A well-organized invoice approval process begins with submitting the invoice, which then proceeds to the relevant department for validation against purchase orders. After department approval, the finance team reviews the invoice for final payment. 

Xero enhances the efficiency of this approval process by consolidating all documents—such as invoices, bills, and receipts—into a single platform. This centralization simplifies document management and makes it easier to process invoices. 

However, for workflows involving several approval stages and approvers, teams have to manually send invoices for approval. This leads to a scattered process across Slack and emails, making it harder to track and manage approvals. 

A spend management platform like Pluto automates the invoice approval, routing invoices to the right approvers based on predefined workflows. It notifies approvers and provides a centralized platform for teams to collaborate, discuss discrepancies, and maintain transparency. 

Not only does Pluto automate the approval process, but also pushes all reconciled invoices and payments seamlessly into Xero, ensuring that your accounting stays up-to-date without extra effort. As a result, your internal team can focus on higher-priority tasks while maintaining control and visibility over approvals.

In this post, we will explore how to automate approvals, reduce manual errors, and improve the efficiency of your invoice approval workflow with Xero. 

What Is the Approval Workflow for Invoices in Xero?

Xero offers a straightforward invoice approval process that helps manage bills, purchase orders, and expense claims efficiently. 

Here’s a step-by-step guide to what you can do within Xero:

Setting User Permissions

Assign different roles—approvers, users, and admins. Approvers handle invoice approvals, while admins manage user permissions and settings, ensuring only authorized individuals can approve or process invoices.

Recording Bills

Bills can be recorded by:

• Forwarding them via email directly to Xero
• Using Hubdoc to capture and extract details automatically
• Manually entering them into the system

Once entered, you review them for accuracy, including checking the amounts, tax rates, and any discrepancies with purchase orders, and submit them for approval. 

Seeking Approvals

Xero offers simple approval workflows where invoices can be marked as "Awaiting Approval" after creation. Specific approvers then approve or reject invoices, making it easier to manage approvals directly within Xero. 

However, these invoices won’t be automatically routed to multiple (or relevant) approvers, and notifications for approval status updates must be manually tracked.

Awaiting Payment

After approval, the invoices move to the Awaiting Payment tab, where they await processing. From here, they can be paid when ready.

Invoice Approval Workflow With Spend Management Platform

If you need more advanced approval workflows with predefined conditions and multiple stakeholders, a dedicated spend management platform can streamline the process. 

A spend management platform like Pluto automates approvals through trigger-based workflows, routing invoices to the right approvers with all the necessary information on a centralized platform. This enhances transparency and makes it easier for your team to manage complex workflows efficiently.

Here’s what an automated invoice approval workflow with Pluto looks like:  

1.Invoice Capture

Pluto simplifies invoice capture through multiple methods.

• For purchase orders (POs), you can create custom forms to raise purchase requisitions (PRs), which are sent for approval. Once approved, these PRs are automatically converted into POs, simplifying the procurement process. 
• For invoices, Pluto offers multiple capture methods, such as emailing invoices, manual entry, or uploading invoice images. 

The platform’s built-in optical character recognition (OCR) technology extracts data from uploaded images, minimizing manual input and reducing errors.

2.Approval Workflows

Pluto's approval workflows are designed to be fully automated and customizable, offering advanced features without the need for coding.

 You can create trigger-based, multi-layer workflows with "if-then" rules to route invoices to the correct approvers based on predefined conditions. 

Whether it's parallel approvals for multiple stakeholders or a sequence of approvals at different stages, Pluto handles it seamlessly. Notifications are sent automatically to approvers, ensuring no delays, and all actions are documented in real time for easy tracking and transparency.

3.Audit Log

With Pluto, you get a detailed audit log, which records every step taken in the approval process. This log provides a comprehensive history of actions, approvals, and modifications, giving clear visibility into who approved what, when, and why. This ensures compliance and accountability, especially during audits, as it allows you to trace any discrepancies or issues in the workflow.

4.Bulk Payments

Once invoices are approved, you can process payments in bulk, eliminating the need for repetitive manual payment tasks. This feature is especially useful when dealing with multiple approved invoices, as it allows you to consolidate payments in one go, saving significant time and effort. 

Bulk payment processing also ensures that vendors are paid promptly, enhancing your overall vendor management.

5.Sync Reconciled Transactions With Xero

Pluto integrates seamlessly with Xero, ensuring that once an invoice is approved and paid, the reconciled transactions are automatically synced with Xero. 

This automation removes the need for manual data entry and reconciliation in your accounting system, ensuring that your books are always accurate and up-to-date without any extra effort. It also reduces the risk of errors and provides a real-time view of your financial data.

6.Reporting

Pluto allows you to generate detailed reports based on various criteria, such as department, employee, location, or vendor. These reports provide valuable insights into your organization’s spending patterns, approval timelines, and departmental budgets. 

With real-time data at your fingertips, you can make more informed decisions, identify inefficiencies, and optimize your approval workflows. This level of granular reporting helps you maintain control and visibility over your financial operations, making it easier to forecast budgets and track overall performance.

Streamline Xero Invoice Approvals Workflow

Pluto streamlines the invoice approval process, making it easier for every team member to contribute efficiently. 

• For procurement teams, Pluto simplifies the creation of PRs and automates the conversion to purchase orders (POs) once approved. 
• Finance teams benefit from automated invoice capture and approval workflows that eliminate manual routing and reduce the risk of errors.
• Approvers are notified automatically, allowing for seamless multi-layered approvals based on pre-set triggers. 
• For accounting teams, Pluto's integration with Xero ensures all reconciled transactions are synced automatically, eliminating manual data entry and keeping records up to date. The built-in audit log maintains full transparency, allowing every action to be tracked for compliance purposes.

With Pluto, each team member can focus on their core tasks while maintaining full visibility and control over the process.

Read our blog on AP Automation to learn more about how Pluto can streamline your invoice processing processes and boost efficiency.