The “invoice approval workflow” consists of the steps your accounts payable department follows to reconcile and clear invoices — this typically includes:

• 3-way matching – matching invoices with the corresponding POs and receipts (and troubleshooting any discrepancies)

• Submitting verified invoices to a department head or manager for approval

• Scheduling and sending payments to vendors

However, the time requirement and involvement of this process vary by approach, and teams who use AP automation software can save countless hours on data entry, avoid human errors, and send payments more efficiently.

Our guide compares the manual vs. automated approach to invoice processing and explains how ProcureDesk supports each step of the invoice approval workflow.  

ProcureDesk is a procure-to-pay software solution with a suite of AP automation tools that streamline invoice processing and give accounting teams better visibility and control over spending. We work with small businesses and growing teams to improve procurement and accounts payable processes. If you’re interested in learning more about our software solution, you can schedule a free demo with our team.  

Key Steps of the Manual Invoice Approval Workflow

Let’s consider an accounts payable team at a hypothetical manufacturing company. The process of receiving and reconciling invoices typically looks like this…

• Step 1: The AP team receives supplier invoices all throughout the month — sometimes they’re sent via email, other times in the mail, sometimes both, so you have to check for duplicates and ensure each invoice is new.

• Step 2: When a new invoice is received, the AP team has to source the purchase order (PO) and packing slip that match the invoice number; this is how they check the invoice for accuracy and confirm the purchase. Sometimes, teams have software or spreadsheets to store PO and purchase confirmations, but in other cases, these are stored in good old-fashioned filing cabinets. If AP teams cannot locate the corresponding PO or packing slip, they must loop in the purchasing team or purchaser to retrieve the proper documents. This becomes a major bottleneck in the AP business process.

• Step 3: If there are any discrepancies with the order, this would be the stage to troubleshoot those with the vendor and receive a corrected invoice.

• Step 4: After the invoice match is complete and the purchase is confirmed, teams prepare payment by adding the correct accounting code and entering the invoice data into their accounting software or ERP. Then, they can send payment to the vendor or tag a designated approver to review and issue payment. The payments are then issued as per the agreed vendor payment terms.

• Step 5: Once the invoice data has been recorded and payment is sent, AP teams can mark the invoice as paid so others know it’s been addressed. Payment status is logged in accounting software automatically, but many teams also will make a note on the paper invoice if they keep physical copies.

Challenges with Manual Methods

You can see in our explainer how this process could become quite tedious and time-consuming, and it’s rarely a one-person job. AP teams have to hunt down documents (in file cabinets!), double-check purchases, and manually enter invoice data into their accounting system. This is not only inefficient but also causes cash flow planning hurdles for CFOs.

The manual workflow process for approvals leads to payment delays, which can cause issues for internal and external stakeholders. Vendors who are not paid on time can charge late fees or not provide products or services. This can impact your ability to serve your customers and lead to deferred or lost revenue. This also negatively impacts your vendor relationships.

Plus, this method is error-prone — teams may not catch duplicate invoices and send two payments, or they may not know about an issue with an order and send a payment for damaged or missing items. Or, they may hit an incorrect key when entering invoice data into the accounting system.

But most of all, this manual invoice approval process does not allow you to control costs. 

AP teams see purchases when they receive the bill for them — they have no idea what other teams are spending or what they’re spending on. They have to rely on other departments to manage their spending and hope everyone is adhering to budgets.

Surprise bills are one of the biggest pains we hear from AP teams still following this approach. Teams (accidentally) going over budget is a huge problem for AP departments. In cases where teams don’t have the funds to pay bills, they end up borrowing from credit lines, which can cause more severe problems.

How AP Software Automates the Invoice Approval Workflow

AP automation software, like ProcureDesk, facilitates each of the above steps; it saves time and enables better spend control while preventing duplicate payments, late payments, and other inefficiencies of the traditional accounts payable process.

Step 1: AP Automation Software Centralizes New Invoices & Detects Dupes

AP software connects with your email account(s) and lets you scan or upload invoices to organize vendor invoice documents in a centralized dashboard. Then, these systems use optical character recognition (OCR) to automatically create new invoices from invoice documents. The system can detect common invoice details automatically and create an invoice for the team members to review. 

Invoice automation software like ProcureDesk doesn’t rely on vendor templates for OCR; the system uses AI technology to identify and categorize invoice details. 

When these systems detect new invoices, they can scan the text to check if it matches an existing invoice. All duplicates are flagged and merged for improved invoice management. With this process automation, your team doesn’t need to upload every invoice manually.

Step 2: Automatic Invoice Matching Features Streamline Invoice Validation

AP systems provide two- or three-way matching features that support invoice reconciliation.

• Two-way matching is when a system automatically matches an invoice to the right PO.

• Three-way matching is when a system can match the invoice with the PO and the goods receipt note.

Some systems only support two-way matching, but solutions with three-way match (like ProcureDesk) are preferred, as they automate the entire invoice validation process.  

Step 3: AP Systems Show Users Which Invoices Require Attention & Provide an Audit Trail

Most invoice-matching features can also flag invoices that require attention — perhaps the purchase receipt is missing information, or there was an issue with the order. Then, AP teams can see which invoices are ready for payment and which require troubleshooting with the vendor.

Bonus: ProcureDesk also has features to simplify this step. Our platform is a full procure-to-pay solution, which means it supports both procurement and AP workflows. It has features to:

• Streamline the purchasing process.

• Store POs and purchase confirmations in the same dashboard you manage invoices.

