May 5, 2022

Need to speed up your AP process? Automated approval software is just one part of the solution


Invoice approval is a critical step in the Accounts Payable (AP) process. Automating this step will undoubtedly add more efficiency to your AP workflows and get your vendors paid faster. However, implementing automated invoice approval software into your tech stack is just one piece of the AP puzzle.

In this article, you'll learn why you need more than just invoice approval software to realize the benefits of AP automation. You'll also learn the following:

Why just invoice approval software is not enough

Manual processes have long plagued AP and created a massive problem for vendors chasing payments. Research conducted by QuickBooks revealed that 65% of businesses spent 14 hours per week chasing payments, equivalent to two working days.

What lies behind these numbers? The QuickBooks survey offered some clues. 81% of respondents said they did not have a fully integrated payment system, while 50% reported using multiple platforms with disjointed processes.

While this survey captures answers from the vendor's point of view, it isn't a stretch to say that disjointed automation is also plaguing your businesses ability to make payments. 

So, while invoice approval software will help you automate one step of your AP process, your gains will be erased if the software doesn’t integrate seamlessly into the AP cycle.

Here's a high-level overview of the AP process that highlights how invoice approval and bill approval software is just one part of the puzzle:

  • Step #1: Vendor onboarding—Vendor management is critical to capturing your suppliers' bank and payment information. Vendor management automation can help you onboard suppliers quickly.
  • Step #2: Invoicing—Once services are implemented, your vendor invoicing software must automatically capture the appropriate documentation and store vendor invoices.
  • Step #3: Document verification—In this step, your AP team must compare invoice information to internal records and verify whether services were delivered per contract specs.
  • Step #4: Invoice approval—If the information on the invoice is correct, your AP team approves the invoice for payment.
  • Step #5: Payment—You'll pay your vendors in this step. Finance automation tools can help you record and transfer money to vendor accounts.

As this list shows, invoice approval is one step of a complex process. Automating invoice approval while relying on manual or disintegrated digital processes creates more hurdles for your AP team.

Challenges in the invoice approval process

A lack of digital integration within AP creates multiple challenges. Here are some of the problems a disjointed AP workflow creates:

  • Data silos: Disjointed systems and data stored on spreadsheets create silos that hinder visibility. The result is longer verification times.
  • Missing data: Manual and paper-driven processes introduce errors such as miskeyed data and lost documents. As a result, lengthy approval times and poor supplier dispute handling can become the norm.
  • Lack of analytics: Your AP team is flying blind due to siloed data and manual processes. You cannot improve workflows because you cannot measure process times.
  • High costs: Highly-qualified AP employees spend more time chasing paper than resolving disputes or conducting value-added analysis, resulting in low ROI.
  • Lost savings opportunities: You cannot capture vendor early-payment discounts without automated alerts and a central view of AP data.

What are some invoice approval best practices?

Invoice approval might be just one portion of your larger AP workflow, but it reflects your process' efficiency. Invoice approval needs input from almost every other AP step. For instance, collect a vendor's payment details efficiently, and you won't have problems approving an invoice and transferring payment (the final AP step).

Automate document matching, and invoice approval becomes easy. Collect invoice details and contract terms on a centralized platform, and you can quickly verify and approve the invoice. In short, an efficient invoice approval process needs other portions of the AP workflow to function smoothly.

Here are five invoice approval best practices that will help you achieve this goal.

Automate AP as much as possible

Automation is the solution to several common issues that AP teams face. For starters, digitizing your AP workflow reduces the chances of manual data entry errors and lost documentation. You can standardize document templates to automate document matching and reduce the clerical burden on your AP team.

Faster invoice processing and approval is a natural consequence of AP automation. You'll create a central data repository that can connect to ERP and vendor management modules, thereby allowing you to gain deep visibility into procurement and expenses.

Use software to document and define approvals

Invoice approvals are rarely straightforward in growing organizations. Often, your AP team will have to escalate approvals to other team members and coordinate with different departments.

Keeping track of these approvals is impossible with a manual or paper-driven process. For instance, your AP team will have to track approvals via email or spreadsheets on shared drives, thereby introducing room for miscommunication or incorrect data entry.

Use software that helps you create workflows, rules, and thresholds. For instance, invoices above a specified dollar amount can be automatically transferred to a multi-level approval workflow, while those below can be approved by a single team member.

Alternatively, you can define spending rules per vendor, department, or location to automate approvals and quickly get your teams the tools they need. Software allows you to envision and enforce almost any expense control model and track progress over time.

Measure approval time and related metrics

You must measure invoice approval's efficiency using metrics such as approval times, exception handling times, number of exceptions per invoice, exceptions per vendor, and three-way matching times.

