Invoicing Process: What Is It and 5 Simple Steps to Mastering It

2 December, 2023
3 min
Brett Johnson, AVP, Global Enablement

Table of Content

Key Takeaways
What is Invoice Processing?
5 Keys Steps of Invoicing Process
Challenges of Invoice Processing
How to Improve Your Invoice Processing: Automation is the Key
Importance of Invoicing Process 
Significance of E-Invoicing in Invoicing Process Transformation
Benefits Of E-Invoicing and Self-Service Portal
How HighRadius Can Help?

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Key Takeaways

  • Manual invoicing process poses challenges such as errors, approval delays, and payment duplications, highlighting the need for a streamlined, automated invoicing workflow.
  • Automation of the different steps involved in invoice processing can significantly enhance efficiency. 
  • Automation of invoicing processes leads to significant time and cost savings, improved relationships with vendors, real-time process visibility, & improved cash flow forecasting.


Establishing a seamless invoicing process is crucial for any business. The invoicing procedure doesn’t just help maintain a healthy cash flow; it’s also essential for building strong client relationships.

A well-organized invoicing process ensures timely payments and transparency in dealings. Even if your current invoicing system seems effective, refining or improving it can significantly enhance your business operations and growth potential.

In this article, we’ll cover the basics of invoicing, methods to enhance your invoicing process, common challenges faced in invoicing, and more. Let’s dive into it.

What is Invoice Processing?

Invoice processing involves managing invoices from their arrival until payment. Invoices arrive in various formats, such as emails, PDFs, or paper, and require filing, recording, and approval before payment. 

While this process may seem simple, it encompasses several steps that can become complex, particularly for larger businesses. And that’s why the invoice management process is frequently automated for efficiency.

5 Keys Steps of Invoicing Process

It’s crucial for a business to optimize the invoice payment process and manage payments effectively. Typically, the invoice management cycle includes the following sequential steps in its workflow:


5 Key Steps in Invoicing Process

Step 1: Invoice receipt & capture: Once the invoice is received the accounts payable team must standardize the invoice and enter it into an accounts payable system along with recording it in the general ledger. 

Step 2- Invoice accuracy check: Once the invoice is assigned a general ledger code, the invoice needs to be checked against a purchase order (PO). At this stage if there is a discrepancy between the invoice and PO the same needs to be highlighted to the supplier. 

Step 3- Invoice approval: If the invoice details are correct, it is then routed to an authorized individual who would formally approve for payment. Nowadays the approval process in most organizations is done digitally. 

Step 4- Invoice payment: Once the invoice is approved, the invoice is processed for payment to the supplier based on the payment terms agreed upon. At this stage companies can make payment using different modes such as cheques, wire transfer, ACH. 

Step 5- Invoice payment archival: During the entire invoicing process organizations need to ensure that all related activities (invoices, communications, receipt) have been documented and stored securely such that they can be easily accessed for future audit processes. 

Challenges of Invoice Processing

Now that we understand the significance of efficient invoice processing and how ineffective practices can impact your bottom line, it’s crucial to recognize the challenges associated with it. Manual entry of invoice details, validation of purchase orders, and continuous manual filing can lead to inefficiencies in the invoice processing process and consume a significant amount of time.Some of the challenges faced in such a scenario are:

Manually capturing invoice data in the system

When invoices are received in different formats, it often requires human intervention to standardize the invoices and manually enter the data required. This not only requires considerable manpower but is also time consuming. 

Error in invoice data capture

When manually entering the data there are considerable chances for incorrect data capture that further leads to delay in the invoicing process.

Lack of centralized storage for invoice documents

If there is no centralized location to store all documents ( PO, invoice and all other emails and communications)related to an invoice it can lead to lack of clarity for the team. This hinders the ability to seamlessly carry out the invoicing process workflow. 

Delay in invoice approval

If the invoicing process workflow is not streamlined efficiently there is a high probability of invoices being routed to the wrong stakeholder. This can lead to repetitive processes leading to waste of effort and considerable delays. 

Delay in invoice payment

Not having a robust invoicing process workflow results in late payment that can impact supplier relations. In many instances organizations may not be able to utilize benefits such as discounts on early payments if provided. 

How to Improve Your Invoice Processing: Automation is the Key

The manual invoicing process is not just error prone but is highly time-consuming with substantial operating expenses. The answer to addressing these challenges is to automate the invoicing process workflow. Automating the invoicing process streamlines the invoice payment process and translates to enhanced efficiency. The key to an automated invoicing process lies in scrutinizing the entire workflow and identifying which processes can be automated. Let us look into some of these processes.

