Manual efforts have become a liability in the last decade and things have gone haywire especially after the virus outbreak. The finance arena has been one of the worst hit industries as the threat over operational efficiency looms large. CFOs are being forced to overhaul and streamline their business processes and expedite them to satisfy customer demands. One of the main bottlenecks in financial organizations is the amount of manual effort involved in invoice processing. Invoice creation is one of the crucial back-office operations and a delay in the process would have a direct impact on the company’s accounts payable and receivable.
According to a report, the average time taken by a financial enterprise to process an invoice from receipt to payment approval takes approximately between 4 and 16 days.
The time frame may not surprise a few organizations that are still entirely reliant on human workforce to handle invoices every day. During the times of ever-increasing digitization and automation technologies, Robotic Process Automation (RPA) is very impactful, ensuring 100% error-free process automation to all back-office operations in the finance landscape, while reducing costs, manual involvement, and high ROI.
A study suggests that a typical invoice processing workflow requires at least 76% manual inputs.
Challenges in Manual Invoice Processing
With fluctuating amounts of invoices coming in every day in all sorts of formats, manual entries of data into internal systems, error-rate, and lost documents is increasing. Moreover, the invoice should be entered in the correct accounts and cost centers on projects. Also, if an invoice has a price discrepancy, then it has to be sent to the finance manager for the final approval. This becomes a tedious process when data needs to be manually copied from a PDF or a paper receipt to the ERP portal, which obviously results in human errors.
Robotic Process Automation (RPA) is tailor-made solution for paper-intensive tasks like invoice processing. The software scans the invoice regardless of the format and then converts the same into an image or a text-searchable document. RPA can also capture different ranges on an invoice so that it captures the right data and keys it into the ERP system.
Invoice automation involves the following steps:
- Monitoring for new invoices
- Invoice capture and evaluation
- Email notification
- Automatic Payments
Benefits of RPA in Invoice Automation
The key takeaways from invoice automation are:
- Reduced expenses on invoice processing
- Employees can focus on activities with higher value addition
- 100% error-free invoice creation
- Avoid penalties and late payments
Read more about: Invoice Processing Automation Use Case
Invoice Automation Workflow
Before automation, the manual invoice processing workflow goes something like this:
- Analyze the invoices and understand relevant data from each of them
- Keying the data into the ERP system so that payments and system records would be complete
- In rare circumstances, the team might find discrepancies to some extent and consult the supplier to resolve the issue.
RPA’s software bots can automate everything right from downloading invoices and data input to error reconciliation and feedbacks in case of discrepancies. Given below is a sneak peek on how RPA can be used end-to-end to move an invoice from receipt to payment in a matter of few minutes.
- Monitoring for Invoices
RPA bots will be able to constantly monitor emails pertaining to new invoices or an exclusive folder created by the employee where invoices are usually saved. As soon as the bots detect a new invoice, they begin to extract information from the document regardless of the format.
- Invoice Capture and Evaluation
By leveraging intelligent optical character recognition (OCR) and natural language processing (NLP) capabilities, software robots can scan information from the invoices.
The invoices are evaluated to match certain order records and criteria such as:
- Verifying invoice against purchase orders
- Cross-checking for duplicity
- Based on the pre-defined discrepancy limits, the bots decide whether to process the invoice or send a feedback to the employee
- Verifying the invoice against VAT rules
In order to create a record in the internal systems, the invoices are added to a general ledger account for future use.
- Email notification
In case of discrepancies, the bots trigger an email to the concerned employee to work on the corrections. After successfully processing an invoice, the bots pushes notifications to the vendor or the employee based on predefined rules.
- Payment Notifications
RPA triggers an email to the supplier to confirm the receipt of the payment and also sends out notifications to employees if the payment nears the deadline to avoid late payment and penalties.
We helped one of the leading logistics providers in the world automate invoice processing to expedite their accounts receivable process. Our customer went on to save $300K every year after implementing Robotic Process Automation in their finance wing.
Check out our blog to know more: How RPA in Finance & Accounting Can Save $300K Every Year
The time is ripe for the finance industry to look beyond manual efforts and discuss automation initiatives in their innovative business plans. Our team of innovative automation experts will guide you on setting up an automation platform tailor-made for your business requirements.
Get a free consultation or contact us at [email protected]
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