Improving Your Accounts Payable Workflow: 5 Steps to Efficient Invoice Processing

Posted by Greg Bartels on Dec 16, 2014 12:52:00 PM

When looking to improve your business operations and increase efficiency, look no further than your accounts payable procedures. With a number of processes that can either be eliminated or streamlined, the face of AP is currently changing and there are a few things you can do to keep up with the times – and help your entire company in the process.

Here are five steps you can take that will have an immediate impact on your current accounts payable workflow, helping to reduce the overall cycle time and save you money as a result. Follow these five steps and you’ll be on your way to a more efficient accounts payable process.

Step 1: Accept Electronic Invoices

The first step is to eliminate paper invoices as much as possible and to accept electronic invoices.  The past challenges in managing electronic invoices revolved around EDI. Most systems today did support electronic invoices without expensive EDI infrastructure.  Most vendors today will gladly send you a PDF “electronic invoice”. While this may be just as cumbersome as a paper invoice since it still requires data entry and archiving, it does eliminate pushing paper and scanning invoices. The same technologies and processes used for extracting data from paper can be used to pull attachments from emails then extract the data.   Starting from an electronic document further enhances the process as you eliminate the scanning process.   Some vendors will continue to send you hard copy invoices, but if you can get just half to deliver them digitally, you’ve saved a ton of time on scanning.

How long is your procure-to-pay cycle time?  According to PayStream Advisors, the average cycle time is 23 days.  This time can be reduced if you don’t have to deal with paper invoices or invoices that come in as email attachments. Despite only one quarter of companies sending invoices electronically, best-in-class companies have been able to whittle down their processing time to as little as 5 days.

Step 2: Centralize Data & Eliminate Data Entry

For those vendors that do not supply electronic invoices, businesses can implement centralized scanning solutions that convert images into computer-readable text, eliminating the need for a human to enter data manually into a system. While this technology requires a high level of expertise and setup, the pros significantly outweigh the cons. 

A best of class service can perform all the functions to parse the data and automatically enter it into your system. Not only is this a faster process, but with the proper controls eliminates human error and data discrepancies. It also has the ability to feed the data to other programs (like your financials).

PayStream Advisors reports that the #5 reason most companies aren’t moving to an automated invoice process is because management feels their current paper-based process works.  However, companies also report that the top challenges AP departments face are: 1- time spent on data entry 2-discrepancies and entry errors 3-missed capture of discounts 4-decentralized invoice receipt and 5-lost invoices.

Step 3: Streamline your Workflow with Automation

Once your invoice is digital you can leverage more efficient ways to automate invoice processing. Digital workflows for invoice approvals and automation will truly streamline the end-to-end invoice process.  A fully automated process not only allows you to receive invoices in a clean and swift manner, but manages approver assignments, workflow, general ledger posting, review, approval, and provides real-time reporting and notifications.

Step 4: Simplify and Standardize

By standardizing basic functions like invoice receipt and approval workflow, you can create a more streamlined process with easier to organize processes. This won’t just benefit the AP department; your suppliers will also be happy with the quicker procure-to-pay cycle because they’ll receive accurate payments much more quickly.

While PayStream Advisors were compiling their report, they learned that when a company doesn’t have a standard procedure for invoice receipt, vendors tend to send invoices to everyone but the AP department.  When purchasers or field approvers receive invoices from vendors, the invoices sit an average of 1 to 2 weeks on their desks before even being sent to AP for entry into the accounting system.

Step 5: Archive Your Data Immediately

Paper files are not efficient. That is a fact. However, if your company is still receiving paper invoices see Step 1 above and implement an invoice automation solution that seamlessly converts them into a digital format.  Processing paper documents then scanning and archiving them after is not efficient.  Adding a feature like a “digital mailroom” to receive and process your invoices means your data is more secure, gets archived immediately, and gets ready for processing in a fraction of the time.

According to PayStream Advisors, many AP departments are implementing back-end imaging (scanning invoices and supporting documents after they have been processed).  Utilizing front-end imaging (scanning directly after receipt) will drastically cut processing time and help to eradicate rogue documents.

Download our most popular eGuides!

New Call-to-actionGet a free copy of PayStream Advisors Report


Some of these steps will take longer than others to implement, but they’re all worth the work. Start with step one and work your way down systematically, and you will be on your way to a more automated, and more efficient, accounts payable process.

Tags: AP Processing, Document scanning, document management system, AP Workflow