As a business owner, you know the importance of accurate invoicing. But what happens when errors slip through the cracks, and inaccurate invoices approval are sent out? It can damage your reputation, strain client relationships, and ultimately hurt your bottom line. So, what exactly helps to tackle such situations? The answer is setting up workflow approval for your invoicing process. It can help prevent these costly mistakes and protect your business’s financial health. In this blog, we will dive into the concept of invoice approval workflow, the steps involved, its benefits, and how it helps streamline your overall accounts payable process. So why wait any longer – let us get started on learning the benefits of workflow approval for accurate invoicing today!
What Is Invoice Approval Workflow?
When it comes to invoices, an approval workflow is a system that manages and controls the creation, approvals, and routing of invoices. It is a series of defined steps a business uses to confirm that invoices are accurate and authorized for payment. When it comes to accounts payable (AP) processing, the approval workflow typically starts with the receipt of an invoice, followed by a review and approval process. Once approved, the invoice is then scheduled for payment. There are different ways in which an invoice approval workflow can be set up. However, most approval systems will have some common features. For example, most approval workflows will allow for creating new invoices and managing existing ones. Additionally, most approval systems will allow for the routing of invoices to the appropriate approvers. Invoice approval workflows can become quite complex with time. But it can help save a lot of time and ensure efficiency in the accounts payable process if executed properly. Let us now discuss some steps involved in the process.
Steps Involved in an Invoice Approval Workflow
- Define your approval process- The first step of your invoice approval workflow is to define your approval process. There are a few things to consider when defining your process, such as who will be responsible for approving invoices. What methods will be used to approve invoices? How often will invoices need to be approved? What will be the deadline for approving invoices? What happens if an invoice is not approved in time? Once you have answers to these questions, you can start setting up your invoice approval process. This will ensure that all invoices are properly approved and processed on time.
- Set up your approval workflow in your software- To set up an approval workflow in your software, you will first need to create a list of people who will approve the document. You can do this by creating a user group or by adding individual users. Once you have created the list, you will need to specify the order in which approvals are required. After the approval workflow is set up in your software, documents will automatically be sent to the appropriate person for approval. And once all approvals have been obtained, the document will be considered final and can be used accordingly. All of this can be a hectic process, and you might need expert help. The best option is to look for outsourced bookkeeping services providers with a team of experts proficient in handling AP-related tasks, thereby streamlining your overall AP function.
- Train your team on the new process- Introducing a new, automated workflow can help streamline the accounts payable process and improve accuracy. But what if your team is reluctant? How do you train your team on the new system? You can start with a training session led by someone knowledgeable about the new system. This will allow your team to ask questions and better understand how the new workflow works. Furthermore, you need to make sure to provide clear instructions on how to use the new system. Everyone must understand the different steps involved in the process. As your team starts to use the new system, they may come across certain issues or problems. You can help them navigate these challenges and ensure a smooth transition to the new workflow by being available.
- Test out the new process with a few invoices- The next step is to test the process to ensure it meets the requirements set forth by the department. This testing will involve sending test invoices through the system and verifying that they are routed correctly, approvals are received on time, and payments are processed accurately. Once the new system is verified to be working as intended, it will go live and replace the current approval process. This change is expected to improve efficiency, reduce invoice approval process errors, and, ultimately, streamline the entire accounts payable process.
- Implement the new process- Now that the testing has been done, the last step is implementing it with the invoices going forward. This is the final step in getting your new process up and running. Once everything falls in place, businesses will be able to start using the new invoice approval workflow process with all invoices going forward. This will help streamline the approvals and get payments out to vendors more quickly.
Following these steps can help set up a robust invoice approval workflow. But how can you be sure that this will prove to be beneficial for your business? Well, we have highlighted some of its advantages. Let us have a look at them.
Benefits of Having an Invoice Approval Workflow
- Ensuring timely payments: With an approval workflow in place, invoices will be routed to the appropriate individuals for review and approval on time. This can help avoid late payments and any associated fees or interest charges.
- Avoiding errors: A well-designed approval process helps catch errors before they result in incorrect payments. By routing invoices through multiple sets of eyes, you can increase the likelihood that any mistakes will be caught and corrected.
- Improving visibility: An effective invoice approval workflow improves visibility by providing real-time data on outstanding invoices and their status in the payment cycle. It helps businesses stay on top of their accounts payable operations by streamlining task assignments, managing different types of approvals, and ensuring compliance with the internal controls and policies of the organization.
- Facilitating communication: Invoice approval workflows enable teams to collaborate seamlessly across departments by providing customizable routing options that accommodate specific business needs. The streamlined communication results in quicker dispute resolution times, reducing manual intervention through alerts for exceptions and saving up even more time.
- Reduction in costs: Finally, reduced costs are another advantage this streamlined approach brings. With fewer errors in data inputting and payments made only after accurate checks have been done – resources such as time, money, and energy will not be wasted unnecessarily endeavoring into the issue. As a result, more funds will be saved that can be reallocated elsewhere within company operations instead.
Common Mistakes to Avoid in Invoice Workflow Approval
When it comes to invoice workflow approval, there are a few common mistakes that can end up costing your business money. Here is a list of some of the most common mistakes to avoid:
- Not checking for accuracy– Whether you are beginning to align your AP process or already have a streamlined one, checking for accuracy is one of the most important steps in the invoice approval process. This means taking the time to review the details of each invoice and ensuring that everything is correct. If you find any discrepancies, be sure to resolve them before approving the invoice.
- Approving incomplete invoices– Another mistake that businesses make is approving invoices that are not complete. An invoice should always include all relevant information before it is approved, such as the number of goods or services purchased/availed, the unit price, and the total amount due. If any of this information is missing, do not approve the invoice until it is complete.
- Overlooking late fees or interest charges– Late fees and interest charges can add up quickly, so checking for them before approving an invoice is important. These charges are often included on invoices payable within a certain timeframe, so be sure to read the fine print carefully before giving your approval.
- Not maintaining good records– Once an invoice is approved, maintaining thorough records of the approval process is essential. This includes tracking all necessary signatures, documenting all approvals and rejections, and maintaining an audit trail for each invoice. Good record-keeping or bookkeeping is essential for ensuring your invoices are processed efficiently and effectively. However, business owners are preoccupied with multiple tasks, leaving no time for an effective bookkeeping system. To overcome such obstacles, outsourced bookkeeping services are one of the cost-effective options. With the help of outsourcing, you gain access to experts who ensure up-to-date record keeping of all your invoices and other relevant information.
Inaccurate invoices can cause problems such as delays in payments and cash flow issues, so it is important to ensure that you have adequate systems in place. An invoice workflow approval system can help improve accuracy and efficiency while providing peace of mind knowing that your business finances are well managed. With minimal effort in setting up these automated processes, there is no reason not to make the change – especially when it will save valuable time and resources over the long run. So, take action now, and set up an efficient invoice approval workflow process before inaccurate invoices hurt your business!
However, if you are still unsure or confused, trusting the experts is one solution. Filing Taxes is the name that you can rely on. Our team of highly skilled professionals possess years of expertise in providing quality accounting and bookkeeping services, including accounts receivable and accounts payable services. Feel free to contact us through our website filingtaxes.ca or reach out at 416-479-8532. Schedule your tax preparation appointment with us and take the first step towards proper management of your finances. Our professional personal tax accountants will make sure to get you the maximum tax refund on your personal tax return.
Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.