Invoice processing

Invoice processing involves the handling of incoming invoices from arrival to post. Invoices have many variations and types. In general, invoices are grouped into two types: 1. Invoices Associated with a Request 2. Invoices that do not have an Associated Request

Most organizations have clear instructions regarding processing incoming invoices. Different sets of intructions are commonly found in most organizations regarding the handling of purchase order invoices or non-purchase order invoices. The main department that processes invoices is known as accounts payable department. The process involving a supplier invoice is also known as purchase-to-pay.

Typical process

A typical process involving paying a supplier invoice begins at the arrival of invoice at the door of the organization regardless of the methods of arrival such as via email, snail-mail, faxes, etc. Once the invoice arrives, the accounts payable clerk must ensure that the document is indeed an invoice. Then the clerk classifies and sorts the invoice into various categories. The definition of various categories is not always the same across different organizations but is normally defined by each organization.

Once its category defined, the invoice is forwarded to the responsible person for that particular invoice. This is normally the person who has placed that order. If there has been a purchase order involved when placing that order, the invoice must then be matched against the purchase order to ensure that the amount invoiced is correctly stated on the invoice. If the amount is right and the goods are there, the responsible person will have to approve the invoice by signing it off. If the amount invoiced exceeds a certain amount that is limited by the organization, the superior of that person may have to approve the invoice as well. This of course differs from organization to organization.

Once the invoice has been approved and there have been no variances, the invoice is posted into the accounting system.

An old invoice process can sometimes exceeds 15 steps before the final posting is done. An example is explained here:

Automatic process

Technology has long enabled the automation of invoice processing from arrival to post. This means that at arrival of the invoice, the same accounts payable clerk will only need to scan the invoice into an automation software. The automation software then converts the invoice's scanned image into a text searchable document. The different fields on an invoice can also be defined into the software so that it remembers which fields that it should capture and register into the ERP systems, for instance, the amount purchase, the quantity, the supplier name, the supplier code, and so on. Most automation software today integrates into common organizational ERP systems such as SAP or Microsoft or Oracle.

Once the data is extracted or captured from the invoice, the data is sent into the system for automatic matching against the purchase order. This is done automatically. The responsible person will then receive an email alert so that he or she can approve the invoice. If there is another person involved in the approval workflow, an email alert will be automatically generated.

Automation software

More information about automating invoice processing with technology can be obtained from the common vendors' websites.

According to the Document Imaging Report, issue no. 8-17-07, there are around 3757 invoice processing applications in the world. The major vendors listed in this report include:

ReadSoft(2557 applications)
Kofax(350 applications)
EMC(70+ applications)
TIS(120 applications)
Océ(less than 100 applications)