Invoice Approval Process

The invoice approval process is a critical part of accounts payable. It ensures that invoices received from vendors or contractors are accurate, legitimate, and aligned with internal purchase orders or contracts before payment is made. A clear and well-structured approval process reduces errors, prevents fraud, and ensures timely payments.

What Is the Invoice Approval Process?

It’s the sequence of steps an invoice goes through from receipt to final payment approval. This typically involves matching the invoice with supporting documents, verifying its accuracy, and getting approval from relevant stakeholders before releasing the funds.

 

Why It Matters

• Prevents duplicate or fraudulent payments


• Ensures only authorized and correct charges are paid


• Improves vendor relationships through timely payment


• Helps with budgeting and financial reporting

Invoice Approval Workflow Steps

Roles in the Invoice Approval Process

• Accounts Payable: Initial validation, logging, and matching


• Department Manager: Confirms goods/services were received as expected


• Finance Controller: Ensures budget compliance and signs off large invoices


• Procurement: Verifies PO and vendor compliance

Common Invoice Approval Policies

• Invoices over $5,000 require dual approval


• Non-PO invoices must be justified with a written explanation


• Approvals must be completed within 5 business days


• Invoices missing PO numbers are rejected

Best Practices

• Automate approvals using software to speed up processing


• Enforce policy thresholds (e.g., auto-approve under $200)


• Maintain an audit trail of all approvals


• Set up alerts for pending or overdue approvals


• Use centralized platforms for invoice intake

Software That Supports Invoice Approval Workflows

• Tipalti: Advanced multi-entity, multi-currency approval workflows


• Stampli: Intuitive interface with real-time collaboration and audit trails


• Airbase: Approvals tied to spend requests and company budgets


• QuickBooks: Basic invoice management with approval tracking

• Zoho Books: Automated rules and customizable workflows

• Oracle NetSuite: Enterprise-grade approvals with audit compliance

Invoice Approval Process Flow Example

Conclusion

The invoice approval process is an essential control point for managing company spend. With automation, clear policies, and accountability at each step, businesses can reduce risk, pay vendors on time, and keep financial data accurate and auditable.