According to research, last year, most of the AP Leaders suffered a miserable state, a majority of 60% still face lengthy invoice and payment approval times. Invoice processing is the most important part of the accounts payable process, which is mostly performed manually. This blog will discuss how to use automation in invoice processing and make the process easier.
Accounts payable professionals spend almost 25% of their days fixing mistakes on invoices, data entry and updating records, and responding to emails about the status of invoices and payments. This inefficiency results in adding 2 hours extra to each day. Meanwhile, highly automated accounts payable departments can process 8 times as many invoices per full-time employee equivalent as those with little or no automation.
Invoice processing involves several steps including downloading the attachment, Manual encoding, capturing invoice details, data entry and checking against purchase orders, and ensuring that they match up accordingly or handling exceptions.
Rather than spending endless hours on mountains of paperwork every day, why not consider using a touchless invoice processing solution instead? This will save time and energy while eliminating unnecessary costs.
Let’s see where all human touches in Invoice processing can be automated
1 Downloading Attachment :
Email has taken over as the standard for communication with suppliers and for receiving invoices. With nearly 300 billion emails sent each day, streamlining the accounts payable department’s capabilities for automatically parsing attachments within emails has never been more important. Invoices arrive through email — and vital information contained within them is often attached to the message. Someone from a team in the accounts payable department is tasked with identifying emails and downloading the file, manually opening them. It’s a time-consuming task that is prone to error.
With the help of Automation, bots Identify vendor emails with invoice attachments and download the attachments.
2 Manual Encoding :
Invoices from a multitude of vendors need to be managed. The problem is compounded when invoices must be sorted and classified. Imagine how long it would take to sort and classify a stack of 100 paper invoices into different categories by hand?
Automatic sorting is much faster and more accurate as compared to manual encoding. When a document is imported into the IDP system, it automatically classifies the document based on document type, vendors, tax rates, etc in a flash
3 Scanning documents :
Just imagine going through each invoice, typing in the numbers, and manually adding them to your system! A mammoth task indeed and a bit tedious as well – subject to human error. For businesses that have a concrete growth plan, automation technologies for invoicing are a smart choice that can help save time and costs associated with processing the physical invoices by hand.
Account payable automation uses OCR i.e optical character recognition technology, which allows the software to interpret machine-printed text or scanned images. Invoice processing software uses this technology in order to analyze and automatically identify the fields/attributes present in invoices, such as vendor, date, amount, invoice number, line item data, etc.
4 Manual data entry :
Invoice data entry is arguably one of the most time-consuming business processes. Making sure the data entry is as efficient as possible is crucial to optimizing bookkeeping processes, especially for companies that handle large documents. RPA-assisted OCR is one of the most effective ways to speed up invoice processing. It can automatically extract information from the document and upload it into the accounting/ERP system, without any human intervention.
5 Finding lost invoices :
According to a study, Automation led to a 60% reduction in missing invoices, a 59% decline in delayed payment & reimbursement approvals, and a 55% drop in missing receipts.
The above-mentioned problems were avoided by using an AP automation solution that will mail or send invoices directly to the right person in your customer’s accounts payable department. Automation will also alert you when the invoice has been opened and viewed.
It has to be made sure that you have assigned an email address to each customer’s account, and regularly check for “unviewed” invoices. There are automated systems available that can set a flag and notify if invoices have gone unviewed for a certain period of time.
6 Reconciling Supplier and PO Information :
Before any business pays an invoice, the invoice must be cross-referenced to all other supporting documentation such as purchase orders and receiving reports to ensure the payment covers only goods or services listed. It’s done manually and leads to errors. The automated 2Way & 3Way matching process helps reconcile & match a large number of invoices, without any manual intervention. Thus, saving employees valuable productive time, and reducing errors.
Touchless processing can be explained as a process where an invoice is received and approved without any manual intervention on the part of the AP team. Around 70% of companies touch invoices 3-4 times throughout the process. The fewer human touches an invoice receives, the faster it is processed with fewer errors down the line.
The above blog post is a guide to understanding the importance of achieving straight-through processing as it is cheaper, faster, and more efficient than any other invoice approval workflow process.
It is important for businesses to have a system that is able to process invoices in a smooth fashion so that it can reduce the overall operational costs, reduce the number of steps and time taken for approving invoices, thus increasing the efficiency and improving the overall financial results of the business.