Invoice processing refers to the series of actions involved in handling an invoice, from its receipt to the payment stage. While this may seem like a straightforward process, it can become complex depending on the size of the organization and the various steps involved.

Nowadays, invoices come in different formats, such as emails, PDFs, and even physical copies. Prior to making a payment, these invoices need to be organized, recorded, and approved by the appropriate personnel.

As an organization grows, the invoice processing procedure becomes more intricate. It involves receiving a supplier invoice, obtaining authorization, determining a payment date, making the payment, and subsequently recording the transaction in the general ledger. This process is crucial for the smooth operation of a business.

Late payment of vendor invoices can cause disruptions in the flow of services, supplies, and raw materials, as well as strain relationships with suppliers. While occasional late payments may be forgiven, consistently delayed payments can have detrimental effects on your business.

By definition, Invoice Processing is a business activity carried out by the accounts payable department, encompassing a series of stages for managing invoices from suppliers or vendors, starting from their receipt to payment and recording in the general ledger.

Invoice processing is often facilitated by software, known as automated Invoice Processing or Invoice Automation. A flowchart outlining the invoice processing steps provides a systematic guide for the accounts payable department to effectively handle vendor invoices.