Have you ever wondered if you should automate invoice processing as a business? You’re not alone.
In today’s fast-paced business environment, manual invoice processing is no longer a viable option for many organizations. The process of manually entering data, verifying information, and reconciling payments is time-consuming and prone to errors. Automated invoice processing has emerged as a solution to these challenges, allowing businesses to streamline their invoicing and payment processes.
In this article, we will explore how automated invoice processing works and the benefits it can bring to businesses.
What is automated invoice processing?
Automated invoice processing is the use of technology to automate the process of invoice creation, validation, approval, and payment. Automated invoice processing software can extract invoice data from various sources, such as email, PDFs, and paper documents, and then automatically match it to relevant purchase orders or contracts. The software can then route the invoice for approval and payment processing.
Automated invoice processing can be used by businesses of all sizes, from small startups to large corporations. The software can be customized to fit the unique needs of each business, and it can integrate with other accounting and management software to provide a comprehensive solution for managing invoices.
How does automated invoice processing work?
Let’s dive into the nuts and bolts of how automated invoice processing actually works.
Invoice Capture
The first step in automated invoice processing is capturing the invoice data. This can be done in a variety of ways, such as scanning paper documents, importing electronic invoices, or receiving invoices directly through email.
The software uses optical character recognition (OCR) to read the invoice data and extract relevant information, such as invoice number, vendor information, and payment due date.
Validation and verification
Once the invoice data is captured, the software can validate and verify the information against relevant purchase orders or contracts. The software can automatically match the invoice to the corresponding purchase order or contract, ensuring that the prices, quantities, and other details match. If there are discrepancies, the software can flag the invoice for further review and resolution.
Approval routing
After the invoice is validated and verified, the software can route the invoice for approval. The software can automatically send the invoice to the appropriate personnel for review and approval, based on predefined approval rules.
For example, the software can route the invoice to the department manager, then to the accounts payable department, and finally to the CFO for final approval.
Payment processing
Once the invoice is approved, the software can initiate the payment process. The software can automatically generate payment instructions, such as electronic funds transfer (EFT) or check payment, and send them to the appropriate payment processor.
The software can also track payment status and provide real-time updates on payment processing.
Benefits of automated invoice processing
Higher efficiency
Automated invoice processing can significantly improve efficiency by streamlining the invoice processing cycle.
By reducing the time and resources needed to create, validate, approve, and reconcile invoices, businesses can focus on other important tasks such as customer service or product development.
Cost savings
Automated invoice processing can save businesses money by reducing the need for manual invoice processing and payment reconciliation. This can also reduce the risk of errors, which can lead to additional costs such as chargebacks or late fees.
Minimized risk
Automated invoice processing can reduce the likelihood of manual errors by automating data capture and validation. With automated invoice processing software, businesses can ensure that invoices are accurate and consistent, reducing the need for manual editing or correction.
The software can also provide real-time updates on invoice status, reducing the risk of missed payments or other errors.
Better visibility
Automated invoice processing can provide businesses with better visibility into their invoicing and payment processes. With automated invoice processing software, businesses can generate reports on invoice status, payment history, and other metrics.
This can help businesses identify trends, track performance, and make informed decisions about their invoicing and payment processes.
Enhanced compliance
Automated invoice processing can help businesses comply with regulatory requirements and internal policies. With automated invoice processing software, businesses can ensure that invoices are processed in accordance with established approval and payment procedures.
The software can also track compliance metrics and generate reports to demonstrate compliance to auditors or other stakeholders.
Faster processing
Automated invoice processing can significantly reduce the time needed to process invoices and make payments. With automated invoice processing software, invoices can be processed and approved much faster than with manual processes, reducing the time to payment and improving cash flow.
This can also help businesses take advantage of early payment discounts or other payment incentives.
Stronger supplier relationships
Automated invoice processing can improve supplier relationships by providing timely and accurate payment processing. With automated invoice processing software, businesses can ensure that invoices are paid on time and in accordance with agreed-upon terms.
This can improve supplier satisfaction and lead to better relationships with vendors and suppliers.
Conclusion
Automated invoice processing is a powerful tool for businesses looking to improve their invoicing and payment processes. By automating data capture, validation, approval, and payment processing, businesses can significantly improve efficiency, reduce costs, and reduce the risk of errors.