Invoice Processing Flowchart

An invoice processing flowchart is a visual representation or diagram that outlines the step-by-step process of handling invoices within an organization. It provides a clear and concise overview of how invoices are received, reviewed, approved, and paid, ensuring efficient and accurate financial management.


The invoice processing flowchart serves as a valuable tool in streamlining and optimizing the invoice handling process. It illustrates the various stages involved, from receipt of the invoice to its final payment, enabling businesses to identify potential bottlenecks or inefficiencies and implement corrective measures.

Key Steps:

1. Invoice Receipt and Verification:

– Upon receipt, invoices are gathered and logged into the system to ensure proper documentation and record-keeping.

– The authenticity and accuracy of the invoice details, including vendor information, dates, and amounts, are verified for validation.

2. Invoice Review and Coding:

– Invoices are reviewed for compliance with internal policies, relevant laws, and regulations.

– Each invoice is assigned a specific code or category based on the nature of the expense, facilitating accurate financial reporting and analysis.

3. Invoice Approval:

– Invoices are routed to the respective departments or individuals responsible for reviewing and approving them.

– Appropriate authorizations and signatures are obtained, ensuring adherence to internal controls and hierarchy.

4. Invoice Posting:

– Once approved, invoices are entered into the accounting system or enterprise resource planning (ERP) software.

– The posting process links the invoice to the relevant general ledger accounts, updating financial records accordingly.

5. Payment Processing:

– Invoices marked for payment are scheduled for disbursement in accordance with the organization’s payment terms and policies.

– Payment details, such as payment method, bank account information, and due dates, are recorded and tracked to ensure timely and accurate payments.

6. Invoice Archiving:

– Processed invoices, along with supporting documentation, are archived for future reference and audit purposes.

– Depending on the organization’s policies, physical copies may be stored securely or digital copies may be retained electronically.


– Increased Efficiency: The flowchart highlights potential areas of improvement, enabling businesses to streamline the invoice processing workflow and reduce manual errors and delays.

– Enhanced Transparency: The visual representation of the process promotes transparency and accountability, facilitating better communication among departments.

– Cost Reduction: By identifying and addressing bottlenecks, businesses can reduce processing time and associated costs, such as late payment penalties or duplicate payments.

– Compliance and Audit Readiness: A well-documented flowchart ensures adherence to internal controls and provides a clear audit trail in case of regulatory scrutiny.


The invoice processing flowchart serves as a roadmap for organizations to efficiently handle invoices, ensuring accuracy, speed, and compliance. By visualizing the steps involved and identifying potential areas for improvement, businesses can optimize their financial processes and enhance overall operational effectiveness.

This glossary is made for freelancers and owners of small businesses. If you are looking for exact definitions you can find them in accounting textbooks.

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