Invoice Processing

Q: What is Invoice Processing?

Invoice processing is the entire workflow a business follows to manage incoming invoices from suppliers or vendors, all the way from receiving them to paying them. It's essentially how companies ensure they're paying the right amount, to the right vendor, at the right time. Efficient invoice processing is important for maintaining accurate financial records, improving cash flow management and fostering good supplier relationships.

What is Invoice Processing?

Invoice processing is the workflow for handling invoices from receipt to payment. It includes steps like invoice capture, validation, approval and payment. Efficient invoice processing is important for maintaining accurate financial records, improving cash flow management and fostering good supplier relationships.

‍Automated invoice processing systems can significantly reduce manual errors, speed up processing times and enhance visibility into accounts payable. By streamlining invoice processing, businesses can ensure timely payments, avoid late fees and take advantage of early payment discounts. Improved invoice processing also contributes to better financial planning and control.

Related terms

Accounts Payable Turnover

Accounts payable turnover explains how many times a business pays its creditors in a set timespan. Companies can use this metric to measure their short-term liquidity.

Accounts Receivable Aging

Accounts receivable aging is a reporting process that categorizes unpaid invoices and credit memos according to how long they remain outstanding. They are typically sorted into 30-day ranges (0-30 days, 31-60 days, 61-90 days), and this report is how companies calculate their days sales outstanding (DSO) average.

Accounts Receivable Turnover

The accounts receivable turnover ratio (or debtor turnover ratio) allows businesses to evaluate their debt collection efficiency.

Accrual Accounting

Accrual accounting is an accounting strategy that records payments and expenses when they are earned and incurred. This is different from cash accounting where revenue is recognized when it is actually deposited or transferred.

Advanced Billing

Advanced billing refers to sophisticated billing practices or capabilities that go beyond basic billing functionalities to address complex billing scenarios, accommodate specialized pricing structures, and support advanced revenue recognition requirements.

Advanced Electronic Bank Payments

Advanced electronic bank payments typically refer to sophisticated electronic payment methods and systems that enable businesses to execute various types of transactions with their banks electronically, often leveraging advanced technologies and automation capabilities.