From a business perspective, invoice processing is part of accounts payable. As a business receives the invoice for goods or services, it should set a remittance date, pay the invoice, and record it in the general book of accounts – this cycle is known as invoice processing.
The complete invoice processing workflow is as follows:
- Receiving the invoice receipt. In a business, the accounting department checks the goods or services procured if they match up to the original purchase order (PO). If there are discrepancies, the department will coordinate with the supplier to resolve issues.
- Approval of the invoice through authorized persons. Depending on the company policies and regulations, approval of the invoice will go through the appropriate employees to validate the necessary information.
- Setting the invoice for payment. Once approved by the authorized persons, the invoice will be set for payment. And usually, terms will be negotiated with the supplier.
- Recording invoices to the ledger. After paying the invoice, it should be recorded in the ledger.
A large business or corporation may receive hundreds of invoices, which may take hours to process if done manually. Thus, most businesses utilize accounts payable automation, which uses OCR and other technologies to streamline invoice records into a single system.