect the right details. Failure to do so can land you with a non-compliance penalty.

Pro Tip: Learn about your reporting obligations and how to improve compliance in our DAC7 EU compliance guide.

Supporting AP Productivity and Decision Making

Effective invoice management frees AP teams from the burden of time-consuming, manual processes. 

Eliminating repetitive data entry tasks reduces days and keeps processes running smoothly. 

The result? More time for AP to focus on productive tasks, such as: 

• Nurturing strategic partnerships to strengthen your supply chain.
• Identifying and capitalising on early payment discounts to boost cash flow.
• Managing vendor communication to sustain strong relationships. Monitoring and reporting expenses to support stakeholder decision-making.

Simply put, if you want to grow your business, address the challenges in your invoicing workflow. 

4 Common Manual Invoice Management Challenges for EU Businesses

Cracks in invoice management typically appear when your business grows. In most cases, the root cause is the same: outdated processes. 

Here are four common issues of an invoicing workflow reliant on spreadsheets, email inboxes, and disconnected tools.

How AP Automation Streamlines Invoice Management for EU Businesses

Modern accounts payable automation software cuts up to 80% of AP workload, freeing teams from the manual processes holding your business back. 

By automating each step of your invoice process, you can scale operations efficiently without extra headcount or resources.

Implementing software has a positive impact on employee performance and overall experience, too.

According to Salesforce research:

• 92% of workers say automation solutions increase their productivity. 
• 85% say software boosts collaboration.
• 88% trust automation tools to complete tasks faster without errors.

By giving employees the tools to work smarter, you also increase retention. In the same survey, 89% say they feel more satisfied with their jobs since they started using automation technology, with 84% feeling happier with their company. 

Here’s how AP automation software solves the invoice management problems that outdated processes create.

Smarter Data Capture with AI-Driven OCR

AI-powered optical character recognition (OCR) data capture automates data extraction with high accuracy—streamlining your AP workflow from the moment you receive an invoice.

Unlike traditional OCR that relies on fixed templates, AI-driven automation combines AI and machine learning (ML) to understand any invoice format (e-invoice, PDF, or paper) and improve over time.

AI also automates the next steps to ready invoices for approval, reducing the need for manual checks. 

For example, Tipalti’s AI Smart Scan feature speeds up invoice matching, coding, and validation by: 

• Using two-way and three-way matching to auto-match headers and line levels, align currencies, units, costs, POs, and goods receipts.
• Automatically spotting specific patterns and anomalies that indicate suspicious or unusual behaviour, as well as potential duplicate invoices.
• Suggesting general ledger (GL) codes based on history, vendor info, and invoice details, and flagging unusual terms. 

By eliminating errors from the start, accurate data flows across accounts payable, improving close time, reporting, and cash flow analysis.

Approvals that Route Themselves

An invoice management system uses smart routing to find the right approver—avoiding delays and lost invoices.

AI natural language processing (NLP) and machine learning analyse the context of invoices, recognising keywords or patterns that indicate the type of expense. 

For instance, Tipalti’s AI Smart Scan might identify a term like “server purchase.” It then uses past data or company rules to categorise the invoice and send it to the right approver automatically.

What happens if an approver doesn’t see the invoice? 

Tipalti lets you tag colleagues and send real-time notifications or reminders to approvers within the platform, keeping your approval process running smoothly. 

You can also set up deadlines to approve invoices within a specific timeframe to tighten controls without constant chasing.

Faster, On-Time Payments

Once an invoice is approved, AP automation software schedules payment. 

With Tipalti, for instance, you can set rules to pay invoices in real time, on the due date, or on a specific date that aligns with cash flow or vendor payment terms. 

With a tool like Tipalti, you can pay invoices individually or in batches. The latter is helpful if you receive multiple invoices from the same vendor. 

You can also put specific invoices on hold within batches for future payments to better manage cash flow.  

As mentioned earlier, efficiency pays in accounts payable. Paying invoices faster helps you grab early discounts and avoid EU late fees.

