Invoice tracking is all about keeping track of cash flow to stay on top of your finances – and that makes it an essential part of running a business.
For small businesses, the admin surrounding invoices tracking can quickly become overwhelming. That makes it all the more important to develop an effective invoice tracking process to save time, reduce errors and maintain strong relationships with suppliers and buyers alike.
We’ll cover what invoice tracking is, why it matters and how to stay on top of your invoices with five best practices for your business.
Key takeaways:
- The main purpose of invoice tracking is to keep track of whether the invoice has been paid. Automation is a game-changer in this, saving time, reducing errors and speeding up payment processing.
- Clear workflows keep payments on track. Digital approval processes ensure invoices reach the right approvers, improving accountability, preventing delays and maintaining healthy supplier relationships.
- Organised records protect your business. Maintaining detailed, accessible invoice records supports accurate reporting, tax compliance and easier dispute resolution.
- Effective invoice tracking supports growth. It strengthens cash flow visibility, reduces risks and frees your finance team to focus on strategic decisions rather than manual busywork.
What is invoice tracking?
Invoice tracking is the process of monitoring the status of an invoice – from the moment it’s received until it’s been paid and recorded.
Part of the invoice management process, invoice tracking used to be a manual task. Today, however, invoice tracking can be automated through an invoice management system, saving valuable time and resources for businesses of all sizes.
Typically, the main goal of invoice tracking is to keep track of whether the invoice has been paid. However, this isn’t the only important information you can get from keeping track of your invoices.
An invoice management system should also track things like:
- Invoice number
- Buyer/supplier ID
- Transaction details
- Invoice due date
Invoice tracking systems can monitor both incoming and outgoing invoices, determine whether an invoice has been paid and how many days an invoice might be outstanding. This improves transparency and makes it easier for you to prioritise unpaid invoices – and that’s important for more than just your own cash flow.
You might also be interested in: How to keep track of business expenses 101
Why is invoice tracking so important?
A smooth invoice tracking process can benefit your business in many different ways – and not just internally. By keeping your financial operations running smoothly, invoice tracking can help enhance your relationships with buyers and suppliers alike.
Here are some of the reasons why invoice tracking matters:
- Timely payments: Invoice tracking helps you keep track of invoice due dates. This helps you avoid late payments – and that’s important for both your cash flow and your supplier relationships.
- No late fees: With invoice tracking keeping you up to date on invoice dates, you’re sure to pay your bills on time. No more unnecessary expenses.
- Stronger relationships: Late fees aren’t the only issue you avoid with invoice tracking. By building a reputation as a reliable business partner, you can nurture stronger relationships with suppliers and buyers alike, as well as avoid the hassle of chasing down payments.
- Better expense management: Invoice tracking helps you keep a closer eye on your spending. It gives you a clearer understanding of your company’s financial health and lets you identify trends and patterns that can help you make more informed business decisions along the way.
- Improved efficiency: Automated invoice tracking allows your accounting department to process a higher number of invoices faster and with higher accuracy – quite the advantage for your overall operational efficiency.
In short, effective invoice tracking does more than just keep your payments on schedule: it strengthens your financial foundation. By improving visibility, efficiency and relationships across your supply chain, it helps your business stay organised, trustworthy and ready to grow.
5 best practices for efficient invoice tracking
Efficient invoice tracking can make a significant difference for your operations – especially if you’re a small business. By improving visibility, accuracy and control, you can maintain a healthy cash flow, reduce financial risks, and build stronger supplier relationships.
Here are five best practices to take your financial operations to the next level:
1. Automate your payments
Automation can transform how you manage invoices. With the right invoice tracking software, you can automatically capture invoice data, route it for approval and process payments without manual input. This saves your accounting team valuable time and reduces the risk of human error.
Encourage suppliers to send e-invoices to make automation even more effective. Digital formats simplify data extraction, speed up processing and keep your payment schedule consistent and accurate.
2. Establish a clear approval workflow
A streamlined approval process ensures invoices reach the right people at the right time. Set up a digital approval workflow that automatically routes invoices to the correct approvers and sends reminders for pending approvals.
Not only does this help prevent delays: it also improves accountability and transparency across your accounts payable (AP) process, ensuring every invoice is reviewed and paid on time – always.
Read more: A complete guide to invoice approval workflows
3. Take measures to prevent fraud
Invoice fraud can be costly and damaging. To protect your business, implement safeguards that verify the authenticity of invoices before payment. One best practice is to separate duties — the person approving invoices shouldn’t also process payments.
Regularly review your supplier database to identify suspicious or duplicate entries, and monitor for any irregularities in payment requests. A proactive approach to fraud prevention can save time, money and reputation in the long run.
4. Maintain strong supplier relationships
Even the most advanced automation tools can’t replace the value of strong supplier relationships. Keep communication open about invoice statuses, payment schedules and any potential issues. Address disputes or discrepancies promptly to prevent delays and maintain trust.
When suppliers know they can rely on you for accurate and timely payments, it strengthens collaboration and helps you negotiate better terms in the future.
Read more: All about supplier relationship management (SRM)
5. Stay organised
Keeping detailed, well-organised invoice records is essential for financial reporting, tax compliance and long-term planning. Your invoicing software should store all invoices, payment approvals and related correspondence in one accessible, searchable place.
Implement a document retention policy that aligns with legal requirements and your business needs. This ensures you can easily retrieve information for audits, financial analysis or supplier reviews, keeping your operations transparent and compliant.
When managed well, invoice tracking is more than just ticking boxes – it’s about keeping your business running smoothly. By using automation, clear processes and open communication with suppliers, you can avoid mistakes, stay on top of payments and get a clearer picture of your cash flow.
The result? A more efficient operation, healthier finances and stronger relationships all around.
Final thoughts
Efficient invoice tracking isn’t just about keeping your accounts tidy: it’s about giving your finance team the tools to work smarter, move faster and make informed decisions. By combining automation, clear approval workflows and strong supplier communication, you can eliminate busywork, reduce errors and gain full visibility into your cash flow.
Looking to take your accounts payable to the next level? Look no further: Pleo Accounts Payable is here to help you do just that.
With Pleo, your team can process payables up to 5x faster. Manage payables effortlessly with flexible approval rules, mobile invoice management, PO-backed invoices and seamless payments in 50+ currencies.
Pretty cool, right? We think so, too. Try Pleo Accounts Payable today.
