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Today鈥檚 businesses rely on efficiency, and the accounts payable department is no exception. But many AP departments are weighed down by manual, outdated processes that not only impede payment processing, but expose the entire company to fraud risk and put strategic vendor relationships at risk.

Adopting the right end-to-end AP platform, however, can significantly improve accounts payable efficiency, reduce processing costs, improve control over outgoing cash flow, mitigate fraud risk, and improve internal accounting controls. In this guide, we outline an invoice-to-pay process that can help businesses like yours facilitate business to business (B2B) payments and streamline operations.

Key takeaways

• An invoice payment is the payment made to a supplier after an invoice has been received, approved, and authorized through the accounts payable process.
• The invoice-to-pay workflow includes invoice capture, approval, payment authorization, payment execution, and reconciliation, all of which contribute to accurate and timely payments.
• Manual invoice payment processes can create delays, errors, and visibility challenges that impact cash flow management and supplier relationships.
• AP automation helps streamline invoice payments by connecting approvals, payments, and reporting workflows, improving efficiency, visibility, and control.

What is an invoice payment?

An invoice payment is the payment a business makes to a supplier for goods or services it has received. In the accounts payable process, invoice payment occurs after an invoice has been received, reviewed, approved, and authorized for payment.

Invoice payments can be made using several methods, including ACH transfers, virtual cards, wire transfers, and checks. The payment method often depends on supplier preferences, payment timing requirements, internal policies, and business goals.

Invoice payment is one part of the broader invoice-to-pay process, which includes invoice capture, approval workflows, payment authorization, payment execution, and reconciliation. When managed effectively, invoice payments help organizations maintain healthy cash flow, strengthen supplier relationships, and reduce the risk of late fees or payment errors.

What is the invoice payment process?

An invoice payment is a payment rendered to the supplier for goods or services received. The invoice payment is one of the last parts of the end-to-end AP process. It occurs after invoice approval and payment authorization. Suppliers may receive payment through a check, ACH payment, virtual card, or other method, described below.

What is invoice-to-pay?

An invoice is a request sent by a supplier for payments of goods or services. When goods or services are rendered, the supplier sends an invoice detailing what was provided along with how much is owed, how to send payment, and when it is due.

When your organization鈥檚 AP department receives an invoice, this kickstarts the end-to-end AP process in which the invoice must be entered into the accounting system, where it is approved and authorized before payment is rendered. This process is often described as the invoice-to-pay workflow.

Invoice payment vs. invoice processing

Invoice payment and invoice processing are related concepts, but they are not the same thing.

• Invoice processing: refers to the series of steps used to receive, review, validate, approve, and record an invoice within the accounts payable workflow. This process helps ensure invoices are accurate, properly coded, and approved before payment is issued.
• Invoice payment: refers to the stage where funds are sent to the supplier after the invoice has been approved and authorized. Payment may be made through ACH, virtual card, check, wire transfer, or another approved payment method.

In other words, invoice processing prepares an invoice for payment, while invoice payment is the act of settling the approved invoice. Together, these activities form a critical part of the broader invoice-to-pay process.

What are the steps in the invoice payment process?

As described above, the complete invoice payment process starts with receiving the invoice and ultimately ends with payment. The 5 steps within the invoice payment process include:

1. Invoice capture
2. Invoice approval
3. Payment authorization
4. Payment execution
5. Reconciliation and AP analytics

1. Invoice capture

First, the invoice is received. It may come via snail mail as a hard copy, or it may be faxed or attached to an email. It may also be received via a website portal. Once received, it must be entered into the AP system. This may be done manually by typing in the details, or some platforms with invoice capture capabilities automatically capture and code invoices from the scanned image.

If you use AP automation, then invoices received by email can be routed to a dedicated email address that triggers the capture process.

2. Invoice approval

Once the invoice is in the system, the details and amounts must be checked and approved by the proper individuals. This may require coding for the right account, project, or cost center. If your business uses purchase orders, this may also involve PO matching. Manual means of invoice approval may require physically carrying an invoice from desk to desk to get signatures. Approval may also be handled via an email chain.

