As the procurement department’s most important partner, the accounts payable department (AP department) is responsible for invoice management. And as with most AP processes (and business processes in general), a well-optimized invoice processing system helps a business operate more efficiently and profitably. However, to achieve optimal results, companies need to move beyond traditional, paper-based manual workflows.
Invoice process automation is just one small part of your Procure-to-Pay (P2P) process and overall business optimization strategy, but it’s an important one, too. With the right software and practices, you can easily streamline and automate your invoice processing for significant gains in your overall profitability, savings, and competitive performance.
How Invoice Process Automation Can Help Your Business
Invoice processing is a fairly straightforward affair, even with a manual approach. Details will of course vary by industry and business, but generally speaking, the process breaks down to:
- Supplier invoice received.
- Invoice routed for processing.
- Invoice data entered into accounting software (also called invoice capture).
- Invoice is reviewed and matched to purchase order (PO) and receiving documents. Exceptions are noted and researched accordingly.
- Invoice is either routed for approval or processed for payment.
- Invoices not approved are rejected outright or returned for revision.
- Revised invoices are sent for another round of review and approval.
- Revised and approved invoices are processed for payment.
The three-way matching system used in invoice processing is much faster than verifying an entire invoice, line item by line item. But speed is still an issue; the problem with using paper-based, manual workflows lies not in complexity, but in the time-consuming nature of the tools involved. Manual data entry is slow, often plagued by costly errors, and consumes valuable time your AP team could be dedicating to tasks with greater strategic value.
Paper-based workflows aren’t just slow, of course. The resources consumed are measured not just in paper and ink, but in the costs needed to collect, organize, and store paper invoices, as well as the work and materials involved in the creation of any scans, faxes, and eMails containing digital copies made after the fact (e.g., optical character recognition (OCR) for scanning hand-written or typed documents). Add in the extra labor for manually chasing exceptions, fraud, and other problems, and you’ll soon discover how easy it is to damage both your reputation with vendors and your bottom line with missed or late payments.
Choosing the right automation solution makes processing invoices much faster, with significantly fewer headaches, shorter invoice cycles, better cash flow, and substantial savings from multiple areas of improvement.
“By eliminating the need for excessive human intervention while still allowing for total visibility of spend and configurable control when processing invoices, accounts payable automation in general and invoice automation in particular sets the stage for continuous improvement as the new standard for all your processes.”
How Invoice Process Automation Works
When you choose to use automation software like PLANERGY as part of your invoice management, you’re adding tools like robotic process automation (RPA), machine learning, and automatic three-way matching to your payable process.
Invoice automation slashes expense and delays from the entire invoicing process in several important ways:
- Invoice capture is improved by allowing for automatic scanning of paper invoices (using OCR to digitize the invoice) or accept electronic invoices (eInvoices) directly from vendors. Either way, manual data entry is eliminated, and the result is a fully searchable digital invoice.
- Invoice data is routed to the central server, where it’s recorded, backed up, and available to all of your applications and approved users—not just accounts payable. As a result, invoice data can be:
- Automatically matched to the original purchase order and packing list/manifest/receipt.
- Automatically reviewed for price and quantity thresholds to determine whether it is routed for approval or payment.
- Automatically routed to the correct approver or authorized for payment.
- Automatically made available to your enterprise resource planning system (ERP system), supplier management, and other applications in your software environment. And because data is stored in the cloud, users can access data from mobile devices and remote locations to approve invoices, analyze data, or create reports in real time.
- A centralized, fully customizable software console or dashboard lets your team perform crucial tasks with the touch of a button, or create new automated workflows for:
- Automatic payment of recurring bills.
- One-off payments.
- Subscription management (for materials delivery, office supplies, etc.).
- Monitoring the status of all invoices and creating automated alerts when unexpected delays or other problems occur.
- Full support for multiple payment methods, including credit cards, PayPal, and electronic funds transfers (EFTs), automated clearing house (ACH) payments, or wire transfers.
By eliminating the need for excessive human intervention while still allowing for total visibility of spend and configurable control when processing invoices, accounts payable automation in general and invoice automation in particular sets the stage for continuous improvement as the new standard for all your processes.
And beyond the immediate improvements in speed and accuracy that accompany automatic three-way matching and approval routing, automated invoice processing:
- Reduces or eliminates duplicate, late, or missed payments, allowing for more early payment discounts to be captured and the preservation of healthy, happy supplier relationships.
- Lower labor costs. Staff spend less time correcting errors and chasing exceptions, and more time focused on high-value tasks that make better use of their skills. Plus, eliminating manual data entry also removes human error and delay.
- Elimination of invoice fraud and rogue spend. When every invoice must be matched to its original PO, and non-PO invoices no longer occur, opportunists have a much harder time bilking you, and your team can order, buy, and pay with confidence without going “outside the system.” Handy self-service and knowing the best vendor has been automatically suggested for any given product and service helps ensure every buy is recorded, tracked, and paid in the system.
- Elimination of the costs and environmental damage that accompany manual invoice processing, e.g. postage, paper, fax machines and supplies, document storage, and other related expenses.
- Improved cash flow thanks to a complete and accurate picture of all spend activity.
- A complete set of transactional data provides new analysis opportunities, revealing new ways to further optimize sourcing and payment procedures, opportunities to develop new markets and product innovations, and transform relationships with your best suppliers into strategic partnerships.
- A foundation for the future. The best AP automation tools let you start as small as you like (e.g., automating a single process) and expand as your budget and ambitions grow. In time, you can implement artificial intelligence and process automation across not just all of procurement and accounts payable, but your entire business.
It’s Time to Automate Your Invoice Processing
When your accounts payable department can process invoices quickly, accurately, and completely, your company can reap hefty gains in efficiency, value, and performance. Investing in accounts payable automation (including invoice processing automation) will help your business move one step further down the road to optimal competitive advantage, more strategic spending and planning, and a bottom line driven by value as well as savings.
Automate, Accelerate, and Optimize All Your Procurement and AP Processes with PLANERGY.Find Out How