Invoice Automation – Driving a More Efficient and Productive Invoicing Process

Invoice Processing Workflow at a Glance

The accounts payable department is in charge of invoice processing. The vendor raises the invoice containing the payment details of the goods/services delivered to the buyer. Invoices are formal, written requests from a vendor or service provider that need to be verified, approved, and assigned to the GL account holding and prepared for payment processing.

The accounts payable department must follow compliance rules while verifying, approving, and assigning GL account coding. Quick and accurate invoice processing is a must to enable strong vendor relationships.

Invoice processing involves tracking and paying supplier invoices. The series of steps that take place from the time a supplier is created until it is paid and recorded in the accounts ledger are categorized as invoice processing.

Irrespective of whether an invoice is received via email or PDF or email, or as an e-invoice, the information contained in it must be scanned into the accounting system. Once the information is scanned into the system, the invoice goes through a specific workflow and payment.

The typical steps in the invoice processing workflow include:

1. Invoice Receipt

Once an invoice is received, the finance or accounts payable team verifies whether the goods or services have been procured as agreed. The team checks that the invoice relates to a valid purchase and confirms that the supplier details are correct.

The billed amount is then compared with the value stated on the original purchase order to ensure pricing accuracy. This initial verification step helps confirm that the invoice reflects agreed terms, quantities, and charges, including delivery costs and VAT where applicable.

If any discrepancies are identified such as differences in pricing, quantities, or charges the invoice is placed on hold and referred back to the supplier or relevant internal stakeholder for clarification. Resolving discrepancies at this stage prevents incorrect payments and avoids delays later in the approval process.

Only after the invoice details are validated and aligned with the purchase order is the invoice routed for formal approval, ensuring accuracy, compliance, and efficient invoice processing.

2. Invoice Approval

Once the invoice information matches the details in the purchase order (PO) and the Goods Received Note (GRN), the invoice is routed for approval in line with the organisation’s internal policies.

Invoice approval ensures that the invoice is accurate, legitimate, and compliant with agreed contractual terms before payment is released. At this stage, the finance team confirms that the goods or services have been delivered as agreed and that pricing, quantities, and VAT details align with the purchase order.

Invoices are then automatically routed to the appropriate approvers based on predefined business rules. These rules typically take into account factors such as invoice value, cost centre, department, and supplier type. For example, low-value invoices may be approved by a departmental manager, while higher-value invoices may require approval from senior finance or procurement stakeholders.

A structured invoice approval process reduces delays, improves accountability, and ensures compliance with financial controls. UK finance best practices emphasise timely invoice approvals to avoid late payments, strengthen supplier relationships, and support efficient cash flow management.

3. Invoice Payments

Approved invoices are sent for payment in line with the terms agreed with the supplier. Some suppliers offer early payment discounts to buyers who settle invoices within a short period, typically within 10 days of invoice issue. UK procurement studies show that organisations with faster invoice cycles are significantly more likely to capture early payment discounts and strengthen supplier relationships.

A well-defined invoice processing workflow improves the efficiency of the accounts payable team and enables invoices to be tracked and processed quickly and accurately. According to UK finance benchmarks, organisations with structured AP workflows process invoices up to 3 times faster than those relying on manual methods.

Invoice processing typically includes the following steps:

Invoice receipt and verification

When an invoice is received, the finance team verifies whether the goods or services were actually procured. Once delivery of goods or completion of services is confirmed, the buyer raises a Goods Received Note (GRN). The GRN records details such as the quantity of goods received and the corresponding value.

At this stage, the accounts team captures invoice data and enters it into the accounting system. The invoice must include essential information such as:

• The total amount owed
• The supplier’s details
• Payment terms
• Cost of goods, including delivery charges, VAT, and service fees
• Invoice category and accounting codes

UK finance bodies consistently report that manual data capture is one of the biggest sources of AP delays and errors, reinforcing the need for structured processes.

Three-way matching

Three-way matching is the most critical step in invoice processing. Before an invoice is approved, its accuracy and authenticity must be verified by matching:

• The purchase order
• The goods received note (GRN)
• The supplier invoice

Accurate three-way matching prevents duplicate or fraudulent invoices from being approved. UK fraud prevention studies highlight that invoice discrepancies and duplicate payments remain a common financial risk where controls are weak.

