What is Vendor Invoice?

Definition

Vendor Invoice is a document issued by a supplier requesting payment for goods or services provided to a company. It serves as the official record for accounts payable and includes details such as invoice number, date, amount due, payment terms, and descriptions of goods or services delivered.

How Vendor Invoices Work

Once received, a Vendor Invoice is entered into the accounts payable system for verification and approval. Organizations often use ERP Integration (Vendor Management) and API Integration (Vendor Data) to automate invoice capture, processing, and reconciliation.

Advanced tools like the Invoice Data Extraction Model can streamline the extraction of key invoice information, reducing manual effort and supporting metrics such as the Invoice Processing Cost Benchmark. Proper handling ensures accurate financial reporting and compliance with Vendor Governance (Shared Services View) and Shared Services Vendor Management policies.

Controls and Oversight

Strong internal controls include Segregation of Duties (Vendor Management), which separates responsibilities for invoice approval, payment, and record-keeping to minimize risk of errors or fraud. Maintaining a Vendor Record Retention Policy ensures that invoices and supporting documentation are preserved for audit purposes.

Regular monitoring of vendor performance through Vendor Financial Health Assessment and implementation of a Vendor Performance Improvement Plan or Vendor Corrective Action Plan helps identify and address recurring discrepancies, delays, or errors in invoicing. This also supports Vendor External Audit Readiness.

Summary

A Vendor Invoice is a formal request for payment from a supplier, critical for accounts payable and financial control. Effective processing through ERP and API integrations, coupled with robust governance, performance monitoring, and internal controls, ensures accurate reporting and operational efficiency.