• Log notes about order status and condition.

• Automate invoice approvals… and more!

In the case where AP teams need to troubleshoot an invoice, they can find notes about orders right in our system (instead of reaching out to the procurement team or the person who made the purchase) and contact the vendor to find a resolution.

Step 4: AP Systems Automate Approval Routing & Integrate with Complementary Accounting Solutions

AP automation systems have:

• Auto-coding features to analyze invoice data and add the right accounting code.

• Automatic routing rules to notify the person(s) in charge of reviewing and approving invoice payments. You can receive notifications through email, mobile app, or the web app.

• Integrations with accounting and ERP software to push invoice data to those tools and prepare payment. (No manual data entry!) Then, teams can reference invoices in both systems without paper-based file keeping.

• Some AP automation software options have native payment processing tools, so you can issue vendor payments without exporting data or leaving the platform; this may be a perk for some users, while others will prefer to manage payments in existing accounting tools.

Step 5: AP Systems Keep Real-Time Invoice Status So Teams Avoid Duplicate Work

Once invoices are approved, and payment is sent, the invoice status updates in the AP system so users know they’ve been cleared.

AP tools keep a real-time status for every invoice (so users know what to work on).

Benefits of AP Automation Solutions

Having an automated invoice approval workflow alleviates a lot of the tedious parts of the AP process, allowing teams to focus on more important tasks — such as remediating discrepancies and sending timely vendor payments.

Avoiding late payments can keep you in good standing with vendors and improve supplier relationships; plus, you might even be able to snag early payment discounts by consistently issuing on-time (fast) payments.    

Many of these workflow automation tools have features to implement budgets and improve cash flow visibility. You can process invoices as soon as they’re received to keep a near-real-time spending record and prevent others from going over budgets.

These tools also let you analyze spending to get a better understanding of how your teams use budgets. You can see which vendors you spend the most with, what users are buying, which departments spend the most, and more.

Then, if you need to reign in spending, you have data that can tell you where to start. The AP and finance department can also use these insights to negotiate vendor contracts and save money.

ProcureDesk’s Solution to Automate & Simplify Invoice Approval Workflows

ProcureDesk is a full procurement and AP automation software that connects purchasers, the procurement team, and AP departments — so everyone can work in parallel.

• Purchasers can shop with vendors and send purchase requests in our system. They can also see budgets (the total monthly allotment and what remains) so they can manage purchases more strategically.

• The procurement team can establish budgets and approval rules to ensure all purchases meet set criteria and users don’t overspend. (Our system will even block new purchases once budgets are met.)

• The AP team can see purchases as they’re made, in real-time, so they have full visibility into company expenses and know what invoices to expect. They can work with the procurement team and other departments to manage and optimize budgets and help pinpoint ways to increase savings.

Our software streamlines workflows for all user groups, with features like three-way matching, auto-coding, and auto-routing to support AP departments. ProcureDesk also integrates with solutions like QuickBooks, Sage, NetSuite, Xero, Dynamics 365, and Bill.com to manage vendor payments.

To continue reading about how ProcureDesk supports the invoice approval workflow, check out our software guide here. Or, you can schedule a free demo with our team to see our features in action and learn more about packages. 

FAQ’s about Invoice approval workflow

What are the steps of the approval process?

The approval process typically follows a structured workflow to ensure invoices and purchases are reviewed, authorized, and processed efficiently. Here are the key steps:

1. Invoice Submission – The vendor submits an invoice, either electronically through an invoicing system or via email.
2. Invoice Verification – The accounts payable team checks for accuracy, ensuring that the invoice details match the corresponding purchase order (PO) and receipt.
3. Approval Routing – Based on company policies, the invoice is automatically routed to the appropriate approver(s) based on thresholds, departments, or cost centers.
4. Approval or Rejection – Approvers review the invoice and either approve it for payment or reject it due to discrepancies.
5. Payment Processing – Once approved, the invoice is sent to the finance team for payment according to the agreed-upon terms.
6. Audit and Record-Keeping – The invoice, approval details, and payment confirmation are recorded for compliance and reporting purposes.

Automation tools like ProcureDesk streamline this workflow by auto-matching invoices with POs, sending reminders to approvers, and reducing manual effort.

What are the steps of invoice processing?

Invoice processing involves handling vendor invoices from receipt to payment. The key steps include:

1. Invoice Receipt – Vendors send invoices through email, EDI (Electronic Data Interchange), or an invoicing portal.
2. Invoice Capture – The invoice data is extracted manually or using OCR (Optical Character Recognition) technology for automated entry.
3. Invoice Validation – The finance team checks for completeness, ensuring the invoice includes vendor details, invoice number, amount, and due date.
4. Matching Process – The system performs a three-way match to verify that the invoice corresponds with the PO and goods receipt.
5. Approval Workflow – If the invoice is within budget and meets approval criteria, it is automatically forwarded to the designated approvers.
6. Exception Handling – If there are mismatches or missing details, the invoice is flagged for review and necessary corrections.
7. Payment Scheduling – Once approved, the invoice is scheduled for payment based on agreed-upon vendor terms (e.g., Net 30, Net 60).
8. Final Payment Execution – Payment is processed via bank transfer, check, or other methods, and the transaction is recorded.
9. Record Management – All invoices and approvals are stored for audit trails, compliance, and future reference.

With solutions like ProcureDesk, businesses can automate invoice capture, approval workflows, and payment reconciliation, ensuring faster processing and fewer errors.