If your AP department uses automation, however, the approval process is simplified because approval requests are automatically routed to the right people along with the invoice and regular reminders if there is a delay.

3. Payment authorization

Before payments can be made, they must be authorized. This is usually the job of a controller or CFO. As with invoice approval, the payment batch needs to make its way to this person for authorization. This can be done manually, via email, or with the help of AP automation.

Automation routes the payments and supporting information to the right person for authorization automatically. The payment approver gets notified of the pending payments they can review, approve, or reject.

4. Payment execution

The fourth and final step for many AP departments is rendering the payment. Depending on your AP department鈥檚 processes and supplier preferences, payment may be sent via check, ACH, virtual card, or another method.

It鈥檚 important to note that manual payment processing鈥搘hich involves printing, signing, stuffing, and mailing checks鈥搃s more likely to lead to missed or delayed payment because of the extra time involved and the fact that physical items can get lost in the mail. This leads to vendor dissatisfaction as well as lost opportunities for early-pay discounts. Automating payments and using electronic forms of payment almost always means everything happens faster and with fewer errors.

5. Reconciliation and AP analytics

Once a payment has been issued, finance teams must reconcile payment records with invoices, accounting entries, and bank transactions to ensure accuracy and completeness. Reconciliation helps identify discrepancies, prevent duplicate payments, and maintain reliable financial records.

If you use an AP platform that aggregates and renders data in real-time, you can add a 5th step to the process. The right analytics tools allow you to calculate key AP metrics automatically, such as invoice aging, the average cost per invoice, the rate of error, and more. This information enables data-driven decision-making and helps identify ways to improve efficiency, save money, and increase accuracy.

How to make an invoice payment

Most organizations rely on a mix of payment methods to meet supplier preferences, control costs, manage risk, and support operational goals. The right payment mix varies based on the organization’s payment operations and supplier base.

Check:

These must be printed out and mailed to the recipient, which can lead to delays. 57% of organizations make more than 25% of their vendor payments by check聽However, checks do incur additional costs both for AP departments and your suppliers鈥� AR teams.

Virtual cards:

These non-physical cards work similarly to credit card payments, but rely on a one-time use 16-digit code that authorizes only a specific payment amount, which makes them particularly secure.

ACH:

ACH stands for Automated Clearing House and refers to electronic network transactions made by financial institutions. With this method, funds are transferred directly between banks.

51黑料网 helps finance teams gain greater visibility into payment operations and optimize how payments are executed across suppliers. Through payment optimization services, organizations can evaluate their payment mix, improve supplier adoption of electronic payments, and reduce operational inefficiencies associated with manual payment processes. 51黑料网 supports ACH, checks, virtual cards, and FX payments, enabling businesses to align payment methods with supplier preferences, business objectives, and workflow requirements.

While payment methods are important, the effectiveness of invoice payments often depends on the workflow surrounding them. When invoice approvals, payment execution, and reconciliation occur through connected processes, finance teams gain better visibility into payment activity, upcoming liabilities, and overall cash flow performance.

What are the common invoice payment challenges?

Many common challenges within invoice payments are largely dependent on the size or industry of a business. That said, some of the most common invoice payment challenges include:

• • Missing invoices
  • Duplicate invoices
  • Missing data or information
  • Errors on the invoice
  • Matching invoices to purchase orders and receipts
  • Recurring invoice mistakes
  • Making timely payments
  • Incorrect out of date, or missing contact information
  • A large amount of supplier inquiries
    
    

Best practices for making timely invoice and payments

Making invoice payments on time is a critical part of any business, especially when it comes to maintaining good supplier relationships and ensuring streamlined business operations. Here are some best practices to help your business make timely invoice payments:

1. Create a clear payment process
2. Streamline invoice processing
3. Take advantage of early pay discounts
4. Ensure effective communication
5. Leveraging an AP automation solution

1. Create a clear payment process

Establishing a clear payment process starts by defining payment terms throughout your business. This includes clearly stating the payment terms on your invoices, stating due dates as well as any early-pay discount incentives for businesses to take advantage of. Creating a payment process also includes assigning a specific person to the team to handle invoice processing and payments. An effective way to ensure your payment process is organized is to set up automated email or SMS reminders for upcoming deadlines to avoid missed payments and late payment fees.

