Let’s be honest—dealing with invoices probably isn’t your favourite part of running a business. Whether you’re getting bills from suppliers or sending out your own, it can all feel a bit… faffy. But knowing how invoice processing works can actually save you time, money, and the odd headache. So, what is invoice processing, how long should it take, and how much does it really cost in the UK? Let’s walk through it!
What Do We Mean by Invoice Processing?
In simple terms, invoice processing is just the way your business handles the bills it gets from suppliers or service providers. From the moment that invoice lands in your inbox, to the moment you pay it and file it away—it’s all part of the process.
Why Is Invoice Processing Important?
You might be thinking, “Can’t I just pay the bills and move on?” Totally fair! But having a proper invoice process in place is more important than it might seem. Here’s why:
It keeps your cash flow healthy – You know exactly what’s due, when, and can plan your payments properly.
It helps you avoid late fees – Paying on time = no unnecessary costs and happier suppliers.
It keeps your books tidy – Which makes life much easier come VAT returns, tax season or when you need a quick answer.
It helps you spot mistakes – Like duplicate charges or paying for things you never received.
It gives you better financial visibility – So you can make smarter decisions for your business.
Basically, a good invoice process keeps things running smoothly behind the scenes—so you can focus on growing your business, not chasing paperwork.
What Are the Steps to Process an Invoice?
1. The Invoice Arrives
Could be an email, a PDF, a paper copy (hopefully not!), or it might land straight into your accounting software if you’re using something like Xero.
2. You Record the Details
You’ll want to log the important bits—like the invoice number, who it’s from, what it’s for, and how much it’s for (including VAT if there’s any).
If you’re still doing this manually, it can take a while. But with the right software, a lot of the info can be pulled in automatically—no typing needed!
3. You Check It’s All Correct
This bit’s important. You want to make sure you’ve actually received what you’re being charged for, and that everything matches up with what you ordered.
This is where the three-way matching thing comes in (more on that in a sec).
4. You Approve It
Once you’re happy with it, the invoice gets approved for payment. That could be done by you, a team member, or even automatically if it meets certain rules (like under a certain amount).
5. You Pay It
You either pay it straight away, or schedule it for later—whatever works best for your cash flow. Just make sure it’s paid by the due date so you don’t upset your supplier.
6. You File It Away
Finally, you save the invoice for your records (and to keep your accountant happy). If you’re paperless, this usually happens automatically in your accounting software.
What Is the Three-Way Invoice Process?
Great question! The three-way invoice process is just a fancy name for checking that:
What you ordered (purchase order),
What you received (delivery note or receipt),
And what you’re being charged for (the invoice),
…all match up.
If they do—brilliant. If not, it’s a chance to fix things before you pay too much or pay for something you never got.
What’s Purchase Invoice Processing Then?
That’s just a specific name for dealing with the bills you get for things your business buys—like stock, supplies, or services. So yep, it’s basically invoice processing, but focused on your purchases rather than your sales.
How Long Should Invoice Processing Take?
Well, that depends on how you do it. Manually, it can take 10 to 15 minutes per invoice, especially if you’re entering all the details yourself or chasing up approvals.
If you’re using software like Xero, that time drops to just a few minutes—and some invoices can even get auto-approved if they tick all the right boxes.
Or, even better—just send it to your accountant, and they’ll handle it in seconds. No stress, no fuss, just done.
How Much Does It Cost to Process an Invoice in the UK?
Again, it depends on how you’re doing it. For many small businesses still handling things manually, invoice processing can cost anywhere from £4 to £25 per invoice when you factor in time, admin, and the odd mistake or delay.
Using cloud software can definitely help bring that cost down.
But here’s the good news—our outsourced invoice processing service costs just £1 per transaction.
You send it over, we handle the rest—quickly, accurately, and with zero hassle for you. It’s a simple way to save time, money, and your sanity.
How to Streamline Invoice Processing in Small UK Businesses
Want to save time and make your invoice processing way less painful? Here are a few tried-and-tested ways to simplify things:
✅ Use cloud accounting software like Xero – it handles invoices automatically and keeps everything in one place.
✅ Set up approval workflows – so invoices don’t get stuck in inboxes waiting for someone to sign them off.
✅ Digitise incoming invoices – OCR tools (Optical Character Recognition) can read invoices and pull out the data for you.
✅ Create recurring bills – for suppliers you use regularly, so you don’t have to start from scratch every time.
✅ Schedule weekly or monthly payment runs – and plan your cash flow around them.
Want to see this in action?
Check out our YouTube video on Xero Invoicing for a quick walkthrough (friendly, practical, and jargon-free!).
And don’t forget to grab our Free Downloadable Invoicing Guide—packed with helpful tips to get your system sorted in no time.
Final Thoughts
Sorting out your invoice processing might not sound thrilling, but trust us—it makes life so much easier in the long run. You’ll stay organised, keep your suppliers happy, and avoid those awkward “Did we pay that?” moments.
If your current system is clunky or time-consuming, it might be time to look at streamlining things. That’s where we come in.
At Simplex Accounting, we help small UK businesses take the stress out of bookkeeping and get set up with simple, paperless systems that just work.
Need a hand? We’d love to help. Book a Call with our Experts to get started!
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