Invoice Automation and its Relevance to Invoice Processing
A purchasing firm/purchaser has to be extra cautious while verifying an invoice. They must confirm the purchase, assure proper payment, and transfer the amount within the agreed timeline. Right from ascertaining the purchase to payment transfer, the entire process consumes much time, labor, and expense if performed manually (paper-based).
According to EY’s 2018 global electronic invoicing survey report, it costs 7 euros on average to ship an issued paper invoice and 15 euros to accept a received paper invoice, demonstrating the magnitude of the problem in manual invoicing possesses.
However, things are changing; with automation in the loop, and OCR-based invoicing evolving significantly, Account Payable departments can have an easier time with the process. Organizations are giving much consideration to this user-friendly and rapid form of invoicing.
According to a report by Billentis, by 2025, e-invoicing will be worth roughly EUR 18 billion and will be one of the most widely used billing techniques, demonstrating the tremendous amount of potential, automation holds in the field of invoicing.
In this blog we will talk in-depth about the process and benefits that automation offers to invoice processing.
Workflow for processing invoices automatically
The traditional process of invoice data capture begins when the finance department receives a supplier’s invoice. At this stage, it’s matched and accepted. However, additional permission is frequently necessary if the invoice is for a significant amount of money. Also, details must be manually entered into the system, which takes much time and workforce and may contain inaccuracies.
Automated invoicing is quick and eliminates all needless delays. As soon as the invoice is received, it is scanned and uploaded into the electronic accounting system. This type of data capture (also known as invoice capture) saves hours of manual data entry. Later, the software converts the information into a text-searchable document.
The invoice data can be retrieved and fully integrated into the automated management software. It comprises information such as the supplier’s name, the price premium, the quantity, and so on. Following that, invoices are sent to the relevant persons for authorization.
An example of an automated invoice processing workflow is shown below:
- The invoice is sent as an attachment to a designated email folder (JPEG, PDF, EDI, PNG, etc.)
- The document is added to the “Review” tab
- The data from attachments are extracted by invoice automation software
- Validate the retrieved data from vendor invoices against the Master Vendor file’s business rules
- Move the extracted values to “Verified” if they pass all validation requirements
- Documents remain in the “Review” area unless they are manually inspected and moved to the “Verified” part if extracted values do not pass validation standards
- A final report comprising all invoice data is generated
- Export as a .csv file or use the API to connect to the ERP system
Benefits of automation
Automated invoicing involves up to an 80% decrease in a company’s procure to pay cycle. Added advantages are:
1- Time efficient
Saving time is essential for every organization/business. Customer deadlines, vendor payment deadlines, and having enough cash in the bank are genuine reasons to adopt an automated system to speed up the AP process.
Many processes, such as forwarding, categorization, verification, and human data entry can be eliminated with software solutions for automated invoice processing, considerably lowering processing time. The automation program can transfer the invoices directly from the scanner to the accounting system after a basic data check to ensure optimal precision.
2- Fewer errors
Manual data entry is prone to mistakes, and accuracy is solely dependent on the operators. Error rates are reduced with automation software, which prevents all forms of error-related concerns such as delayed approvals, time spent searching for and resolving errors, and discount loss. Automated AP processing also aids in the elimination of payment errors that contribute to hidden expenses.
According to a report published in IndustryWeek, automating invoice processing can save up to 90% on processing costs compared to traditional invoice processing. It also reduces the expense of document storage and sends out automatic reminders, lowering the possibility of late or missed payments.
4- Increased productivity
Another advantage of automated accounts payable processing is that it can boost productivity. It reduces the amount of time AP personnel spend processing each invoice by eliminating human touches.
Staff can use this time to combat any invoice backlog or dedicate it to other value-added operations. Ensure contract compliance, mitigate compliance issues, rationalize supplier spend, manage accruals and budgets, manage cash flow, and anticipate budgets are several aspects.
5- Secure operation
Every day, the AP department handles enormous sums of cash, yet there is minimal protection when paper bills pile up on multiple workstations. A manager can set privileges with a press of a button in an automated system. Audits are also more successful with digital systems because each invoice creates a trail that can be followed.
There are numerous advantages associated with automating your AP processing. If you are envisioning AP automation for your company, try SkyscendPay.
It is a software-as-a-service (SaaS) invoicing and early payment solution. It helps buyers to automate their accounts payable (AP) processes, eliminate human invoice processing, and speed up invoice approval. SkyscendPay also provides an early payment solution to help purchasers manage their working capital needs while also allowing them to make early payments to their suppliers.