Organizations worldwide are rapidly moving toward using automation wherever possible. Invoice processing has not been immune to this trend. Invoice process automation uses the power of machine learning and AI to speed up accounts payable workflows and reduce the need for manual intervention.
The Pitfalls of Manual Invoice Processing
Manual invoice processing is time-consuming and tiresome. It makes scaling difficult for accounts payable teams while simultaneously driving up costs. According to Ardent Partners’ State of Accounts Payable Automation Report for 2023, almost one-third of accounts payable leaders see reducing invoice processing costs as a key focus area.
The same report states that 35% of respondents are keen to eliminate paper invoicing altogether. Without a doubt, there is a definite need to digitize and automate invoice workflows.
How Does Invoice Process Automation Help?
Automate your invoice workflows to enjoy a host of benefits.
– Reduce the possibility of human error due to manual data entry.
– Speed up the time to invoice payment and avoid late fees.
– Improve vendor relationships and trust as a result of timely payments.
– Free up your accounts payable team to work on higher-value projects.
– Eliminate or reduce the need for paper documentation.
– Predict payment timelines accurately with machine learning and AI invoice processing.
– Scale up your accounts payable team’s capabilities quickly.
Here are two businesses that drove efficiency in their invoice workflows by leveraging automation power.
Puma, the global sports apparel brand, has sped up its invoice approval workflow and improved vendor relationships using automated invoice processing. The new system allows it to quickly identify and resolve bottlenecks. It has entirely done away with paper processes, thus reducing company stationery expenses.
Lush Cosmetics, which processes 120,000 invoices annually, used a paper-based system. Invoices were easily lost, and scaling was a challenge. Transitioning to an automated system has helped it achieve a 92% touchless rate on invoicing and provided a better audit trail.
Now that we’ve established that automating the invoice-handling process is beneficial, let’s get an insight into how it works.
How Does an Automated Invoice Payment Process Work?
Handling invoices using an invoice automation software begins when an invoice is received either in paper or electronically. If the former is the case, a person scans the invoice using optical character recognition (OCR) technology. The software extracts required data like the purchase order (PO) number, vendor to be payed, due date for payment, and the amount owed.
Next, the tool checks if the purchase order number and payee mentioned in the invoice are on file within the organization’s purchase order automation system. It also checks if the number and types of items ordered are as per the purchase order. If all details are correct, the system automatically approves the invoice. Otherwise, it routes it to a pre-designated person for clearance. Once approval is received, the invoice is scheduled for payment within a particular date based on the terms of the agreement with the vendor.
As the final step, the automation makes the payment to the vendor.
What Should You Look for in an Invoice Process Automation System?
A good invoice workflow automation system has the following capabilities.
– It integrates seamlessly with your Enterprise Resource Planning (ERP) system.
– It can perform a purchase order automation check for every invoice received.
– It can apply predefined and customizable rules to workflows.
– It can flag discrepancies and route them to the right people for remediation.
– It offers capable reporting and dashboard views.
– It can scale quickly as the volume of invoices increases.
– It can be deployed and run on the cloud.
While a good invoice process automation system is capable and powerful, setting it up may not necessarily be straightforward.
Challenges with Setting Up an Invoice Process Automation System
Maybe you’ve decided to use a cutting-edge invoice system for your business. The option you’ve zeroed in on leverages machine learning and AI invoice processing. You want to get it up and running fast.
But consider these facts before you invest in it.
Firstly, your invoice automation system should be compatible with your existing ERP, accounting, and workflow systems. Also, your legacy systems might need to be upgraded to work with your new invoice system.
Secondly, you may face resistance to implementing the new system from employees accustomed to the old, manual paradigm of invoice management, even though the new system is more efficient. You will have to convince them.
Thirdly, you will need to arrange for training and support to ensure hassle-free adoption and utilization of the new system.
Finally, there is a not-insignificant upfront cost involved in setting up any automated system, including yours. Justifying this cost might take some work at your end (even though the new automated invoice system will provide better ROI than manual processes in the long run).
If you’ve thought long and decided to invest in an automated invoice processing solution, here’s how you need to do it.
How to Get an Invoice Process Automation System Set Up
Use a reputable implementation partner to set up the invoice automation software of your choice. Your partner can securely migrate disparate data into the new system and help you identify which processes should be migrated and how. They will be able to offer you specialized consultation and implementation for the invoice automation solution of your choice, be it Automation Anywhere, Power Automate, Ui Path, or any other.
Your partner will set up workflow rules and conditions that suit your specific needs and provide maintenance support as needed.
Ready to Take the Plunge?
Organizations worldwide are rapidly implementing invoice process automation as it helps save time, cut costs, and reduce human error. While transitioning to cutting-edge AI-driven invoice tools is not a straightforward process, a good implementation partner can ease the process and improve ROI in the medium- to long-term.
Learn more about the possibilities of invoice workflow automation for accounts payable teams.
- Infinitely Efficient: The Power of Invoice Process Automation - February 7, 2024