Go over the payment terms for the transaction. Double-check the expected goods or services,. Ensure that the invoice is from the correct supplier,. Verify the total cost owed to the vendor,. With the relevant documentation in hand, the employees in charge of verifying payments should go over the essential information on the invoice. Okay, we get it, there are plenty of risks associated with improper invoice processing, so how do we do it correctly? Don’t worry, we’re about to jump right into the essential steps to process your unpaid invoices!įor accounts payable departments, this step takes the most amount of time and is also the most cumbersome. Seeing as there would be a lack of accurate and timely financial statements or payment records, this would once again harm the reputation of your business or cause future legal issues. Last but not least, this can cause problems in the case of a business audit. When there is no clear vision of your overall debts and payments, this makes it more difficult to plan future purchases, inventory, and business operations as a whole. If the workflow process is unorganized, businesses will struggle to get an overview of their financial forecasts. Not only does poor invoice processing affect the present, but also the future of your business. 🚩 If your company has a high DPO, it can show that you can’t or won’t pay invoices on time, which is a red flag for other suppliers! Additionally, it could also incur extra fees.īusinesses can consider visualizing how long it takes them to pay invoices or bills to vendors by calculating financial ratios like DPO (Days Payable Outstanding). In the same vein, your business risks harming the relationship with your suppliers, while also harming your company’s reputation.īusinesses can be lucky sometimes, and one or two late payments may go over without a problem, but missed invoices or multiple late payments are a bad sign. This could have a major effect on the amount of cash flow and business operations that your company can accomplish while you wait for invoices to be paid and items or services to be received. We’ve already mentioned it before, but there are clear risks that come from an improperly established invoice processing workflow.įirst and foremost, there is the risk of not receiving your goods or services due to unpaid or late payments. Make sure that your company is capable of paying in the allotted time.īy following a pre-determined processing workflow, such as the one you’ll see below, you’ll speed up invoice payment and ensure that your business has what it needs and that your supplier stays happy. Of course, your business must follow the previous payment terms that were negotiated with the vendor. Usually, payment is the easiest part of the process. 
Before invoices can continue to be processed, they should be validated by at least one or two dedicated individuals. If there are any potential issues at this stage, it’s a good idea to contact your supplier early in the process, to ensure that you receive the expected products/services as soon as possible.Īpproval by your accounting team, or whoever handles the invoices, is a time-consuming but necessary part of invoice payment. You’ll first need to obtain your supplier’s invoice and ensure that you’ve actually received the goods or services requested. But, what are the main aspects that you’ll need to follow before really jumping into the specific steps? No matter the size of your organization, invoice processing must be done at some point or another. Smaller businesses don’t always have the means to pay for an entire team, so, accounting managers, office leads, or occasionally even the business owner will deal with invoices themselves. In larger companies, a dedicated accounting department often manages invoice processing.
#INVOICING PROCESS SERIES#
Simply put, invoice processing is the entire series of phases and steps that must be completed to verify, validate, pay, and record invoices.Īs the payment process isn’t always as simple as putting in your credit card information, there are generally whole teams that will handle this process from start to finish. If you manage a business, you know that purchasing goods and services from vendors and suppliers is often a key part of running a business successfully.
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