Invoice receipt: Standardizing invoices in different formats and manually entering the data is a cumbersome process. Electronic invoicing (E-invoicing) addresses this challenge where a supplier or service provider can electronically send their invoice to your accounts payable system. Today most organizations are steadily moving towards a model where they prefer to receive e-invoices. 

Recommended Reading: E-Invoicing and Payments Process: A Step-by-Step Guide [+ Free Templates]

Invoice data capture: With automation the accounts payable system can capture the data automatically without any human intervention. This reduces the chance of human error. While the process is completely automated if we receive e-Invoices, even in cases where the invoices are not shared electronically the invoices can be scanned and using OCR and the data can be captured. However, for smooth and efficient processing organizations should urge their service providers and suppliers for e-Invoicing. 

Invoice accuracy check: Verifying the invoice for accuracy is one of the most important steps during the invoice payment process. With automation once we have the invoice data the system can automatically check all documents pertaining to the invoice such as PO, any email communications and other documents that are present in the central repository. This greatly reduces the verification process from days to minutes. 

Invoice approval: As highlighted earlier, a key issue with the approval process is routing errors. Automated routing not only ensures that the invoice is received by the right stakeholder but also reduces the time spent on email communication and follows up for the team. 

Invoice payment: Once the invoice has been verified and approved, the automated accounts payable system based on the payment terms agreed and organization related payment policies can directly send the invoice for invoice payment processing. Once completed the system then captures all information with respect to the invoice payment thus archiving the data. 

A key aspect to consider as organizations transform their invoicing process is to closely work with service providers and suppliers that have adopted e-Invoicing. Further firms should utilize the self-service portals that suppliers might provide customers. This enables one to check invoices in real time and resolve disputes efficiently. 

Importance of Invoicing Process 

Time saving: According to studies manual invoicing processing can take up to 25 days. With automation this reduces to 3-5 days. This allows the team to focus on activities that are more important and value generating for the company. 

Cost saving: The average cost of handling one invoice is almost $11.57. With automation this can be reduced due to lower operating expenses and eliminating additional charges that vendors might charge for late payments. 

Improved relationship with vendors: With automation the invoicing process is streamlined with faster processing resulting in timely invoice payment. This not only improves the relationship with vendors but also improves credibility and in some cases, organizations might be able to experience advantages such as discounts offered by vendors on early payments. 

Reduction in errors while invoice processing: With automation one has all the information in a central repository with respect to the invoice. With an efficient verification and approval process the chances of invoice payment duplication is minimal. Further this also helps to prevent any fraudulent activities. 

Improved cash flow and forecasting: Invoice processing automation allows all stakeholders to have a real time view of the invoice. This information allows all stakeholders to check for details related to upcoming cash flows in real time.


Significance of E-Invoicing in Invoicing Process Transformation

As organizations look forward towards automating their invoicing process with a complete transformation of AP, a key catalyst for this transformation is E-Invoicing the onus of which lies with the vendors. In due course of time as automated invoicing process becomes the norm most organizations would demand their vendors for e-invoices. So, for suppliers and service providers it is essential to closely transform their invoicing and payment process to align with their customers needs.

Electronic invoice presentment and payment (EIPP) has become crucial for enterprises in this regard. EIPP systems streamline the invoicing and payment processes, offering efficiency, cost savings, and improved accuracy compared to traditional paper-based invoicing methods.

Manual or paper-based invoicing is not only costly for vendors, but it also leads to poor customer experience as customers need to standardize these invoices in order to capture the data. Automated AP portal invoicing not only standardizes the customer experience but also kickstarts the invoicing process seamlessly. 

As highlighted during the invoice verification and approval stages there are chances of discrepancies where customers might request for dispute resolution as well as require additional documentation from the vendors. Provision of an efficient self-service portal to the customer enables self-service across the full invoicing cycle from communication of invoices to accessing and requesting documents along with the ability to make payments using the preferred payment method for the customers. This not only results in faster cash flow and invoice payment processing for the vendors with reduced days sales outstanding (DSO) but also aligns with the automated invoicing process of the customer and results in better customer service. 

In due course of time for most vendors e-invoicing would be a necessity. The early adoption of e-invoicing along with supporting the customer through provision of self-service portals will enable enterprises to become their customers preferred partners as they navigate this transformation journey together. 

