Learn the importance of invoice approval, how the process works, and best practices to streamline it with automated approval workflows.
Running a business equals managing invoices. But getting them approved can often be slow and complicated. Without a clear process, invoices can get lost, delayed, or paid incorrectly. This can lead to cash flow problems, strained supplier relationships, and missed financial targets.
Invoice approval is the process of checking and authorising an invoice before it’s paid. It ensures that the invoice is accurate, matches the original purchase order, and follows company policies. When done correctly, invoice approval helps businesses avoid payment errors, improve cash flow, and maintain good supplier relationships.
Automating this process can save time and reduce mistakes. In this guide, we’ll explain how invoice approval works, the different types of approvals, and the best practices for making the process faster and more accurate.
Understanding invoice approval, what is it?
Invoice approval is the process of reviewing and authorising an invoice before payment is made. It ensures that the details on the invoice match the original purchase order and the goods or services received. This process is essential for preventing payment errors, such as overpayments or duplicate payments, which can harm a company’s cash flow. Effective invoice approval also helps identify fraudulent or incorrect invoices before they are processed, protecting the business from financial loss.
By ensuring that payments are accurate and properly approved, companies can avoid late fees and maintain positive relationships with suppliers. A structured invoice approval process increases financial control by creating a clear system for checking, approving, and tracking payments. It also builds supplier trust, as timely and accurate payments strengthen business partnerships. Businesses that automate their invoice approval process can process invoices faster, reduce human error, and improve overall financial efficiency. For more details on improving your invoice handling process, check out our guide on invoice processing.
Comparison of various approval types
Different financial transactions require different types of approvals. Understanding these differences helps businesses create a more organised and efficient approval process.
Invoice approval focuses on reviewing and confirming that an invoice matches the original purchase order and delivery note. This ensures that the goods or services were received as expected and that the payment terms are correct before releasing funds.
Purchase approval happens earlier in the process. It involves authorising a purchase before an order is placed. This step ensures that the purchase fits within the company’s budget and follows internal policies. Purchase approvals are typically required for large or non-standard expenses.
Expense approval is used for reimbursing employee expenses, such as travel costs or office supplies. Employees must provide proof of purchase, such as a receipt, and the expense must meet company guidelines.
Invoice approvals are usually more complex because they require multiple layers of verification. An invoice must match the purchase order, delivery note, and contract terms before approval. This adds an extra layer of control to prevent payment errors and fraud. For more on setting up clear approval levels, explore our guide on building an approval matrix.
What is the invoice approval workflow?
The invoice approval process follows a series of structured steps to ensure payments are accurate and properly authorised. A clear workflow reduces errors, improves processing time, and strengthens financial control.
Here’s how a typical invoice approval process works:
- Invoice submission – The process starts when a supplier sends an invoice to the finance team. Invoices can arrive by email, as a PDF, or through an invoicing platform.
- Data validation – The finance team checks the invoice for accuracy. This includes verifying the supplier’s details, invoice number, total amount, and payment terms.
- Matching – The invoice is matched against the original purchase order and the delivery note. This confirms that the goods or services were delivered as agreed and that the amounts are correct.
- Approval routing – Once matched, the invoice is sent to the relevant person or team for approval. High-value invoices may need approval from senior management or multiple departments.
- Payment processing – After approval, the invoice is scheduled for payment based on the company’s payment terms. The payment is recorded in the accounting system for tracking and future reference.
An automated approval system can significantly speed up this process. By automatically validating data, matching invoices, and routing them for approval, businesses can reduce manual work and avoid payment delays. For more on how to manage supplier invoices effectively, check out our guide on vendor invoice management.
Best practices for invoice approval
Improving the invoice approval process helps businesses reduce delays, prevent errors, and maintain strong supplier relationships. Here are some best practices to create a more efficient and accurate approval system:
Set clear approval limits
Define who has the authority to approve invoices based on the invoice value or type of expense. This prevents confusion and ensures the right person is reviewing each invoice.
Use a multi-level approval process
High-value or complex invoices should go through multiple levels of approval. This adds an extra layer of control and reduces the risk of errors or fraud.
Create an approval matrix
A clear approval matrix maps out who approves which types of invoices and under what conditions. This avoids bottlenecks and ensures a smooth approval process. Learn more about setting up an effective approval matrix.
Automate approvals
Using an automated system speeds up the process by automatically routing invoices to the right person and tracking progress. This reduces the need for manual follow-ups and minimises human error.
Ensure real-time tracking
Businesses should have a system in place to monitor approval status and payment schedules in real-time. This improves cash flow management and helps avoid late payments.
Automating the invoice approval process reduces delays, increases accuracy, and gives finance teams greater control over company spending. For more details on how automation can improve your approval process, check out our guide on automated invoice processing.
How Summit can streamline invoice approvals
Summit’s spend management software automates the entire invoice approval process, making it faster, more accurate, and easier to manage. It captures invoices directly from emails and PDFs, eliminating the need for manual data entry. Using OCR (Optical Character Recognition), Summit extracts key details such as invoice number, supplier information, amounts, and payment terms, ensuring accuracy from the start.
Once the data is validated, Summit routes invoices through a multi-level approval workflow based on company policies. High-value or complex invoices are automatically sent to senior management for additional review. Real-time tracking gives finance teams full visibility into the status of each invoice and upcoming payment schedules.
Summit also ensures accuracy by matching invoices with existing purchase orders and delivery notes. Any discrepancies are flagged for review before the invoice is processed. The system integrates seamlessly with existing accounting and ERP systems, providing a smooth and connected financial workflow.
By automating invoice approvals, Summit helps businesses reduce errors, speed up processing times, and strengthen supplier relationships through timely and accurate payments. Finance teams gain greater control over company spending, improve cash flow management, and reduce the risk of payment errors.
Ready to simplify your invoice approval process? Talk to us today to learn how Summit can help your business improve financial efficiency and accuracy.
