Long gone are the days of running from desk to desk with stacks of invoices waiting for approval. For most finance departments, invoice approval workflow automation isn’t the next big thing. It’s the new norm. Approval administrators like Cindy Romeis are happily trading in antiquated approval workflows for invoice workflow automation.
Cindy is the Accounts Payable Specialist for AvidXchange. She’s responsible for many tasks but the most important is administering invoice approvals. She’s lived the dreadful days of handling printed invoices and suffered the headaches that come with manual approval workflows. Since those days, she’s adopted invoice workflow automation to ease the pains of payables. Her years of experience comes with a few tips that all finance departments can use.
Avoiding the Invoice Approval Headaches
The biggest headache some approvers and administrators still encounter comes from paper. Finance department’s know that paper-based processes lead to a number of problems, including lost invoices, lack of flexibility, and control. PayStream Advisors points out the paper pain in a recent invoice study. For 45% of all surveyed businesses, manual approval routing is one of the top three accounts payable challenges.
Cindy’s Tip: Get rid of as much paper as possible, computerize everything. When finance departments shred paper-based approval processes, there’s less room for error. Automated invoice approval workflows give approvers clear visibility into all invoices and their location in the approvals process. I’ve seen the day where I’ve had to go from office to office to pass out paper invoices. The lack of paper means you’re not going to lose the invoice. Not to mention that it speeds up the approval time.
The Importance of Handling Invoices with Care
Centralization for invoice receiving and approval managing is critical. For many finance departments, the biggest pain in the approval workflow starts at the beginning—receiving the invoice. For some businesses, the invoice should only be received by designated approval administrators in the company. If it goes to anyone else outside of the invoice receiver, it naturally slows down the process. With this type of vendor error, the designated invoice receiver is responsible for being the “Invoice Investigator” to find the invoice and avoid approval delays.
Cindy’s Tip: Create a centralized location to receive and manage invoices. Start with receiving the invoice. Work with your vendors to create one email inbox for vendors to send invoices and give administrators access. A centralized, electronic location reduces the chance of invoices going to any other departments or individuals.
And regardless of the way vendors send the invoice, there needs to be one application for approvers and administrators to easily manage approval routing. Most finance departments are receiving invoices via one email inbox but trusting invoice approval workflow automation to streamline the approval workflows without paper. Once the invoice is in the workflow portal, it can be viewed and approved electronically. Approvers can see exactly where the invoice is in the approvals process at all times—including who has it, who’s next in line to approve, and how long it’s been at each point.
The Approval Administrator’s Big Break
Whether your finance department trusts manual or automated invoice approval workflows, organization is key. The only problem is manual processes make it difficult to follow each step due to limited visibility.
Invoice approval workflow automation makes it easy to create and change a workflow that digitizes the current approval workflow, improving control and flexibility. But even with approval workflow automation, it’s essential to create workflows that reduce effort and approval time.
Cindy’s Tip: Use invoice workflow automation to set up approvers in groups, otherwise known as “roles.” Here’s how it works. Instead of creating individual users and managing those permissions, create groups, or roles, that allow multiple people to be a part of one role. That way, within each role, multiple people can approve the invoice without the administrator chasing down each user to figure out who it should be routed to.
Roles also make it simple to add the right users. Naturally, there will always be structural change within any company. The reality is people switch positions and fast-growing companies add employees every week. With approval workflow automation, the administrator can simply add or remove the necessary people to the role group without creating a new user and managing permissions for each. And, if a role no longer works for your business structure, you can simply inactivate the role.
Also, during initial set-up, organize workflows by department for routing ease and organization. Roles can be defined by each department. This set-up simplifies routing. With departmental set-up, your department can only see invoices sent to your department—not others in the company. Even when disputing an invoice, your department will have control over when the invoice can move forward in the approval workflow
Dealing with the Difficulties of Invoice Disputes
Disputing invoices with vendors is not uncommon. The issue could be as simple as incorrect totals or could be much bigger, such as unsatisfactory work. When handling disputes manually, there’s the risk of approving and paying the disputed or inaccurate invoice. There’s also the worry that two invoices for the same service will be approved and paid. With manual invoice approval workflows, approvers struggle with controlling and managing invoices that depend on manual approval steps.
Cindy’s Tip: Don’t worry about disputed invoices. Chances are, if there’s an issue with an invoice, your department can provide the answers to any questions or dispute matters. That’s why it’s important to make it the department’s responsibility to move the questionable invoice in and out of the “Dispute” pile—not the administrator’s. The departments will have better insight into whether or not they are satisfied with the work or if a new invoice will be created. Until a decision has been made, consider marking the invoice as “Dispute,” to avoid accidentally approving it. As a best practice, if any of the invoice details change, the invoice in question should be voided. A new invoice should be entered into the system to avoid any confusion.
Get Ready for the Next Big Thing
As invoice approval workflows continue to change with tech times, there are a few things to keep in mind. Consider your organization’s vendors, scaling for growth, and keeping up with FinTech trends. What may work for your business now may not be what it needs in the next five years.
Cindy’s Tip: Choose a forward-thinking AP automation solution. Many finance departments are now handling purchase orders first. When exploring E-Invoicing solutions, consider what your company may need in the near and far future. Purchase order (PO) linking is quickly becoming a demand for most organizations. With PO linking, once the PO is approved, there’s no need to go through the automated invoice approval workflow. All details automatically match the invoice. Simple steps like this save the workday and plenty of headaches.
Avoid the Ancient Approval Lag Time
Most finance departments follow the common rule of paying invoices within 30 days after receiving them. With automated invoice approval workflows, administrators and approvers have visibility into all invoices in the approval cycle, so there’s no need to chase down approvers or follow up. PayStream points out that 72% of businesses see a quicker approval of invoices when implementing invoice approval workflow automation solutions. But even with technology, there’s still approval lag time.
Between vacations, meetings, and the nature of a busy workday, approving the invoice may fall down the list of things ‘to-do.’
Cindy’s Tip: Set up automatic approval reminders. Automated approval workflows automatically generate reports to remind approvers that invoices are in their queue waiting to be approved. The approver profile allows you to automatically send reminders as frequently as you’d like. For example, if an approver has not approved the invoice after two or three days, the administrator can manage permissions that send out approval reminders on Monday, Wednesday, and Friday. Even better, every time an approver logs in to the system, they’ll see invoices sitting in the queue for approval.
As another best practice, give the right managers the right approvals. The workflows can be set up by approver level and dollar amount so that smaller invoices are not always being sent to finance leaders.
With conditional steps, you’re able to automatically route invoices to approvers under certain circumstances. For example, if an invoice exceeds $15,000, administrators can add a step to the workflow that automatically routes the invoice to the CFO for approval. And if your CFO cannot approve the invoice, someone within the CFO Role or group can approve on his or her behalf.