How long it takes to process an invoice depends on many factors: your industry, how quickly your finance team works, the size of the invoice, the technology you’re using, and more. A small business might handle an invoice in a couple of days, while a large organization with a longer approval process across multiple departments could take weeks.

Slow invoice processing becomes a problem when it leads to late fees, strained relationships with suppliers, and lost opportunities to negotiate discounts for early payment. Below, we’ll cover typical invoice processing times by industry, what impacts those times, and how to speed them up for your business.

What’s in this article?

• What is invoice processing?
  
• Typical invoice processing times in different industries
  
• Factors that affect invoice processing time
  
• How to speed up invoice processing in your business
  

What is invoice processing?

Invoice processing is the end-to-end procedure of taking invoices from receipt to payment. It typically involves verifying and approving invoices, recording them in an accounting system, and issuing payments. Organizations use manual, semiautomated, or fully automated methods to handle processing.

Typical invoice processing times in different industries

The time frame for invoice processing varies by industry based on the nature of operations, volume of invoices, and level of automation. The number of days it takes to bring an invoice from receipt to payment is known as days sales outstanding (DSO). Here’s the average DSO in different industries.

Retail

Average DSO: 3–7 days

Retail businesses handle high volumes of invoices. To speed up the process, they tend to use automated systems such as electronic data interchange (EDI).

Manufacturing

Average DSO: 39 days

Manufacturing companies manage complex supply chains that often require detailed matching of invoices with purchase orders and delivery receipts. These businesses also often have variable payment terms that can be individually negotiated with suppliers. Manual validation and cross-checking of parts or materials delivered can add more time.

Healthcare

Average DSO: 47 days

Healthcare businesses must comply with stringent regulations and audits and reconcile complex invoices related to pharmaceuticals, medical devices, and services. Manual processes are still common in smaller institutions, which further extends processing times.

Business services

Average DSO: 41 days

Business services have a lower invoice volume, which enables faster processing. But they often have more complicated billing (e.g., hourly rates, retainers, milestone payments) and rely less on automation.

Factors that affect invoice processing time

The nature of each invoice, your internal processes, and the systems you use can all impact how quickly invoices are processed. Here are the factors that have the biggest effect on invoice processing time.

Technology

Expect delays if you’re still manually entering every line item or waiting on physical signatures. Even if your team is skilled, humans can only move so fast. Companies that use automation tools (think AI for data capture or workflows that notify the right person at the right time) have faster processing times. But businesses that don’t have integrated purchasing, accounting, and payment systems will process invoices more slowly than those that do.

Invoice complexity

If your invoices are simple (e.g., one supplier, one total), processing can be relatively quick. But industries such as construction and manufacturing handle invoices tied to longer projects and specific milestones. They must carefully match purchase orders, deliveries, and contracts, which slows down processing.

Approval processes

Large organizations often require multiple layers of approvals, which might feel safer but can also delay processing. Simplifying the approval process or setting thresholds (e.g., “no need for approval on invoices under $500”) can speed this up.

Invoice errors

Invoices with missing information—such as incorrect purchase orders and vague descriptions—take extra time to process. When vendors know what details you need up front, you can minimize the back-and-forth.

International payments

International payments can take longer to process due to currency conversion, foreign taxes, or compliance with regional invoicing rules (e.g., VAT invoices in Europe). These factors can add weeks to processing times, although automating these processes or working with a global payment provider can help.

Invoice volume

High-volume industries such as retail and ecommerce face unique challenges because they process so many invoices, so even a few minutes of delay per invoice can accumulate quickly. Companies in these fields usually invest in bulk processing tools to manage their workloads.

How to speed up invoice processing in your business

If you’re tired of invoice processing delays slowing down your business, here’s how you can speed up processing without compromising on accuracy:

• Use optical character recognition (OCR) technology: Software with OCR can extract invoice details (such as amounts, dates, and vendor names) from scanned or emailed invoices to reduce manual data entry.

• Try automated matching: Modern systems can automatically match invoices with purchase orders and receipts and only flag exceptions for review. This eliminates the tedious back-and-forth for most invoices.

• Automate workflows: Implement workflows that send invoices directly to the right person or department for approval to eliminate confusion and speed up the approval process.

• Set clear approval thresholds: For small invoices (e.g., under $1,000), skip the long chain of approvals. Trust your team to handle these to avoid bottlenecks.

• Enable mobile approvals: Allow managers to approve invoices from their phones. Delays often happen because people are away from their desks when approvals arrive.

• Enforce invoice guidelines: Provide vendors with a checklist of what you need on every invoice—accurate purchase orders, clear descriptions, etc. The more they comply, the less time you’ll waste chasing corrections.

• Encourage e-invoicing: Electronic invoices are quicker to process and easier to track than paper or PDF-based systems, so make digital invoices the standard. Programs such as Docusign can handle approvals digitally so you’re not waiting for a signed piece of paper to be scanned and returned.

• Process invoices as they arrive: Don’t wait until the end of the month to tackle invoices. Process invoices consistently (weekly or even daily) to spread out the workload and prevent crunch time errors.

• Centralize in one platform: Centralize all invoices in one platform where they’re easy to track, search, and update. Invoicing and accounting tools such as SAP, QuickBooks, and specialized accounts payable platforms can help.

• Prioritize exceptions: Focus on invoices that don’t match perfectly or have missing information and let your system handle the rest. Most invoices shouldn’t need manual review.

• Monitor metrics: Track key performance indicators (KPIs) such as average processing time, number of exceptions, and late payment fees. These metrics show where delays are happening and what’s costing you money. Use this data to refine your methods.

• Integrate business systems: Integrate your accounting software, procurement system, and payments platform to save time and eliminate duplicate efforts.

• Outsource, if needed: If your team is stretched thin, consider outsourcing invoice processing to a specialized firm or using an AI-driven service. This can free up your team for more important work.