More importantly, track trends in these metrics. This exercise will help you spot holes in your workflow and improve AP efficiency.

Use finance automation software that integrates with your current tools

You must integrate invoice approval and larger AP workflows with other systems in your organization. For instance, linking to ERP or accounting systems is essential to gaining an end-to-end view of your organization's financial efficiency.

Integrating your platforms will also help you reduce the possibility of data entry errors or data silos cropping up. For instance, with an integrated system, you can approve an invoice, transfer payment to the vendor, and automatically record bookkeeping journal entries in a single process.

The result is a real-time view of your company's financial standing and greater efficiency throughout.

Separate invoice approval and payment duties

Structure your AP department so that invoice approval and vendor payment roles are distinct. This structure is in line with GAAP recommendations since it avoids potential conflicts of interest between related parties.

While separating duties doesn't necessarily increase process efficiency, it does mitigate the risk of compliance and audit violations.

How Ramp's finance automation tools can speed up the invoice approval process

You've learned that invoice automation software cannot operate in a vacuum since process efficiency depends on how well the rest of the AP workflow operates. Ramp helps you simplify invoice approval by automating invoice approval and all related workflows. Here's how:

Pre-approve expenses

What if you could eliminate the need to approve invoices in your AP process and still control spending? Ramp allows you to pre-approve spending limits on employee cards, shortening AP workflows. 

You can block spending in specific vendor categories, create vendor-specific cards to control expenses, and build flexible spending exception management workflows.

Build multi-level approval workflows

Building multi-level approvals is simple with Ramp. You can define approval roles and people within your organization, and Ramp automatically gathers spending approvals.

You can also redirect transactions for manual approval to deal with edge cases. Ramp's AI-powered real-time reporting helps you approve out-of-policy expenses and notify employees of unauthorized spending.

Seamlessly integrate with accounting

Ramp integrates with popular accounting and ERP tools such as QuickBooks, Sage Intacct, NetSuite, and Xero. Ramp connects cards, bills, accounting, audit trails, rules, and collaboration data to simplify accounting tasks. You'll close your books faster and can rely on a central data repository at all times.

The result is greater visibility into your processes and more accounting automation that frees up employees' time to conduct value-added analysis.

Accurately onboard vendors 

Vendor onboarding is a critical step. You'll collect all payment-related information at this step, and errors at this stage will hamper your AP process. Ramp's vendor management software centralizes all SaaS vendor spending, giving you visibility into subscription costs.

You'll eliminate common issues such as duplicate spending and shadow IT. You can offer vendors seamless onboarding processes that automatically capture bank information and track vendor-related spending over time.

Invoice approval is a critical portion of the AP process. However, you must pay attention to the rest of your AP workflows before automating approvals. Choosing a tool that automates and streamlines AP is the best way of ensuring smooth and efficient invoice approvals.

Learn how Ramp simplifies invoice approvals and eliminates wasteful spend.

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What are the benefits of automating invoice approvals?

Here are the five benefits of automating invoice approvals:

  • Faster vendor payments
  • Better vendor relationships
  • Deeper insight into spending patterns
  • More ROI from AP processes
  • Eliminate errors in data entry and documentation

What are the five best practices of the invoice approval process?

The five best practices of invoice approvals are:

  • Automate AP as much as possible
  • Use software to document and define approvals
  • Measure approval time and related metrics
  • Integrate
  • Separate approval and payment duties

How do manual AP processes negate invoice approval automation?

Manual AP processes data silos and force your AP team to search for data across disparate systems. These create processes also introduce data entry errors and a lack of cohesive information related to the invoice. For instance, a lost document or miskeyed data can create vendor disputes, damaging your relationships over time.

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Streamline approvals.
Review requests, pre-approve expenses, and issue general expense cards in a few clicks – or directly in Slack. Delegate approvals and empower your team leads to spend on the things they need and control their team’s expenses.
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Issue instant cards.
Unlimited virtual and physical cards with built-in spend limits, instantly available for everyone in your team. Define spend rules and let your smart cards enforce your policies automatically. No more surprises or under-the-radar spending.
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Stop waiting on monthly statements or manual spreadsheets. Find, browse, and download real-time transactions from any employee, department, or merchant – on any device.
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An accounting experience by finance teams, built for speed and efficiency. Automate manual processes and start enjoying instant reconciliation – Ramp does all the heavy lifting.
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Trim wasteful spend.
Ramp analyses every transaction and identifies hundreds of actionable ways your company can cut expenses and alerts your team via email, SMS, or Slack. It’s like having a second finance team, laser-focused on cutting costs.
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