An Insight into Automated Invoice Processing
Managing the processing of invoices can quickly become a laborious task once a business has begun to scale over time. What can be a simple process involving a spreadsheet can quickly become impractical.
The core issue of a manual process is it can lead to significant issues for the business. Such as missing invoices, longer payment time, and erroneous payments which could be deemed fraudulent. All of these risks can potentially damage relationships with suppliers, and ultimately impact the survival of a business.
The ultimate solution to these manual risks is to implement an automated invoice processing system.
What is Automated Invoice Processing?
In short, automated invoice processing is the utilization of the software that can process invoices for the accounts department and automatically update the relevant information in an Enterprise Resource Planning (ERP) system.
By automating the process, you can speed up invoice approvals, eliminate or significantly minimize any errors, and reduce the overall risk and cost of the invoice process.
There are a variety of steps in invoice processing, and it isn’t as simple as just “paying an invoice”:
- Match an Invoice against a Purchase Order (PO)
- If irregularities or errors occur, then someone will need to look into these and resolve them (for example, a purchase order number doesn’t match the invoice)
- Invoices will need to be sent to the relevant parties for approval of payment
- The company ERP system will need to be updates
- Payment is then issued to the supplier
All of these steps can be automated fully, except step 2 which may require human interaction. However, the likelihood of step 2 being required is also minimized with the utilization of automation.
What does Automated Invoice Processing Improve?
Reduction of Manual Data Entry
A lot of the invoice process involves manual inputs. Whether that be inputting the data into a system, or inputting payee information. There is a lot of keyboard inputs from an individual when completed manually. This significantly increases the risk of human error.
All it takes is someone to input a number incorrectly for a record to be saved as $100,000 instead of $10,000
Automated Invoice Matching
Finding the records and matching them to the invoice can be a time-consuming process in itself. An automated process on the other hand will be able to find the relevant documentation and match it to the invoice within seconds. Therefore saving significant amounts of time (and money) in the process.
The approval process can sometimes be the main cause of delayed invoice payments. Authorization sits on people’s desks for weeks and is forgotten about. With an automated system, the approval will ping up on the relevant individual’s computer and regularly remind them to approve. This speeds up the process, but from a personal point of view, it stops the individual in the accounts department from having to awkwardly push a manager for their approval.
All banking details are saved, and all supplier details are saved. Once everything is approved, the payment is simply released. This means no input errors for payments and an increase in speed.
Overall, the main benefit of automating the invoice process is a reduction in error risk, as well as an increase in payment speed. This can have a significant benefit on the business relationship you have with suppliers, which could ultimately lead to discounts in the future.