Benefits Of E-Invoicing and Self-Service Portal

Some of the key benefits of e-invoicing and self-service system are:

Cost reduction: Lower manual effort and increased accuracy lead to cost savings for both suppliers and customers. The reduction in paper, printing, and postage costs is an OPEX bonus.

Minimization of invoice errors: Automating the invoicing process practically eliminates human errors in data entry, significantly reducing the likelihood of disputes and delays in payment.

Seamless integration with AP system: E-Invoices are seamlessly captured by customers’ automated AP system that kickstarts the invoicing process faster. 

Easy access to invoice related documents: The provision of a self-service portal allows customers to access documents as well as requests for additional information in real time. This improves communication with the customer. 

Streamlined validation with faster payment reconciliation: For customers, e-Invoicing makes it simpler to perform automated three-way matching—aligning invoices with purchase and shipping documents to confirm accuracy. Suppliers also benefit from easier payment reconciliations, saving everyone time and effort.

Faster resolution of disputes: With a self-service portal customers can access all information with respect to an invoice and seek resolutions for disputes swiftly. 

Improved customer experience: E-invoicing as well as a self-service portal empowers the customers by providing them with easy access to all information as well as provides them with the ability to use preferred payment methods, which enhances the overall customer experience. 

Improved profitability and cash flow: E-invoicing expedites payment cycles. Suppliers can issue invoices immediately, and customers can validate and pay them more rapidly. The result is better cash flow all around.

How HighRadius Can Help?

HighRadius Electronic Invoice Presentment and Payment (EIPP) Cloud solutionenables enterprises to deploy a self-service portal for their customers to review and pay bills online. Self-service enabling customers and eliminating paper invoices has a proven track record of reducing operating expenses by at least 30%. Additionally, enabling customers to pay via credit card, ACH or eCheck online can reduce DSO by almost 10%. A cloud-based solution available as Software-as-a-Service, EIPP Cloud is easy and cost-effective to deploy and maintain.



1. What is invoicing process?

The invoicing process encompasses the end-to-end handling of invoices, from receipt and approval to establishing remittance dates, payment execution, and ledger recording.

2. What is the invoice payment process?

The invoice payment process involves the systematic steps followed to settle financial obligations by paying the amount specified in an invoice received for goods or services.

3. What are the key steps of the invoicing process?

The key steps of the invoicing process are invoice receipt and capture, invoice accuracy check, invoice approval, invoice payment and invoice payment archival. 

4. What is E-Invoicing?

E-Invoicing, or electronic invoicing, is the digital generation, transmission, and processing of invoices between businesses, typically facilitated through automated systems to enhance efficiency and reduce paper-based processes

5. How does implementing HighRadius E-invoicing software help?

Implementing HighRadius E-invoicing software streamlines invoice transmission, accelerating payment processing through automated ACH, Credit Cards, and eChecks. Its versatile support for various payment processors and invoice formats, along with multiple transmission modes, ensures a quick and adaptable implementation tailored to diverse customer needs, while also facilitating efficient storage and retrieval of historical invoices.

6. What is EIPP?

EIPP stands for Electronic Invoice Presentment and Payment. It refers to a set of technologies and processes that enable businesses to create, deliver, and manage invoices electronically, as well as facilitate online payment methods. 

7. Can EIPP software be integrated with ERP systems?

Yes, Electronic Invoice Presentment and Payment (EIPP) software can typically be integrated with ERP (Enterprise Resource Planning) systems, allowing seamless coordination between invoicing and overall business operations. This integration enhances efficiency by streamlining financial processes and providing a unified platform for managing diverse aspects of enterprise resources.

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HighRadius Electronic Invoice Presentment and Payment (EIPP) Software provides tools that automate and speed up invoice communication and facilitate a faster collection of payments, enabling a closer and more convenient relationship with customers. It automates the invoice transmission and payment collection process providing a configurable solution that supports multiple invoice formats and different modes of transmission (fax, email, portal, etc.) depending on the targeted customer, its integration with ERP systems and a rich search capability enables efficient storage and retrieval of past invoices, backup attachments to minimize disputes and short pays. Apart from that it also has some key features that you would not want to miss out: level-III interchange and surcharge; self-service customer portal; invoicing across email, customer portals, post, and fax; advanced deduction management; and lightning e-payments. The result is faster invoicing and payment collection, better customer service, and improved profitability and cash flow.