Invoice to Payment Flow

This flow documents the complete accounts receivable cycle, from invoice creation through customer payment and final AR closure.

Flow Overview

The invoice to payment flow is the primary revenue collection process. It tracks the journey from billing a customer to receiving and recording payment, handling both on-time payments and overdue scenarios.

Key Stages

1. Invoice Generation

• Triggered by order fulfillment or service delivery
• Invoice created with line items, tax, and payment terms
• AR recorded in the general ledger

2. Invoice Delivery

• PDF invoice generated
• Sent to customer via email
• Customer portal link provided

3. Payment Window

• Customer has until due date to pay
• Payment terms typically Net 30
• Reminders sent approaching due date

4. Payment Processing

• Customer submits payment
• Payment authorization and capture
• Confirmation sent to customer

5. AR Closure

• AR balance updated
• Journal entries recorded (cash in, AR out)
• Metrics updated (DSO, collection rate)

Happy Path Metrics

• Invoice Accuracy: 99.5%
• On-Time Payment Rate: 85%
• Average Days to Pay: 28 days
• Collection Rate: 98%

Branch Points

Payment Received On Time

• Standard flow completes successfully
• Customer maintains good payment history
• No collection activities needed

Payment Becomes Overdue

• Automated dunning process starts
• Collections team may get involved
• Customer credit score impacted

Integration Points

• Order Management System: Triggers invoice creation
• Payment Processing Flow: Handles payment execution
• Collections Flow: Handles overdue invoices
• Financial Reporting: Provides AR metrics

Business Impact

This is a critical flow for cash flow management:

• Represents primary revenue collection
• Direct impact on working capital
• Key metric: Days Sales Outstanding (DSO)
• Target DSO: < 35 days