Ultimate Guide to Tracking Invoices for Businesses

Manually keeping track of invoices creates unnecessary problems and inefficiencies for your accounts payable staff and finance team. But digital transformation with AP automation software lets your company efficiently complete automated invoice processing and earn those coveted early payment discounts from suppliers on time.

Although invoice tracking applies to both accounts payable and accounts receivable, this guide describes the best way to track invoices from suppliers, using an AP automation solution that solves common invoice tracking problems and eliminates invoice processing frustrations. 

Keeping Track of Invoices: an Ongoing Struggle 

With traditional systems, tracking supplier invoices takes a lot of time, creates frustrations for the accounts payable department, and costs your company unnecessary money for staffing when trying to keep up with the workload. 

If your company uses a manual, paper-based system, time-consuming manual workflow processes and bookkeeping delay supplier invoice payments. Invoices may not be adequately checked to identify and resolve errors with suppliers and your team may inadvertently pay duplicate invoices. These problems are costing your company money. And those supplier communications and invoice payment status calls take a lot of accounts payable department time that could be devoted to more valuable projects. 

Your company may lose track of vendor invoices that are:

• Sent to the wrong person
• Go missing between invoice receipt and routing of invoices for payment approval with attached, matching paper POs and receiving reports
• Not properly filed for storage
  • as record retention
    • during the current and future years
    • onsite or offsite in a warehouse
  • for external audit access and sample disbursement transaction verification
  • for a potential IRS corporate income tax audit

What is an Invoice Tracking System?

An invoice tracking system is an online software used to electronically capture and extract invoice data, access invoice data, process invoices for errors, approve and pay invoices, and automatically communicate payment status. An invoice tracking system provides document management capabilities and an audit trail. 

How to Keep Track of Invoices and Payments

Your company needs to know how to track invoices and payments in the best way. Tracking invoices well requires a cost-effective system that automatically captures invoice line items and headers electronically through upload, email, or optical character recognition/OCR invoice processing and stores them in a centralized document repository that’s accessible from a Supplier Hub portal. 

As some components of how to track invoices as e-invoicing, system users from the company and its suppliers can access the online invoices and monitor the invoice receipt date, payment status, invoice history, and payment history. This invoice data is available during all steps of invoice processing, including for designated approvers when making approvals, when keeping track of payments on unpaid invoices, and after these invoices are paid. 

Why Strong Invoice Management Matters

Strong invoice management matters because a bad invoice tracking system isn’t streamlined, efficient, or error-free. Your business may be wasting money and time paying duplicate invoices, manually processing paper invoices, looking up phone numbers, and making phone calls or email follow-ups to suppliers with questions about invoice payment status. 

Your company may be at risk for large penalties when it’s not following global regulatory compliance laws for making payments and record retention.

If supplier/vendor invoices aren’t timely recorded for accounts payable when keeping track of invoices:

• Your company’s accounts payable and cash requirements needs are incomplete and out of control. 
• Your business isn’t earning early payment discounts by the prompt payment date, thus overspending unnecessarily. 
• Suppliers could cut off inventory shipments for overdue payments and charge interest on late invoices not yet paid.
• The accounting department uses more time manually accruing many accounts payable open invoices and coding expenses and inventory for invoices not yet entered into the system at each month-end. 
• Weak invoice management delays the accounting close process for generating financial statements. 

Even for small businesses and business owners, using Google Sheets/Microsoft Excel spreadsheets or traditional accounting systems like QuickBooks alone for invoice tracking and business spending analysis isn’t an adequate solution. 

Without strong vendor invoice management through automated invoice processing, your small or mid-sized business won’t have real-time spend control or perform timely analysis for decision-making. And it won’t experience how to track accounts payable well and save time. 

Best Practices for a Seamless Process

The following best practices apply to how to keep track of invoices and payments for accounts payable. 

Best practices for a seamless invoice tracking process are:

1. Use AI-driven, cloud-based, scalable AP automation software with seamless accounting software or ERP integration to capture invoice data, unify systems, sync between systems, and eliminate manual data entry into a second system. 
2. Streamline end-to-end accounts payable workflows for a significant workload reduction. 
3. Automate the entire invoice-to-pay process, automatically using electronic invoice data captured in the system and electronic payment methods using a bank account, credit card, or digital wallet service like PayPal.
4. Use a self-service supplier portal for submitting global suppliers and non-employee freelancers W-9 or W-8 series tax forms, and gain access to status notifications, invoice history, and payment history.
5. Access an invoice tracker providing an audit trail.
6. Electronically perform 3-way or 2-way invoice matching to a purchase order (and receiving report, if applicable).
7. Automatically route invoice images and supporting documents to designated approvers. 
8. Pay approved global invoices when due in large batches for efficiency, using online payments in the payment process.
9. Track invoice-related spend management totals by supplier, invoice number and amount, business entity, and the combined company.
10. Provide multi-entity views and combined views of accounts payable and payments with invoice details.

The Power of AP Automation in Invoice Tracking

AP automation in invoice tracking software powerfully and effortlessly enables your company to achieve these best practices in invoice tracking. AP automation also provides other benefits, including:

• Supplier validation for fraud risk reduction
• Rules-based error detection 
• Simplifying supplier-related IRS tax compliance 
• Global regulatory compliance for payments 
• AI-driven business intelligence to analyze current and past spend 
• Automatic real-time payment reconciliation to the general ledger

With AP automation, you can track recurring invoices and set up recurring electronic payments. AP automation software offers scalability for growth as the invoice volume and business grows. The best AP automation solution lets you reduce hiring needs for payables processing staff as you optimally structure your accounts payable department.

With Tipalti AP automation software, a solution providing the best way to keep track of invoices, your company can:

• Reduce its AP workload by 80% 
• Significantly reduce invoice processing costs 
• Accelerate the financial close by 25% 
• Reduce invoice payment errors by 60% 

When your company can digitally track invoices well, your team will process invoices on time to take lucrative early payment discounts by the prompt payment due date. You’ll help save money to improve your company’s cash flow and profitability. You and your finance team members will have time to pursue strategic projects to enable business growth and achieve better financial results.

How to Start Your Invoice Management Journey 

Integrated with your ERP system, use the Tipalti platform of unified finance automation products not only to track invoices but also as a launchpad to cost-effectively help you achieve business goals. To find out how Tipalti AP automation software helps you and your business progress from problematic invoice tracking for accounts payable to a managed solution, get your guide.