Procurement Glossary & Terminologies

Glossary / Letter I / Invoice Approval

Invoice Approval


Evaluating and approving supplier invoices before payment is known as invoice approval. Once the buyer gets a supplier invoice from the supplier (by email, post, et al), the invoice approval procedure typically starts. After that, the invoice is categorised and sent to the appropriate stakeholder for approval.

Understanding Invoice Approval

Before supplier invoices are entered into the ERP/procurement system, they must be reviewed and approved by the appropriate parties.

Invoice information is presented in digital form for the approver to quickly review using accounts payable software, which helps streamline the invoice approval procedure. Additionally, the system can automatically recommend coding depending on the company’s chart of accounts and rules or based on previous data. This makes it possible to swiftly and efficiently approve invoices using a computer or mobile device.

Steps to Create an Invoice Approval Process

Most companies have a defined procedure in place for dealing with incoming bills. Although the processes differ from one organization to the next, they can be broadly divided into two categories:

  1. Invoices that are accompanied by a purchase order or purchase requisition.
  2. Invoices without a corresponding purchase order or request.

Here are a few specific actions that businesses may take to ensure quicker and more accurate invoice approval:

  1. Prepare a bill

All pertinent information should be manually entered into an organization’s invoice approval loop for an invoice to be handled on time.

  1. Verification or matching of POs

The classification of the invoice is the next step in the procedure. Other associated purchasing documents, such as purchase orders, order receipts, and purchase requests, must be identified and linked as part of this process.

  1. Specify any exceptions

Suppose an invoice fails validation because of a mistake or missing information. In that case, it should be sent to a designated person who may correct the problem and reroute the invoice for approval.

  1. Route endorsements

Following validation and matching, invoices are forwarded to the appropriate approvers following the details provided in one of the purchasing documents (such as PO number, requester name, and department).

  1. Manage payment

If an invoice is accepted, it should be sent automatically to the finance department for processing. An invoice can be closed after the money has been received.

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