What is invoice-to-pay?
The invoice-to-pay process is the end-to-end workflow of managing and settling accounts payable obligations.
The invoice-to-pay includes the receipt, review, approval, and payment of invoices. Creating a prompt and accurate invoice-to-pay process is essential for optimizing cash flow, building strong vendor relationships, and streamlining operations.
Components of the invoice-to-pay process.
Invoice receipt.
The invoice-to-pay process starts with the receipt of invoices from vendors. Invoices can be received through various channels, including email, mail, electronic data interchange (EDI), or vendor portals.
Invoice verification and matching.
Once received, invoices are verified to ensure accuracy, completeness, and compliance with contractual agreements.
This involves matching the invoice details against purchase orders and receiving documents to confirm the quantity, quality, and pricing of the goods or services delivered. Any discrepancies or errors are flagged for resolution before proceeding to the next step.
Approval workflow.
After verification, invoices enter an approval workflow based on predefined rules and approval hierarchies, to be approved for payment.
Payment authorization.
Once approved, invoices are authorized for payment based on the agreed-upon terms and conditions.
Payment authorization includes selecting the relevant payment method (e.g., ACH, check, virtual card) and scheduling the payment according to due dates, early payment discounts, or cash flow considerations.
Payment execution.
After payment authorization, the approved invoices are processed for payment. Payment processing may be handled internally by the organization’s finance department or outsourced to third-party payment service providers for added efficiency and security.
Reconciliation and reporting.
Following payment execution, finance teams reconcile accounts payable transactions to ensure that payments match the corresponding invoices and align with their budget allocations.
Reconciliation involves matching payments with bank transactions, resolving discrepancies, and updating financial records accordingly.
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Benefits of an efficient invoice-to-pay process.
Improved cash management.
An efficient invoice-to-pay process helps organizations manage their cash flow more effectively by optimizing payment timing, getting early payment discounts, and reducing the risk of late payment penalties. Timely payments also help foster strong vendor relationships.
Enhanced operational efficiency.
Streamlining the invoice-to-pay process through automation reduces manual work, speeds up invoice processing cycles, and lowers administrative costs.
Compliance and risk mitigation.
Implementing robust controls and audit trails within the invoice-to-pay process ensures compliance with regulatory requirements, internal policies, and contractual obligations. With configurable approval processes, relevant stakeholders have oversight into transactions, which in turn reduces fraud risks and prevents errors throughout the payment lifecycle.
Vendor satisfaction and relationships.
A well-managed I2P process fosters positive vendor relationships by providing transparency, reliability, and timely payments. Efficient communication channels and resolution of invoice disputes contribute to vendor satisfaction and may result in preferential treatment, discounts, or strategic partnerships that benefit both parties in the long term.
How Airbase helps with invoice to pay.
Here are some of the features Airbase employs to streamline the invoice-to-pay (I2P) process.
Automated workflows: Airbase automates the entire invoice-to-pay workflow, from invoice receipt to payment execution.
Approval routing: Airbase enables organizations to define and customize approval workflows based on their specific requirements. It automatically routes invoices to the appropriate approvers for timely review and approval while maintaining compliance with internal policies and regulations.
Integrations: Airbase integrates with over 70 ERP platforms, synchronizing invoice data and payment information in real time. This integration eliminates manual data entry, reduces errors, and enhances accuracy throughout the invoice-to-pay process.
Payment flexibility: Airbase offers multiple payment options, including virtual cards, ACH transfers, and check payments. Payments can be made across subsidiaries and in multiple currencies.
Visibility and reporting: Airbase provides real-time visibility into the status of invoices and payments through its easy-to-use reporting tools. This means organizations can track payment performance, analyze spending patterns, and generate actionable insights to optimize their I2P process continuously.