Invoice Processing Definition
Invoice processing is the process of converting paper invoices into digital data that can be read by accounting software. The goal of invoice processing is to reduce the time and effort required to manage invoices and improve the accuracy of financial data.
There are several steps involved in processing an invoice:
1. Data entry: The first step is to enter the invoice data into the accounting software. This includes the vendor, invoice number, date, and amount.
2. Coding: Once the data is entered, it needs to be coded so that it can be properly categorized in the accounting software. For example, invoices from different vendors may need to be coded with different expense codes.
3. Approval: After coding, invoices need to be approved by someone with authority to do so. This step ensures that only valid expenses are being processed and helps to prevent fraud.
4. Payment: Once approved, invoices are ready for payment. Depending on the organization’s policies, payments may be made electronically or by check.
