How To Approve An Invoice For Payment: Practical Tips For Account Payable
How to approve invoices for payment:
Your business needs a clear space for approving invoices for payment. Below we have listed step by step guide for a simple bills payable system:
Check the invoice for accuracy:
Initially, review all the details of the invoice to make sure they are accurate. Look for the products and services and see if they align with the agreement in the purchase order. Look for the amount being charged and if they align with what you’ve discussed with your supplier.
Cross- reference invoice dates:
Check the dates of the goods and services on the invoice which are listed and cross-reference them with past invoices to see they don’t overlap. If they overlap with the dates, follow up with the company to make sure you’re not being charged twice for the same purchase.
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Confirm the work with the project manager:
If the invoice covers services that were overseen by someone else, check in with the project manager for the job to make sure the work was performed to their satisfaction and confirm all elements of the project you’re being billed for have been completed.
Check the vendor details:
Now, review the details of the vendor to make sure they reflect what you have on file in your accounts payable system. Check that business name and tax ID number haven’t changed. Revisit the vendor’s payment method and make note of the method your company plans to use to pay the invoice.
Record the invoice due date:
Make note of the invoice payment deadline. File the invoice in your record by invoice to pay the due date. If the supplier offers any discount for early payment, make notes of those and confirm whether it’s possible to meet the early payment deadline to save money.
Schedule a payment:
Schedule a payment in your accounts payable system. Make sure to check payment before the due date to leave a buffer, in case any problems arise in time of payment.
How to improve invoice approvals?
Streamlining your invoice approval process can help pay your bills faster and avoid incurring late fees. While it’s important to clear major purchases before they are paid for, methods for speeding up the invoice approval process to free up time and avoid bottlenecks.
Below are some easy tips for improving your invoice approvals:
Approve purchase orders:
Requiring approval of purchase orders and requiring approval when the invoice is received is a complete waste of time and energy. Consider requiring approval for purchase orders only so that your accounts payable can pay the invoice faster.
Set a threshold for invoice approval:
To make the approval process more efficient, consider setting a cost threshold for approval and allowing invoices for small amounts of money to be paid without the need for approvals.
Try in person approval:
You may want to set up a system where your team simply goes to the approver in person to discuss any details for the invoice and get it approved quickly on the spot. Or set up a weekly meeting to discuss and approve invoices.
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Consider negative approvals:
Sometimes, requests for approvals get buried in the email boxes which bogs down the payment process. You may try to implement a policy where accounts payable sends an invoice to the approver but in case they don’t hear back in a certain amount of time, usually a couple of days then they can consider the invoice approved.
There are accounts payable systems available that allow you to automate the approval process in the cloud, so invoices are processed more efficiently and payments are made quickly. You may also automate your invoice payment by recurring bill payments for any vendor that invoice you set an amount on a regular basis.
Benefits of improving accounts payable:
By streamlining your accounts payable system, you can make your team more efficient and save money at the same time.
Below are some of the benefits of improving invoice approval process:
Streamline Decision Making:
When you simplify the approval process for invoices, you streamline line decision making for accounts payable. Eliminating the need for approvals on small purchases and removing some layers of invoice approval will help the financial accounting team to spend less time chasing approvals. It also means the managers tasked with approvals can spend less time reviewing invoices, freeing up time for more important work.
If you’re committed to paying invoices on time or even settling them before the due date, you might save money in the long run. When you tend to pay bills on time, you avoid paying high penalty fees. Many suppliers offer discounts for the ones who pay the invoice before the due date, which can help save your business money. If you set up automatic bill payments for your invoices when it’s possible you can improve cash flow. You’ll always know when money will be leaving your business account each month, so you can plan ahead to cover those foreseeable expenses.
Maintain Good Vendor Relationships:
Businesses love customers who pay bills on time. Not just the supplier will offer discounts and rewards for early payments but also prioritize your work if they know you’re a reliable client. This means that your orders get completed faster and your projects are done sooner. It can mean that if you ever have an issue or a complaint your vendor may act faster to reach a solution in order to keep your business.