Perhaps it might sound too generic to you. Or, even, something so common and routine in your daily work that you don’t understand why we’re discussing the topic 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 consequence of digital transformation,every business process and action is different. Therefore, it is also important to pause and consider the essential and basic things that you must now carry out online.
What is invoice approval?
As we mentioned in the introduction of this article, every business action or process is now different. Invoice approvalis no exception. We have left the traditional methods behind, and those who haven’t either will be late or, simply, won’t make it.
Likewise, we could say that invoice approval, more than an action, is a process by which received invoices are reviewed and validated for subsequent payment. Therefore, we are talking about a procedure that begins with the receipt of the invoice and concludes when the supplier collects payment. This entire process, in turn, consists of several steps that we will detail later.
Different processes depending on the company
Therefore, invoice approval is essential in any type of business. However, the way they are processed and their payment managed varies greatly depending on the type of company.The most common in SMEs and micro-enterprises is that this entire process is managed by a single person or a very small accounting team.
However, in large companies, with high invoicing volumes and multiple invoices to manage daily, usually have much more extensive internal processes. Communication with clients and suppliers is already much more bureaucratic, even for invoice management. In turn, invoice approval also involves their validation by various internal systems and departments.
The fact is that, for both these large companies and very small businesses, digitalization has revolutionized everything. Taking advantage of its benefits is something you must do. Not only for convenience, but because the business landscape is already developing in this new digital scenario and will continue to do so in 2023 and in the coming years.
What is the approval process?
Thanks to a good invoicing and invoice approval process, you can avoid accounting problems. Such basic but important issues as:
– Overpayments or underpayments that later lead to legal problems
– Payments to incorrect companies.
– Discrepancies in cash and accounting, both your own and that of your suppliers.
– Errors in invoice payment terms and dates.– Discrepancies between what the supplier invoiced and what was requestedTherefore, whether manually or through an efficient invoicing software, it is a process that absolutely must be carried out in any business. From a large enterprise in any major sector to a small urban retail business.
In this regard, there is indeed 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. Invoice Reception
Logically, the first step is to receive the invoice. This is sent by the client with all the mandatory billing data that the invoice must include. From there, the process begins.
2. Review
After the invoice reception, the relevant verification that the data is correct. That is, to verify that the tax information is correct, the amount to be paid is as agreed, the tax aspects are the appropriate ones, the deadlines, etc.
3. Categorization and Storage
Thirdly, especially for companies with high invoicing volumes, it is necessary to proceed with invoice classification. This step involves categorizing whether an invoice is for contracting external supplier services or if it is for a material purchase. In this way, accounting is managed better, and it’s easier to organize information for future financial and accounting analyses.
4. Payment
As we mentioned at the beginning, invoice payment is the final step in the approval process. However, it is necessary to adhere to the deadlines set out in the invoice, as well as ensuring that the supplier has been paid.
This entire invoice approval process that we have just detailed is very old. In fact, it has been implemented this way for a very long time in most companies. However, the difference lies in how it is carried out. Now, the vast majority of businesses perform it with a digital system. Software with which the approval process is much more agile, convenient, and efficient.
How to Perform Invoice Approval 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 landscape. Likewise, we find legislation and news on electronic invoicing in Europe and globally that seek to establish invoice approval through software.
In this regard, although there are differences between countries, the policies being adopted in recent years are very similar across all EU countries. In fact, due to continental regulations, it is already mandatory for any B2G operation (between businesses of any type and public administrations) to be invoiced electronically. This is established in the Directive 2014/55/EU published in the BOE (Official State Gazette).
Spain, as a member of the EU, complies with this measure. But not only that, it has already had mandatory e-invoicing for years. In turn, the Create and Grow Law, which we explain here has just been launched, following this entire political direction. Because of it, in fact, in the coming years, any private company will also have to approve its invoices electronically, also for B2B operations (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 scenario and political requirements. And if you still resist it, in the very near future, you will have no place, neither commercially nor legally.
Advantages of a good invoice approval workflow
In this regard, easyap wants to help you. Once you start looking for good accounting software, make sure you implement a complete one. The solution we develop 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, team, and financial resources to other business functions.
– You can record all tax and accounting actions in a single cloud space that you execute, which significantly improves the internal control of any procedure.
– You will significantly reduce all times to resolve exceptions and execute the entire invoice approval process.
– Treasury planning is much simpler, not to mention the assistance with declaring and filing taxes.
– Communication with clients and suppliers is much simpler and smoother.
– You have access to all and every one of the invoices in a single spacethat you have issued as well as those you have received.
– You can automatically assign tasks accounting tasks or the management and approval of specific invoices to the teams and/or people you decide.
– The categorization of invoicesthat you can do in the system will help you identify clear areas for improvement in all your accounting processes.
Furthermore, another advantage you have with a solution like easyap’s is that you transform a fixed cost into a variable one.With us, you will pay for each invoice you issue and not a fixed cost. For this reason, we have the ability to efficiently adapt to companies of different sizes and with totally 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 for survival in the present and future. With a solution like ours, you will save on costs and you will optimize two key business resources: time and money. At easyap we help you with your digital transformation.
