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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, we’ll explain why you need more than just invoice approval software to realize the benefits of AP automation.

What is an invoice approval?

Invoice approval refers to the process of reviewing and verifying invoices from vendors or suppliers to make sure they’re accurate and legitimate before authorizing payment. It involves checking the invoice details against purchase orders, contracts, and delivery receipts, and ensuring that the amounts, terms, and conditions are correct.

The invoice approval process is typically overseen by the Accounts Payable (AP) department in a business. In smaller organizations, a designated finance officer or even the business owner may handle this process, depending on the company's size and structure.

Steps in the invoice approval process

While the specific steps may vary between companies, the general steps involved in the invoice approval process without automation are as follows:

1. Create an invoice

Start by generating an accurate and detailed invoice that includes all necessary information such as date, invoice number, vendor details, items or services provided, costs, and payment terms.

2. Validate purchase orders

Cross-reference each invoice with corresponding purchase orders or contracts for validation that the billed items or services were ordered and delivered as agreed.

3. Define exceptions

Identify and establish rules for handling invoices that don’t match purchase orders, are outside of standard pricing agreements, or have other discrepancies.

4. Route approvals

Determine the approval workflow for invoices, making sure that each invoice is reviewed and authorized by the appropriate person or department based on the company’s internal policies.

5. Process the payment

Once an invoice is approved, it should be forwarded to the appropriate team for payment processing according to the terms agreed upon. Prompt payments will maintain good vendor relationships and avoid late payment fees.

The problem with manual invoice approval

Traditional invoice approval workflows are inefficient and leave room for human error. Here are some of the problems a manual invoice approval process 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 invoice 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.

Invoice management software automates the entire process, from capturing and digitizing data to matching invoices with purchase orders and approval routing. At the same time, it minimizes manual data entry, centralizes storage, and automatically flags discrepancies for your finance team through rule-based workflows.

Why just invoice approval software isn't enough

However, just invoice approval software isn’t enough. While it will help you automate one step of your AP process, your gains will be erased if the software doesn’t integrate seamlessly into the entire 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:

  • 1. Vendor onboarding: Vendor management is critical to capturing your suppliers' bank and payment information. Vendor management automation can help you onboard suppliers quickly.
  • 2. Invoicing: Once services are implemented, your vendor invoicing software must automatically capture the appropriate documentation and store vendor invoices.
  • 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.
  • 4. Invoice approval: If the information on the invoice is correct, your AP team approves the invoice for payment.
  • 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.

What are some invoice approval best practices?‍


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 accounts payable teams face. For starters, using automated accounts payable software 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 accounts payable department 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

Measure your invoice approval process’ efficiency using metrics such as payment 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 accounts payable process efficiency.

Use finance automation software that integrates with your current tools


You should integrate invoice approval and accounts payable automation 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


We’ve covered how 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 to ensure smooth and efficient invoice approvals.

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Finance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.


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