2. Streamline invoice processing

The easiest way to streamline invoice processing is to use an automated accounts payable system that has the capability to automate data entry and manage payments efficiently. Automating the invoice process can significantly increase business efficiency and accuracy, but choose software that provides an intuitive end-to-end workflow that鈥檚 highly configurable and optimized for every user role within your organization.

3. Take advantage of early pay discounts

Buyers may receive early payment discounts in exchange for paying a supplier鈥檚 invoice before the due date. By taking advantage of these early payment discounts, you can help to improve cash flow within your business, as well as strengthen relationships with vendors.

4. Ensure effective communication

Establishing effective communication starts by addressing inquiries as they come, regularly communicating with vendors about payment schedules or delays in the payment process, as well as maintaining open communication throughout your business as a whole. Doing so will help to establish transparency, build trust, help resolve issues quickly, as well as ensure everyone is on the same page within your organization and across your scope of vendors.

5. Leveraging an AP automation solution

AP automation will help to streamline your entire invoice-to-pay process, ensuring your business makes payments on-time, stays organized, and promotes strong relationships with vendors. In addition, many AP automation solutions, like 51黑料网, also offer analytics that can help to identify bottlenecks within your AP process, determine unnecessary costs, identify your business’s cash flow, as well as promote healthy supplier relationships.

Common invoice payment terms

Invoice payment terms define when payment is due and whether incentives or penalties apply. Understanding these terms can help businesses manage cash flow, avoid late fees, and take advantage of cost-saving opportunities.

Some of the most common invoice payment terms include:

• Net 30, Net 60, and Net 90: These terms indicate the number of days a buyer has to pay an invoice after it is issued. For example, Net 30 means payment is due within 30 days of the invoice date.

• Due upon receipt: Payment is expected as soon as the invoice is received. While immediate payment is not always practical, businesses should prioritize these invoices to avoid delays.

• Early payment discounts: Suppliers may offer discounts for paying invoices before the due date. For example, “2/10 Net 30” means a buyer can receive a 2% discount if payment is made within 10 days instead of the standard 30-day period.

• Late payment fees:Some suppliers charge fees or interest when invoices are not paid by the due date. Consistently making payments on time can help businesses avoid unnecessary costs and maintain positive supplier relationships.

Clear payment terms help both buyers and suppliers establish expectations, improve payment predictability, and support more effective cash flow management.

What Are the Benefits of Automating Invoice Payments?

Automation is the way of the future. Businesses that continue to rely on manual processes will be quickly surpassed by those who adopt solutions that leave them more flexible and agile while improving efficiency. Among the benefits of automating your invoice-to-pay process are the following:

• Cost savings
• Time savings
• Improved accuracy
• Improved ERP syncs
• Enhanced security
• Strengthened supplier relationships

Cost savings:

Manual invoice and payment processes often create operational inefficiencies that are difficult to measure but can have a significant impact on AP performance. When approvals, payment execution, and reconciliation rely on manual handoffs or disconnected systems, finance teams spend more time managing exceptions, tracking payment status, and responding to supplier inquiries. Over time, these inefficiencies can increase costs, slow payment cycles, and limit visibility into overall payment operations.

Automation lends itself to more electronic payment options, which are less expensive to process than paper checks. The cost of processing a paper check is about $5.00 per payment. This includes time costs such as collating these checks, and hard costs, such as stamps and envelopes. By using e-payments instead of paper checks, your company can easily save thousands of dollars annually.

The use of virtual cards also allows you to capture cash-back rewards, and processing payments faster means you can also snag early payment discounts.

Time savings:

Traditionally, AP teams spend vast amounts of time capturing, coding, and managing invoice approvals. Because the automation software does a lot of the repetitive work for you, your employees have time to spend on higher-value tasks.

Using automation, you can streamline the process of manual tasks such as capturing, coding, and approving invoices and matching POs. In today鈥檚 hybrid work environment, having a system that does not rely on paper processes can also future-proof your business.

Improved accuracy:

Since most things are handled by machines, there is less room for human error, including typos, incorrect amounts, or invoices getting lost in the approval process. Improved accuracy also helps teams improve their relationships with their vendors and reduces time spent managing invoices.