Invoice approval routing

Invoices with matching data are automatically routed to the appropriate internal stakeholders for approval. The approval path depends on organisational policies and invoice value.

For example, invoices exceeding £10,000 may be routed first to a procurement or finance manager before reaching the accounts payable team. Invoice approval processes vary by organisation and invoice type, but clear approval rules help reduce delays and ensure compliance.

If there is a discrepancy between the invoice, purchase order, or GRN, the invoice is routed back to the supplier or relevant stakeholder for correction before further processing.

Invoice payment and recording

Invoice payment is made according to the terms and conditions defined in the supplier contract or purchase order. The payment method—such as bank transfer or direct debit—is usually agreed at the contract stage.

The accounts payable team is responsible for processing approved invoices. Once payment is completed, the finance team records the transaction in the general ledger. To complete the process, the system captures and archives:

• The payment amount
• Supplier details and contact information
• Payment references and identifiers
• Accepted payment methods

Maintaining accurate and accessible records is essential for audit readiness and financial reporting, particularly under UK compliance requirements.

Automating invoice payments

Most of the steps involved in invoice processing can be effectively automated using AP invoice automation software. Invoice automation ensures that payments are made on time, approval cycles are shortened, and supplier discounts are captured more consistently.

UK organisations using invoice automation report faster processing times, fewer errors, and improved cash flow visibility, making automation a critical component of modern accounts payable operations.

How does Automation Improve Invoice Processing?

Irrespective of whether your company is handling small or large volumes of invoices, it pays to automate invoice processing. How does invoice processing automation improve invoice processing?

Improves invoice management – Even if your company is handling only a few invoices a month, implementing automatic receipts and invoice management software supports business growth and simplifies invoice processing. The entire accounts payable process can be streamlined with AP invoice automation software, without compromising on accuracy.

1. Minimizes Manual Data Entry

A common step in the AP approval process entering invoice data into the accounting system. When done manually, this step is prone to errors and overlooks. Not only is manual entry prone to errors, but it is time-consuming as well. A 2020 Payables Insight Report by Coupa reveals that 51% of companies consider manual data entry and inefficient processes as the biggest pain points of a manual AP process. Invoice processing automation helps users create dynamic forms that automatically populate the accounting systems, which brings down the error margin in data entry.

2. Automates 3-way matching

3-way matching is an important step in invoice processing that checks against fraud or duplication. The accounts payable process is susceptible to fraud and duplication. A survey conducted by the Association for Financial Professionals reveals that 74% of the organizations were targets of payment scams and other billing schemes. Accurate invoice matching helps prevent instances of AP fraud. Automated invoice processing improves the speed and accuracy of 3-way matching and integrates with the accounting system to flag discrepancies and prevent malpractices.

3. Automates routing of invoices for review and approval

In an automated invoice system, review and approval of invoices and resolution of exceptions are automatically routed to the appropriate manager. Automation of invoicing creates an automated workflow that routes the invoices to the appropriate manager and issues alerts and notifications in case of a delay in approval. Invoicing automation ensures that all invoices are approved and subsequently paid on time.

4. Centralizes records

Automated invoice processing software usually provides an electronic document management system (EDMS) for centralized access to accounting data and documents. Centralized document management makes it easy to find the files needed. Role-based access can be given to employees for the safety and security of sensitive financial data.

5. Improves performance

An efficient invoice automation system enables procurement teams to take advantage of early payment discounts. Automation software provides an intuitive dashboard for tracking key metrics across workflows in real time, making it easy to identify process bottlenecks and resolve them ASAP. Resolving process bottlenecks speeds up the approval process and enables the effective capture of payment discounts.

What is Automated Invoice Processing?

Invoice processing automation is the process of streamlining and automating the invoice processing workflow. Invoicing automation streamlines the accounts payable processes by automatically paying supplier invoices. Invoice processing workflow includes steps like extraction of invoice data, entering the data into the accounting system, and reviewing and approving invoices automatically based on preset rules.

