It may sound too generic to you. Or even something so common and everyday in your work life that you don't understand why you should address the issue of invoice approval. However, we are currently facing a new landscape. A scenario for any company and sector that is radically different from what we knew until very recently. As a result of digital transformation, every business process and action is different. That is why it is also important to focus on the essential and basic tasks that you now have to carry out online.
What is invoice approval?
As we said at the beginning of this article, every business action or process is now different. The Approval of invoices is no exception. We have left the analog world behind, and those who have not done so are either late or will simply not make it.
Likewise, we could say that invoice approval, rather than an action, is a process by which invoices received are reviewed and validated for subsequent payment. Therefore, we are talking about a procedure that begins with the receipt of the invoice and ends when the supplier collects payment. This entire process, in turn, consists of several steps, which we will detail below.
Different processes depending on the company
Therefore, invoice approval is essential in any type of business. However, the way in which they are processed and their payment managed varies greatly depending on the type of company. The most common practice in SMEs and micro-enterprises is for this entire process is managed by a single person or a very small accounting team .
However, in large companies, with high turnover and multiple invoices to manage on a daily basis, tend to have much more extensive internal processes. Communication with customers and suppliers is already much more bureaucratic, even for invoice management. In turn, invoice approval also involves validation by various internal systems and departments.
The fact is that, both for these large companies and for very small businesses, digitization has revolutionized everything. Taking advantage of its benefits is something you must do. Not only for convenience, but because the business world is already developing in this new digital landscape and will continue to do so in 2023 and in the years to come.
What is the approval process?
A good invoicing and invoice approval process prevents accounting problems. Basic but important drawbacks such as:
– Overpayments or underpayments that later lead to legal problems
– Payments to incorrect companies.
– Discrepancies in cash and accounting, both in-house and with suppliers.
– Errors in payment deadlines and dates on invoices.
– Difference between what was billed by the supplier and what was requested
For all these reasons, whether manually or through efficient invoicing software, this is a process that must be carried out in any business. From a large company in any major sector to a small retail business in a city.
In this regard, there is a key invoice approval process. This is a common procedure followed by the vast majority of businesses. It consists of the following steps or points:
1. Receipt of invoice
Naturally, the first step is to receiving the invoice. This is sent by the customer with all the mandatory billing information that must be included on the invoice. From there, the process begins.
2. Review
After receipt of the invoice, you must verify check that the information is correct. This means checking that the tax information is correct, the amount to be paid is as agreed, the tax aspects are correct, the deadlines are correct, and so on.
3. Categorization and storage
Thirdly, especially for companies with high turnover volumes, the invoice must be classified. This step consists of categorizing whether an invoice is for contracting services from external suppliers or for purchasing materials. This makes accounting easier to manage and simplifies the organization of information for future financial and accounting analysis.
4. Payment
As we pointed out at the beginning, paying the invoice is the last step in the approval process. However, you must comply with the deadlines established on the invoice, as well as ensuring that the supplier has received payment.
The entire invoice approval process we have just described is very old. In fact, it has been implemented in this way for a very long time in most companies. However, the difference lies in how it is carried out. Nowadays, the vast majority of businesses use a digital system. Software that makes the approval process much more agile, convenient, and efficient.
How to approve invoices in Spain
In turn, this procedure is common not only in some companies. Governments are the first to advocate for the digital transformation of the business fabric. Likewise, we find legislation and developments regarding electronic invoicing in Europe and around the world that seek to establish the approval of invoices through software.
In this regard, although there are differences between countries, the policies adopted in recent years are very similar across all EU countries. In fact, under continental regulations, it is already mandatory for any B2G transaction (between companies of any kind and public administrations) be invoiced electronically. This is established in Directive 2014/55/EU published in the BOE.
Spain, as a member of the EU, complies with this measure. But not only that, it has has had mandatory electronic invoicing for years. In turn, the Create and Grow Law, which we explain here , which follows this policy line. In fact, under this law, in the coming years, any private company will also have to approve its invoices electronically in B2B transactions (between private companies) and B2C (with the end customer).
Therefore, in Spain, as in the rest of Europe, the invoice approval process must be digital. Following the conventional method, but adapting it to the new digital landscape and political requirements. And if you still resist it, in the near future you will have no place either commercially or legally.
Benefits of a good invoice approval workflow
In this regard, we at easyap want to help you. Once you start looking for good accounting software, make sure you implement a comprehensive solution. The solution we have developed at easyap allows you to manage your invoice approval workflow with the following benefits:
– You will increase your business's productivity. Everything is more agile, and you can allocate human, equipment, and financial resources to other business functions.
– You can record all the tax and accounting actions you carry out, which greatly facilitates the internal control of any procedure.
– You will greatly reduce all the time to resolve exceptions and execute the entire invoice approval process.
– Cash flow planning is much simpler, not to mention the help it provides when filing and submitting taxes.
– Communication with customers and suppliers is much simpler and more fluid.
– You have access to every single invoice you have issued and those you have received.
– You can automatically assign accounting tasks or the management and approval of specific invoices to the teams and/or people you choose.
– Categorizing invoices that you can do in the system will help you identify clear areas for improvement in all your accounting processes.
Another advantage of a solution such as easyap is that you transform a fixed cost into a variable one. With us, you pay for each invoice you issue, rather than a fixed cost. For this reason, we are able to adapt effectively to companies of different sizes and with completely different billing volumes.
In short, beyond the mandatory nature of electronic invoicing, digitizing your processes and your business in general is a necessity. But it is a commercial necessity and one that is essential for survival in the present and the future. With a solution like ours, you will save on costs and optimize two key business resources: time and money. At easyap we help you with your digital transformation.
