Automated Invoice Processing: A complete guide and steps to implement it

Did you know that it takes approximately one hour to process five invoices per hour manually? And the cost can be anywhere from $14 to $20. How many invoices does your organization process in a day? If yours is a small business, maybe less than 100. For bigger companies, the chances are hundreds or even thousands. How are your Accounts Payable (AP) teams keeping up the pace? Forget about the delivery timelines. Are these invoices accurate enough so that you don’t have to repeat another whole new cycle of invoice processing?

If your answers are not positive to the above questions or if you have overlooked these critical aspects of business, it is time to overhaul the primitive methods and embrace technology. Welcome to the world of?automated invoice processing.

With automation taking the world by storm, right from assisting us at home to helping organizations achieve a lot quicker, processing invoices can be done in a matter of minutes with an effective automated invoice processing system.

This blog will explore in detail all that you need to know about the best automated invoice processing software.

What is automated invoice processing?

Invoice processing starts from receiving an invoice to making the payment. Even though it looks like a two-step process, it is complex with many details. In a traditional setup, the process looks like this:

• Organization receives invoices from vendors in several formats - PDFs, paper documents, emails, images, etc.
• Bookkeeper enters the information manually into the accounting system
• In some instances, like purchase order the invoice is verified against the document
• Invoice is scanned and stored safely for future reference
• Invoice is sent for approval to the authorized teams
• Payment is processed
• All the records, including payment information are archived for auditing purposes

Challenges in manual invoice processing:

All of these steps come with their own set of challenges.

• Delayed payments

Many times invoices get stuck and forgotten in the sea of approval rounds, especially when several people are authorized. AP executives may make continuous follow-ups, which is time-consuming. Additionally, delays can cause missed opportunities on discounts and burdens of penalties. In some cases, invoices may get lost in the paper works, resulting in even more grave situations.

• Manual errors

When numbers are involved, adding or deleting a single digit can create a huge difference. Manually entering data may cause mistakes in dates, incorrect account numbers, wrong purchase order numbers, and wrongly billed items. Painful and labor-intensive processes may also create duplicate entries and paying twice, which are a loss to the company.

• Risk of fraud

In the world of increasing cybercriminals, it is not a good idea to share invoices and exchange financial information through emails and legacy applications. When third parties like your suppliers and vendors are involved, you need a secure environment that protects their identity from theft and manipulation of records.

• Monitoring and storing

In the case of disputes your vendor wants the payment copies since the start of the deal, say it is 10 years back. Pulling out the information from office cabinets or internal computer storage, may not be an effective way for your teams; neither tracking down the acknowledgment emails can be fruitful. This long process can take a toll on your teams. Plus, AP members have to monitor every paper and be answerable for questions from the suppliers about the invoices and payment status - an additional burden.

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