Automated invoice processing software allows companies to take a more hands-off approach to accounts payable management. Accounting teams are also freed up from tedious manual tasks so that they can focus on strategic tasks. Key features that automated invoice systems provide are standardized coding, automated approval, and dashboards that show the status of invoices.

Most invoicing platforms can directly integrate with ERP platforms, which helps increase the timeliness and accuracy of payments. Streamlining the accounts payable process improves cash management and accelerates the financial close process.

The must-have features of invoice automation software are:

Multi-channel invoice capture – The software must support multiple channels for vendors to select from for sending invoice data. Common data formats are PDF, electronic invoices, scanned copies, paper-based invoices, and XML formats.

Intuitive user interfaces – The software must provide intuitive user interfaces that can be easily used and understood by users. Simple and intuitive interfaces require very less or no training for using the invoice software.

KPI/SLA management – The software must provide capabilities to track and manage key performance indicators and SLAs associated with your invoicing process. These insights can be used to track invoice statuses and monitor where money is being spent and why.

Integration – The invoice automation software must be able to integrate seamlessly with other accounting systems. Integration with other accounting systems allows the routing of validated data into existing ERP systems.

Customization – The invoice automation software must be customizable according to the requirements of the business. The rules for routing the invoices to appropriate employees vary in each company. The software must allow for customization as per business rules unique to each business.

How to Implement an Automated Invoice Processing System

Now that we are clear about the need for automated invoicing and features of automated invoice processing software, the next step is to implement the solution. When you choose a no-code BPM software like Cflow, automated invoicing workflows can be set up within minutes. Cflow simplifies workflow automation with the visual form builder. New workflow forms can be built using the drag-and-drop option with visual clues.

Building the Invoice Workflow in 4 Easy Steps

1. Create the invoice workflow form

You can build the invoice workflow using a pre-built template or by creating your own form. Cflow provides several pre-built templates that can be used to create key business workflows. By using the pre-built invoice approval workflow, you can quickly set up a new workflow.

If none of the templates meet your business requirements, you can create a custom workflow form with routing and business rules tailored to your organisation. The drag-and-drop form designer allows you to customise forms to suit specific needs.

For example, you can:

• Add an invoice line items table

• Enable digital signatures

• Create drop-down lists

Cflow also allows users to add dynamic behaviours to automated invoices. For instance, forms can be configured so that only relevant information is visible to stakeholders as the invoice progresses through different approval stages.

The visual form builder is designed to be user-friendly, allowing users without any technical expertise to set up workflows easily—without writing a single line of code.

2. Customise the invoice processing workflow

Invoices typically go through multiple rounds of approval. Once the invoice workflow forms are created, the next step is to route invoices from one approver to another based on defined business rules.

The workflow builder in Cflow is fully visual, just like the form builder. Its code-free interface allows users to apply conditional rules to workflows.

For example, logic can be added to automatically route invoices to a senior executive when the amount exceeds £10,000. Conditional logic ensures that senior leaders review only high-value invoices and do not spend time approving low-value ones.

Implementing conditional logic improves workflow efficiency and helps enforce compliance with internal policies.

3. Integrate with other accounting systems

The accounting function typically consists of multiple systems, such as ERP, invoice approval, and expense approval systems. Data must flow seamlessly between these systems for smooth financial operations.

Manually entering invoice line items from approved invoices into ERP systems is time-consuming and inefficient. Cflow enables seamless integration with all accounting systems used by your organisation.

These integrations ensure records remain up to date, streamline the approval process, and significantly reduce manual interactions.

4. Test and review the invoice automation system

Once the system is fully configured, the next step is to carry out user acceptance testing. Users should be trained to use the new system effectively.

After implementation, the system’s performance must be tested and reviewed regularly. Ongoing performance testing is essential to ensure the invoice automation system continues to deliver the expected outcomes.

Major Benefits of Automated Invoice Processing

Irrespective of the type of business, processing invoices is an integral part of business operations. Whether you are paying manufacturers for raw materials or wholesalers for products or vendors for services performed, you need an invoice processing system to ensure that payments are made on time and that strong vendor relationships are maintained.