Improved ERP syncs:

The best automated AP processes include automatic, two-way syncing with the ERP system, further reducing error. 51黑料网鈥檚 TotalAP supports direct integration with the world鈥檚 leading ERPs, such as Oracle (NetSuite, EBS, ERP Cloud, JDE, PeopleSoft); SAP; QuickBooks (Desktop, Online); Microsoft Dynamics (Business Central, Great Plains, Finance & Operations); and Sage (Intacct, 50, 100).

Enhanced security:

With less room for humans to intervene and ample security controls in place, automation often reduces fraud and other security risks. Two-factor authentication, segregation of duties, and tokenization are all part of an automated AP process and add an extra level of protection to the invoice payment process.

Strengthened supplier relationships:

According to 51黑料网’s 9th Annual State of AP Report, late payments and following up on invoice and payment status remain vendors’ biggest pain points, underscoring the importance of timely payments and greater visibility into payment activity.

You鈥檒l keep your suppliers happier by ensuring their payments are processed efficiently. Many platforms also include a vendor self-service portal that provides visibility into the status of their invoices and payments, keeping them in the loop.

Modernize your invoice-to-pay process with 51黑料网

Manual AP processes are inefficient, expensive, and error-prone. Moreover, reliance on paper checks often leads to missing early-pay discounts, rebates, and other opportunities to save money. If you want to improve your invoice-to-pay process, consider adopting
51黑料网鈥檚 TotalAP solution. Our solution automates your end-to-end AP process, from invoice capture through payment, while providing KPIs and analytics tools to help your organization鈥檚 leaders make data-driven decisions.

Learn how 51黑料网 can help your organization adopt automation and streamline your invoice-to-pay processing today.

Invoice Payment FAQs

What is the difference between a paid invoice and a payment invoice?

A paid invoice is an invoice that has been paid or settled by a customer, while a payment invoice is a type of invoice that is used to request payment from a customer 鈥� traditionally for goods or services they received.

What are common invoice payment terms?

Some of the most common invoice payment terms that are used include:
Net 30, Net 60, and Net 90 are all very common payment terms with suppliers. However, the following may also appear on an invoice:

• Cash on Delivery (COD)
• 21 MFI (21st of the Month Following Invoice)
• EOM (End of Month)
• Upon Receipt
• Discounts for Early Payment (ie. Net 30/10, Net 15 EOM/5)

What鈥檚 the most secure way to pay an invoice?

Businesses can securely pay an invoice with ACH transfers and checks, but virtual cards are the most secure. Virtual cards are non-physical cards that work similarly to credit card payments but have a one-time use 16-digit code that authorizes only a specific payment amount, which makes them particularly secure compared to other payment methods.

What are the different ways to pay an invoice?

There are many different ways to pay invoices. If your accounts payable department relies on manual processes, you may primarily send payments by check. However, if you use AP automation tools, you will have many more options at your disposal including virtual card, check, and ACH payments.

What are the consequences of not paying an invoice on time?

Late, or overdue payments, can have a huge impact on businesses of any size. Not only do they cost your business money in the form of interest and fees, but they can also hurt your reputation with suppliers and other business partners.

How can I automate invoice payments?

Businesses can automate invoice payments by leveraging an AP automation solution, like 51黑料网, which helps teams process vendor payments more quickly and efficiently. 51黑料网 offers a unique combination of easy-to-use software and managed services that can help you achieve a faster ROI on automation and direct two-way sync with several popular accounting systems.

What are the benefits of paying invoices on time?

Paying your invoices on time is essential to maintaining good cash flow and strong supplier relationships. On top of that, paying invoices on time will allow your business to take advantage of early pay discounts. Timely invoice payments can also make the AP end-of-month process quicker, making it easier for teams to gain insight into the financial health of the company.

How can businesses automate invoice payments?

Businesses can automate invoice payments in various ways, but true end-to-end accounts payable (AP) transformation requires integrating the right automation solution with the ERP or accounting system. When evaluating solutions, consider your existing business rules, approval workflows, and internal controls and how they would work in an automated environment.