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The invoice-to-pay process refers to a request for payment for goods or services that have been provided, and the subsequent approvals and payment. Suppliers of goods or providers of a service create invoices for the goods sent or service provided, including a statement of the money owed, and send each invoice as a payment request to the customer.
Once the supplier or provider has completed an invoice and sent it as a payment request, it is received by the accounts payable department of the customer. The invoice is then read, recorded and assigned a billing code before being sent through a purchase order matching process or for internal buyer approval.
Once the invoice is approved by the purchase order matching process or by the internal buyer, the payment is scheduled according to the due date on the invoice. Payment will then occur at the appropriate time via pre-agreed means.
Here we look closer at each step in our invoice-to-pay process guide.
Recording an invoice-to-pay
Once received and read, invoices are recorded in numerous ways, including:
dedicated supplier portal
Invoices can also be recorded through email or even fax, though each method still relies on a staff member to read the invoice and manually enter the details into the company's accounting system.
An alternative method is the use of automation and online portals to digitally read and record the contents of each invoice, reconciling them with the corresponding data in the accounting system.
The invoice approval step can happen manually or via automation, with the latter especially useful for recurring payments from the same payer. Obviously, manual invoice approval processes are more time-consuming and prone to human error, but may be beneficial for one-off or very large payments.
A basic manual invoice approval process involves the accounts payable clerk notifying the internal buyer via email, phone or in person. The internal buyer then reconciles the invoice with the original purchase order and the received goods or service.
The automated invoice approval process is much faster and works by automatically generating a request for approval. A two-way match attempt is made by the system using a previously generated purchase order. A three-way match is achieved by also including the shipping receipt in the matching process.
The invoice-to-pay process generally terminates at payment approval, but the actual payment itself can also be included, especially if the payment system is controlled by the same accounting system that records and tracks the invoice.
Payment can be made in several ways including by cheque, ACH or wire transfer, or e-wallet, or via credit or debit card transfer. The method used is determined by the payee's preference, agreed during the negotiation of terms phase of the original purchase.
Automating the invoice-to-pay process
Automation can make the invoice-to-pay process much easier to manage, speeding up the process and streamlining every step from receiving the invoice-to-pay to payment of the invoice.
Using optimal character recognition (OCR) technology and machine learning in combination with online portals, invoice-to-pay automation not only speeds up the process but also eliminates the human error inherent in any manual data entry task. The process is simplified even further with a provider like GoCardless that integrates with major accounting and invoicing software like Xero, Chargebee or Salesforce, completing all of your invoice-to-pay processes with a faster and more accurate payment approval process.
Businesses receiving recurring payments can collect invoice payments directly from their customers' bank accounts and get paid twice as fast through GoCardless. Such automation is a great benefit to accounts payable administrators handling recurring invoices which only need to be manually approved the first time.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.