How to Automate & Accelerate Your Legal Invoice Approval Workflow
Open the invoice, check for errors, forward to Finance, repeat. Legal invoice review is one of the more tedious tasks your team has to deal with. And it eats up a disproportionate amount of their time. So what if you could just make it… simpler?
What most teams don’t realize is that, with a few savvy adjustments, you can automate the legal invoice approval process and set up an invoice approval workflow that frees your team to handle higher value work. Like building out a legal operations function that streamlines costs and maximizes the value the legal team delivers to the broader business.
The blueprint below shows you how.
What Is an Invoice Approval Workflow?
First, a quick definition: An invoice approval workflow is the structured path your invoices follow from when they’re received until they get paid. The workflow defines how your invoice is routed, who must sign off at each step of the approval process, and who ultimately authorizes payment.
Key Steps in the Invoice Approval Process
- Invoices are received and their data captured
- Invoices are validated for accuracy and compliance with outside counsel guidelines and agreed terms
- Invoices are routed for approval to the appropriate stakeholder (as needed)
- Exceptions are flagged and handled
- Once final approval is given, the invoice is paid
Why Legal Teams Struggle with Invoice Approvals
Most often teams struggle simply because of the time it takes to process invoices. Strict billing rules and the need to review complex line items can make the task long and fraught — and delays can impact both the legal team’s financial efficiency and vendor relationships.
How To Automate Your Legal Invoice Approval Workflow
The solution to the issues outlined above? An invoice approval automation system designed to minimize errors and improve cycle times. Here are three steps to take to get it right.
1. Gather Your Tools
You can only operate so fast when tired eyes and an overbooked brain are the sole items in your toolkit. The first thing to do is recruit a few key reinforcements.
Documented Billing Guidelines
One incredibly helpful “low-tech” step you can take right now is to ensure your team’s outside counsel billing guidelines are in order.
Without clear, written rulings on which billable services are acceptable, or how time should be charged, each new invoice could trigger a debate with your outside counsel. And looking ahead, any invoice approval workflow software you adopt will need standardized criteria to reference when making compliance decisions.
So an easy first step is to ensure your billing guidelines are clear before you start fine-tuning your technology (see the linked guide above for how to construct the perfect set).
E-Billing Software
Next, you need to examine how the legal department receives invoices. Envelopes and emails aren’t the delivery vehicles of choice among efficient legal teams, and most now require their law firms to submit invoices through a shared digital platform.
Adopting legal e-billing software immediately removes “lost in the mail” and “slipped into the spam folder” from your list of potential delays. And more importantly, it introduces some powerful new efficiencies into the invoice approval process.
Modern, AI-powered e-billing solutions automatically apply your legal billing guidelines against the invoices they receive, flagging errors and anomalies for further review. Adding this new screening layer alone has already cut review time in half for many corporate legal teams.
Accounts Payable (AP) Integration
The workflow doesn’t end with confirming an invoice’s correctness. The stated services need to be processed and paid for before you can cross the item off your to-do list. That means bringing your AP function into the conversation.
In the past, that would have been done by forwarding emails. But as we said earlier, getting invoices stuck in “email limbo” is the exact opposite of efficiency. The best e-billing software accelerates this final leg of the invoice approval workflow by creating a direct integration with your finance team, ensuring quick, trackable and compliant payment.
2. Set Your Rules
We’ve already discussed enforcing billing guidelines, but that’s only one of the areas where automated systems can shave off time and add value. Advancements in AI and other legal tech mean newer systems can effectively automate a host of tasks, from when invoices should be rejected outright to approvals and flagging for further review. Let’s review the automation rules you should set up for your system.
Legal Invoice Rejection
Some invoices are so obviously non-compliant that they don’t even deserve a mouse click. Missing descriptions, insufficient detail, and unauthorized block billing are common traits of invoices destined for immediate rejection and return. They’re also elements that your e-billing software can detect and address automatically, before they reach your desk.
You’ll have to decide for yourself what fits the description of an egregious error. Still, automatic rejection is a mechanism most teams can apply in at least a few scenarios, such as missing UTBMS codes.
Legal Invoice Approval
At the opposite end of the spectrum, there are situations where automatic legal invoice approvals can be conducted with very low risk. The common denominator in this category is typically cost.
For example, you might decide that invoices that pass your e-billing system’s initial guideline check and total less than $500 can be automatically routed to your AP system. Alternatively, you might decide that any line item less than $100 isn’t worth arguing about with your most trusted law firm.
