AP best practices: modernizing your invoice approval process

Shaun Jex | Monday, Nov 20th 2023
AP best practices: modernizing your invoice approval process

On average, AP (accounts payable) professionals spend at least 20% of their time managing approvals. That's one full day a week! How can organizations expect their accounting teams to deliver on strategic priorities when they’re spending all their time performing such routine tasks?

If you’re nodding along in frustration, then read on. In this blog, we’ll explore the AP best practices your accounting team must adopt in order to modernize your approval process and make better use of your team's time.

Approval channel best practices

Approval channels are rules used to assign invoices, purchase orders, expenses, and payments to managers or team leaders for approval. But manual AP processes can cause these workflows to break down ― resulting in costly errors. Even more dangerously, these workflows can even be tampered with or falsified, leading to an increase in fraud.

Organizations can use AP automation solutions like Quadient AP by Beanworks to establish the following approval channel best practices:

  • Create multi-level approvals: Set up at least two levels of approval. For example: Invoices over a certain amount go to two different people for approval.
     
  • Separate approvals for invoices and payments: The person who approves invoices should not be the same person who approves payments. This double verification will help prevent risk, flag fraudulent activities, and protect company funds.
     
  • Create formalized approval procedures: Formalize and document your approval procedures. They should clearly define the approver, the timeline for approval, the back-up approver, and the second-level approver (as applicable) for every workflow.
     
  • Segregate duties: GAAP (Generally Accepted Accounting Principles) recommends ensuring the individuals who create and maintain financial records for an organization's transactions are not the same as those who issue and approve financial transactions.
     
  • Build a PO (purchase order) approval workflow: Set up internal purchasing rules before placing orders. Make sure that POs are authorized by managers or finance department leads, approved, and then sent to the supplier.

Approval channel automation

Quadient AP can help you create customized approval channels based on your unique organizational requirements. It also offers the flexibility to create separate approval workflows for all your accounting processes –– from purchase orders to invoices to payments ― with distinct levels and approvals for each one.

In addition to the obvious time-savings benefits, approval channel automation provides:

  • Restricted access: Only authorized approvers can view the status and history of a purchase order and sign off on an invoice or payment, helping to prevent fraud.
     
  • Customized routing: Create separate invoice approval routes based on location, department, project, vendor, etc.
     
  • Cloud-based audit trails: Track and trace every step of an invoice workflow electronically ― creating an indisputable and easy-to-access audit trail.

Choosing a robust AP automation solution

The bottom line is integral to the success of any business. It's important to set your accounting teams up for success with automated approval process management ― helping you eliminate inefficiencies, focus your team on strategic work, and safeguard your budget.

To stay competitive and ensure efficiency, organizations are embracing best practices that streamline their AP workflows including the invoice approval process. One crucial step in this modernization journey is integrating AP automation solutions with your existing systems like Sage Intacct or Microsoft Dynamics for seamless "invoice processing, real-time visibility, and enhanced control.

When you're ready to invest in Quadient AP by Beanworks to automate your AP approval workflows, we're here to help. Book a demo today

2023 and Beyond AP Guide