Automated invoice processing offers several benefits for a business, some of which are highlighted below:

1. Reduced manual entry

Strong invoice processes rely on e-invoices or converting paper-based invoices into electronic form. Automated invoice systems eliminate the need for manual data entry into accounting systems. Document management software scans invoices and extracts data more efficiently and accurately when compared to manual entries by accounting teams. Lesser manual entries automatically improve the accuracy of accounting systems and save time for the accounting team.

2. Improved reliability of invoice verification

Review and approval of invoices are sometimes quickly waved through the process especially when accounting teams are pressed for time while dealing with heavy workloads. When invoice processing is automated, the entire accounting team has access to invoice-related information immediately and payments can be authorized easily, speedily, and accurately. An automated invoice processing system verifies and validates invoices automatically based on preset business rules. Routing of invoices is also done automatically in an automated system.

3. Easy access to information

When invoice processing is automated, any questions that the accounting manager or staff has on the invoice are readily answered. All the necessary information and data on invoices can be easily retrieved and displayed at any time, in any location. Automation improves information flow and access to information. The appropriate employee can retrieve information or approve invoices using any device, from any location, and at any time.

4. Automated workflows

Automated workflows let teams set rule-driven processes that route invoices through the proper steps to payment. Rule-based workflows ensure that invoices are routed to the right person based on the value of the invoice. For example, invoices for office supplies amounting to $100 need not be routed to the CFO for review and approval, while a $10,000 invoice for new office equipment needs to be signed off by the CFO or CPOs.

5. Leveraging early payment discounts

Several vendors offer early payment discounts to buyers. Strong invoice processing practices help companies leverage more early payment discounts. Automated invoices are processed faster, which in turn avails early payment discounts. Saving money via these discounts translates to more earnings for the business.

6. Reduced audit preparation time and effort

Finance and accounting departments need to be compliant with the company’s policies and other industry regulations and standards at all times. An automated invoice processing system ensures that data and invoices are captured and stored in an easily accessible system. Moreover, the data format is compliant with Finance and accounting policies and regulations. Accounting teams are always audit-ready when operations are automated.

7. Increases scalability

Technology-driven invoice processing is better suited for handling the evolving needs of growing businesses. As business operations expand, the volume of invoices that need to be handled increases proportionally. The right AP invoice automation software helps businesses scale up easily to higher volumes without having to hire additional AP staff.

8. Sizeable cost savings

Invoice automation offers several ways to cut down on costs. The first way is by cutting down on the human effort required in invoice processing. AP staff spend less time on route tasks in invoice processing and, hence, are able to focus on tasks that contribute to improving productivity. Improved productivity translates to cost savings.

Automating invoice processing brings about digital invoices, which cuts down the costs associated with paperwork. Timely payments via automated invoice processing help businesses cash in on early payment discounts offered by vendors. At a large scale, cost discounts help realize huge savings for businesses.

9. Reduced business risk

Automated invoice processing provides custom access controls and digital data security, which increases audit compliance. The risk of missing or misplaced documents is mitigated in automated invoice processing.

10. Improved visibility

Digital accounting workflows in place of manual workflows increase visibility across the process. Management is able to monitor business processes in real time for data-driven smart decisions.

11. Improved vendor relationship management

Maintaining strong and healthy vendor relationships is a breeze with automated invoice processing. Information is just seconds away in an automated system. Payments alerts and notifications issued to stakeholders ensure that vendor payments are done on time. Timely payments also help establish trust-based vendor relationship management.

12. Positive environmental impact

Less paperwork reduces the carbon footprint, which has a positive impact on the environment. Automated invoice processing means less storing and shipping of paper.

Conclusion

Automating the invoice processing workflow brings several advantages to the business, including, reduced redundancy, improved productivity, timely payments, and minimised paperwork.  Workflow automation software like Cflow simplifies invoice automation so that payments are done on time and are carried out accurately. The visual workflow builder in Cflow can be used to create automated invoice processing workflows by simply dragging and dropping workflow elements. The insane level of customisation and customer support that we provide helps you ease into the new workflows quickly and effortlessly.

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