What is Invoice coding?
Invoice coding assigns each invoice or invoice line to the right general ledger account, cost center, project or tax code so the expense is recorded correctly.
In more detail
Coding is often where AP time actually goes, because it needs context: which department used the item and what category it belongs to. Rules cover repeat suppliers, such as 'this supplier always goes to office supplies, cost center 210.' AI helps with new suppliers and mixed invoices by suggesting codes from past invoices, line descriptions and PO data, with a confidence level. Keep a person in the loop for low-confidence suggestions and for new accounts, and audit a sample of auto-coded lines each month. Miscoding rarely blocks payment, but it distorts reports, accruals and budget views, and it surfaces at the worst time: close.
Example
An invoice from a software reseller lists a subscription, implementation hours and hardware. The system proposes three different GL accounts for the three lines, and the accountant corrects one.