Legal Invoice Forwarding
Some issues are too sensitive to rely entirely on technology. For example, it may not be appropriate to route an invoice related to a sensitive internal investigation through the usual channels. As a result, you might also consider programming your e-billing software to send certain invoices your way, or to other specific members of senior counsel, even if they pass automated compliance checks.
Other examples include invoices that exceed a certain budget threshold or those associated with particularly important matters.
So how do you decide which invoices fall into this category? A good rule of thumb is to start conservative. Err on the side of additional scrutiny at first and then progressively automate more of your invoice approval flows as you get comfortable with the capabilities of your chosen automation system.
3. Study Your Results
The combination of clear guidelines and automated processes outlined above is certain to deliver serious improvements for most teams.
But another benefit of adopting this type of invoice approval automation, is the ability to quantify those improvements through the feedback your automation system generates.
This is especially true if you’re working within a centralized platform, like an Enterprise Legal Management (ELM) system. These types of platforms are designed to remove data silos and keep all your information easily accessible in one place, allowing your team to review invoice progress and approval status in real time, making it easier to:
- confirm exact turnaround times and monitor invoice progress by type
- identify common violations and instruct law firms accordingly
- easily track your human review rate so that you can refine your automation rules strategically, in line with the most common errors and bottlenecks
And with that last piece in place you’ve entered the territory every overworked in-house legal team dreams of: a smooth, automated invoice approval system that continuously improves the longer you work with it.
Manual vs Automated Invoice Approval Workflow
To sum up, let’s compare a manual and automated invoice approval process head-to-head. The table below runs through the difference between these systems:
Manual versus Automated Invoice Approval
| Factor | Manual Invoice Approval Workflow | Automated Invoice Approval Workflow |
| Invoice receipt and processing | Via email (or even snail mail). Typically slow and invoices may be mislaid. | Fast, with invoices received through a centralized system/vendors submitting through portals |
| Accuracy | Invoice processing prone to human error and missed discrepancies | Consistent validation against predefined rules, refined as needed by human team members |
| Visibility | Limited tracking and data centralization. Can be hard to monitor invoice status or follow up. | Good e-billing tools offer full visibility, with dashboards, status updates and audit trails |
| Compliance | Relies on individual knowledge of manual enforcement of billing guidelines | Can enforce billing rules automatically across all invoices |
| Scalability | Human efforts are difficult to scale as invoice volume grows (typically requiring additional headcount), and team members may become frustrated or burnt out on heavier workloads | Good e-billing and ELM systems are easy to scale, without adding administrative burden |
| Cost Control | Reactive. Issues are often caught late and may contribute to overblown legal department budgets | Can be set up to flag and prevent non-compliant spend early proactively |
| Collaboration | Team overviews of invoice status are typically fragmented across email threads or disparate systems | Good e-billing solutions ensure invoice data are centralized and that legal software integrates with tools from other teams, such as Finance. |
Where to Start When Automating Legal Invoice Review
With that, you know everything you need to know about why legal teams should implement automation and invoice approval workflow software. The only thing left is to get started.
Our advice? Look for a trusted e-billing platform that can serve as the foundation for automating your entire legal invoice review process. Be sure to check reviews and testimonials. And don’t settle for solutions that don’t offer a demo.
Interested to see how Brightflag stacks up?
Book a demo today. We’d be happy to walk you through how our unique platform can help save your legal team time, money, and invoicing headaches.
FAQs
What is an invoice approval workflow?
An invoice approval workflow is the structured process whereby invoices move from intake to payment. It includes steps for verifying information and approvals, and aims to ensure timely, accurate processing.
What is invoice approval automation?
Invoice approval automation is the use of software to streamline steps like flagging non-compliance and approving compliant invoices. With proper implementation, automation speeds up cycle times and reduces manual work.
How does legal invoice automation work?
Legal invoice automation automatically applies billing guidelines to incoming invoices, flags non-compliance based on pre-programmed rules, and routes invoices through a set process or for review. Good automation integrates with finance systems to make the process as seamless as possible, from intake to payment.
Why is invoice approval workflow software important?
Invoice approval workflow software standardizes invoice processes, reducing errors and manual work. This frees legal teams up to tackle higher value tasks, knowing that their invoices are being handled correctly.
What are the benefits of invoice approval automation?
Benefits include faster cycle times, fewer errors, and improved visibility into and control over spend. This can significantly contribute to the efficient functioning of the legal department.
How can legal teams improve invoice approval processes?
The first steps in improving invoice approval processes are to standardize billing guidelines and invest in e-billing software. From there, teams can refine their invoicing process using performance data and insights from their invoice automation system.
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Sinead Kenny
Director, Customer Insights at Brightflag
