In this article, we will explore what automated invoice processing is and its benefits. We will also share our simple process for automating your invoicing process. Read on to learn more.
Automated invoice processing is the use of technology to handle the receipt, extraction, and processing of invoice data without human intervention. This process typically involves Optical Character Recognition (OCR) and machine learning to capture data from invoices and input it into an accounting system.
Example: Walmart's automated invoice processing system efficiently handled Invoice #INV789012 from Dell Technologies, extracting details such as 200 units of Product XPS-13 at $999 each, and promptly entered the data into the SAP accounting system.
Automated invoice processing is important for a number of reasons, some of the most common reasons include:
Automated invoice processing significantly reduces the time spent on manual data entry. By automating this process, businesses can handle a higher volume of invoices with the same resources, leading to increased operational efficiency.
Manual data entry is prone to errors, which can lead to financial discrepancies and compliance issues. Automation ensures that data is captured accurately, reducing the risk of costly mistakes.
By reducing the need for manual intervention, businesses can save on labor costs associated with invoice processing. Additionally, automation can lead to faster invoice approvals and payments, potentially qualifying businesses for early payment discounts.
Timely and accurate payments are crucial for maintaining good relationships with vendors. Automated invoice processing ensures that invoices are processed promptly, leading to on-time payments and improved vendor satisfaction.
Automation allows for better tracking and management of invoice data. This can provide valuable insights into spending patterns, helping businesses make more informed financial decisions.
Automated invoice processing streamlines the entire workflow, from receiving invoices to making payments. Here’s our simple 6 step process:
Invoices can be received in various formats, including paper, email, or electronic data interchange (EDI). Automated systems capture data from all these sources.
Example: Walmart receives an invoice from Dell Technologies via email. The automated system immediately captures the invoice data for processing.
Using OCR and machine learning algorithms, the system extracts relevant data from the invoices. This includes vendor information, invoice number, date, and amount.
Example: The system extracts details from Invoice #INV789012 from Dell Technologies. It captures 200 units of Product XPS-13 at $999 each.
The extracted data is validated against predefined rules to ensure accuracy. Any discrepancies are flagged for manual review.
Example: The system validates the extracted data from the Dell Technologies invoice. It flags an issue where the total amount does not match the unit price multiplied by the quantity.
Validated data is automatically entered into the accounting system. This updates accounts payable records and triggers the approval workflow.
Example: The system integrates the validated data into Walmart’s SAP accounting system. This updates the accounts payable records and starts the approval process.
Automated systems route invoices through the appropriate approval channels based on predefined business rules. This ensures compliance with company policies.
Example: The invoice from Dell Technologies is routed to the purchasing manager at Walmart for approval, following the predefined business rules.
Once approved, invoices can be scheduled for payment. Automated systems handle payment processing, ensuring timely payments to vendors.
Example: After approval, the invoice is scheduled for payment. Walmart’s automated system processes the payment to Dell Technologies on the due date, ensuring timely payment.
Implementing automated invoice processing involves several key steps to ensure a smooth transition and optimal performance. Here’s what you need to know:
Evaluate your current invoice processing workflow to identify areas that can benefit from automation.
Select an automated invoice processing system that integrates with your existing accounting systems and meets your specific business needs.
Ensure that your team is adequately trained to use the new system. Communicate the benefits of automation to gain buy-in from all stakeholders.
Continuously monitor the performance of the automated system and make adjustments as needed to optimize efficiency and accuracy.
We hope you now have a better understanding of what automated invoice processing is and how to implement our invoice processing automation process. If you enjoyed this article, you might also like our article on invoice data parsing or our article on benefits of automated invoice processing.