By streamlining the invoice-to-pay lifecycle, Tipalti reduces payment errors by up to 66% and speeds up financial close by up to 25%.

For example, by automating 180+ invoices a month, European Family Office saved around 50% of one employee’s time, freeing the AP team to focus on strategic work.

“Tipalti has given us all peace of mind. It really doesn’t matter how much we scale and grow; we can easily handle any volume of invoices. I just check Tipalti to make sure our payments are moving forward according to plan, and they always are.” —Lisa, Finance Director, European Family Office

Data That’s Always in Sync

After payment, invoicing software sends real-time reconciliation to your ERP system or accounting software—no more pulling data from scattered spreadsheets or systems.

Bringing multiple invoice data together gives you real-time cash flow visibility. Tipalti AI can analyse historical data and predict future spending patterns, helping you make informed spending decisions. 

For example, if you can track how often vendors are paid early, you can make spending decisions on payment cycles, not due dates.

Accurate data flowing into your ERP also improves record-keeping. An automated reconciliation process creates a robust audit trail for transparency and compliance with EU VAT, tax, and DAC7 regulations.  

On-Demand Personal Assistance

Automated invoice management software works in the background, streamlining your workflow with little need for human intervention. But AI assistants are always on, answering questions and performing tasks on demand. 

Think of them as 24/7 chatbots, with specialist knowledge about your business. 

Tipalti AI Assistant, for example, is a personal AI chatbot that knows your financial workflows as well as you do.

You can ask Tipalti AI Assistant to trigger specific AI Agents to perform actions like:

• Creating reports
• Running matches
• Recommending approvers
• Auto-generating purchase requests
• Resolving ERP sync issues

The AI Assistant acts as your conversational interface, combining knowledge of your invoices, requests, and purchase order numbers with advanced reasoning to execute tasks and surface insights and opportunities.

Automating these routine jobs eliminates back-and-forth email or chat conversations, freeing human AP teams to focus on vendor management.

Customer Story: AP Automation Empowers Growth for Dragoman

Manual processes are hard to scale. For global translation and interpretation leader Dragoman, manually managing payments in multiple currencies was causing payment delays and straining relationships.

The company needed to solve its problem to scale without the burden or expense of hiring. By implementing Tipalti and integrating it with Xero, Dragoman was able to automate its accounts payable. 

The results: 4x revenue growth and 8x net profit—all while increasing trust and building an efficient process that future-proofs their operations. 

What to Look For in AP Automation Software

The right AP automation software can be the difference between accounts payable running smoothly and causing more headaches. 

Here are a few non-negotiable features to look for when evaluating solutions: 

Use reviews, case studies, and product demos to get a feel for products. Check that software: 

• Can scale as your invoice volume increases.
• Addresses EU e-invoicing standards and GDPR.
• Supports international suppliers/vendors (if applicable).
• Is user-friendly for non-finance staff (e.g., managers approving invoices).
• Has mobile functionality for managing approvals on the go.
• Can easily onboard suppliers for faster invoice processing and payments.
• Has tiered pricing to support your needs and budget.
• Offers responsive support across different channels (e.g., phone, email, and live chat).

The right invoice management software will save you time, reduce errors, and increase visibility—turning accounts payable from a bottleneck into a growth engine.

Here’s what Tipalti’s Chief Accounting Officer, Paul Henderson, advises on choosing a solution that grows with your needs:

Save Time and Money on EU Invoice Management with Tipalti

Manual invoice management works when your invoice volume is low. But as your business grows, it can hinder scalability.

When data entry piles up, approvals stall, and payments fall behind—putting vendor relationships and EU compliance at risk.

Invoice management automation helps you fix this. It takes repetitive tasks off your team’s plate, automatically managing the invoice process, from receipt to reconciliation.

The result: fewer errors, faster payments, clear audit trails, and the ability to scale without recruiting and training extra AP staff. 

Ready to replace your outdated processes? Explore how Tipalti’s Invoice Management streamlines your AP workflow.