For accounts payable teams, the invoice approval process is often rife with inefficiency, errors, and lack of visibility. When done manually, the approval process workflow involves multiple handoffs, chasing down reviewers for approvals, and heavy administrative overhead.
It’s a time-consuming, costly process prone to slowdowns and mistakes.
By automating the invoice approval workflow through modern AP automation solutions, organizations can accelerate processing times, improve accuracy, and gain full transparency into where invoices are at all times. Accounts payable teams spend less time on manual tasks and more time on strategic priorities.
Ready to streamline invoice processing at your organization? Follow these three simple steps to automate the approval process workflow:
Step 1: Evaluate Your Current Process
Before automating any process, you need to map out and analyze your existing invoice approval workflow. Document each step from when an invoice is received to final approval and payment posting.
This process evaluation should identify:
- All handoffs, touchpoints, and approval layers
- Bottlenecks and delays causing slowdowns
- Manual tasks prone to errors like data entry, matching, etc.
- Lack of visibility into invoice status
- Compliance risks or audit concerns
If your current process involves physical invoices being routed and approved manually, there are opportunities for automation. But even for companies already using some invoice processing automation, there may be ways to further streamline the approval workflow.
As you map out the process, be sure to gather input from all stakeholders involved – AP staff, approvers in different departments or field locations, reviewers, accounting team members, and any other parties. Their firsthand insights will inform how to optimally design your automated workflow.
Step 2: Configure Approval Rules and Routing
With a clear picture of your current state, you can now leverage the power of an advanced invoice processing automation solution to configure smarter approval routing rules and accelerate cycle times.
Some key steps include:
Enable Intelligent Invoice Capture and Data Extraction
Rather than manually keying invoice data or even using basic optical character recognition (OCR), look for solutions that leverage AI and machine learning for highly accurate invoice data extraction. This eliminates one of the most time-consuming tasks while improving accuracy.
Define Multi-Tiered Approval Hierarchies
Configure rules for automated approval workflows and escalations based on criteria like invoice amount, vendor, purchasing category, location, etc. For example:
- Invoices under $5,000 routed to the manager for approval
- Invoices $5,000-$25,000 route to director approval after manager
- Invoices over $25,000 require VP and/or CFO approval
This ensures the right financial controls while enabling parallel approvals for faster processing.
Automate coding, matching, and PO/receipt handling
Eliminate other time-consuming tasks by automatically handling coding based on rules, performing 2-way or 3-way PO and receipt matches, and flagging exceptions for review. This reduces administrative efforts across AP, purchasing, and accounting teams.
Integrate Seamlessly Across Systems
A modern AP automation solution should integrate directly with your ERP, accounting software, purchasing systems, and more. This creates a seamless, end-to-end process flow while preventing duplicate data entry and errors.
Step 3: Monitor, Measure and Optimize
Even after implementing automated invoice approval workflows, the process optimization journey doesn’t stop there. Leading AP automation solutions provide powerful reporting, analytics, and monitoring capabilities to continually measure and enhance processes over time.
Track Cycle Times and Measure Productivity Gains
By tracking key metrics like average approval cycle times or invoices processed per employee, you can quantify the productivity gains from automation. Most solutions enable custom reports for tracking KPIs that matter.
Identify Remaining Bottlenecks
Analytics tools can also pinpoint specific areas of the automated process that are still causing delays or challenges. Maybe a certain approval step or escalation rule needs adjustment. Or specific geographics or invoice types are flowing differently than expected. With data-driven insights, you can keep fine-tuning the workflows.
Monitor Approval Workloads and Reassign
Comprehensive solutions provide visibility into approval workloads and volumes across the organization. If certain approvers are becoming overloaded, you may need to reassign approval hierarchies based on actual volumes versus job titles or roles. Monitoring tools enable proactive adjustments.
Ensure Compliance and Reduce Exceptions
AP teams can also use reporting and monitoring capabilities to identify and resolve instances of non-compliant invoices, and enforce policies around invoice approvals, accrual caps, segregation of duties, and more. Over time, this minimizes exceptions and enhances compliance.
Embracing a “continuous improvement” mindset through monitoring, analysis, and refinement ensures your automated AP approval processes keep getting better over time. It allows you to validate and enhance your return on investment from automaton.
By following these three steps – analyzing your current process, leveraging automation to streamline invoice approvals, and continually optimizing based on insights – your accounting team can achieve world-class efficiency, control, and productivity. The time and cost savings allow you to reallocate resources towards more strategic finance priorities while gaining greater financial visibility across the organization.
