Removing the human element from invoicing, automated invoice processing can improve the speed and efficiency of your invoice management. Learn everything you need to know about the benefits of automated invoice processing and find out whether it could work for your business.
What is an automated invoice processing system?
Automated invoice processing enables companies to process invoices without any interaction from humans (in most cases). There are a broad range of start-ups and established companies offering automated invoice processing software packages. Generally, these are split up into two separate camps: tools for invoice capture and rules-based tools, while there are also specific tools for accounts payable automated invoice processing.
So, what does automated invoice processing actually involve? There are a couple of different stages associated with automated invoice processing that you’ll need to get to grips with:
Invoice monitoring – It’s increasingly rare for companies to be served with hard copies of invoices. Instead, invoices are sent as PDFs or image files. RPA (Robotic Process Automation) bots or email automation tools can be used to flag emails with invoices attached, forwarding them for data extraction, automatically.
Invoice capture – One of the most important stages of automated invoice processing is invoice capture, which refers to the extraction of important details from the invoice, such as company name and bank account number. If the automated invoice processing software that you’re using has any uncertainty about the data it’s extracted, the invoice capture can be referred to an employee for manual checks.
Invoice evaluation – It’s also important to evaluate invoices against order records to ensure that payments are valid. Some of the evaluations that should be completed include cross checking against purchase orders (POs), cross checking for duplicates, and checking to make sure that the invoice is in accordance with VAT rules.
Invoice recording – If invoices have been sent without POs, they’ll be added to a general ledger account, with automated invoice processing machine learning solutions used to match the invoices with their appropriate accounts.
Payment – Finally, payment needs to be made to settle the invoice.
What are the benefits of automated invoice processing?
There are a broad range of benefits associated with automated invoice processing software. Here are four reasons why learning how to automate invoice processing could be a good idea for your business:
Reduced costs – One of the key benefits of automated invoice processing is the fact that it helps to reduce back-office costs through the reduction of manual effort. Put simply, your accounting team won’t need to manually go through every invoice. Instead, they can act as a backup for when your automated invoice processing software isn’t sure about the data it extracted.
Reduced errors – Because automated invoice processing removes the risk of human error, there are likely to be much fewer problems with your invoices. This can help to improve your supplier relations by reducing or even eliminating late or missed payments.
Faster turnaround time – With an automated invoice processing system, your business can achieve much faster turnaround times on your invoices, reducing the burden of admin on your accounting team and helping to foster good relations with your suppliers.
Better use of employee time – Instead of focusing on relatively low-impact tasks like invoice processing, your employees can spend their time on higher value activities that may bring greater benefits to the business.
What are the drawbacks of automated invoice processing systems?
Although the benefits of automated invoice processing are significant, it’s important to remember that there are some disadvantages. Most significantly, automated invoice processing systems that utilise machine learning may have difficulty capturing data from invoices that don’t have a set format. When dealing with numeric data, automated invoice processing systems are often highly accurate, but when other elements are also included on the invoice, such as logos or graphs, the data may be less reliable. Of course, given that automated invoice processing is such a new development, the software is getting better all the time, but you should bear in mind that these systems aren’t infallible.
How to automate invoice processing
Learning how to automate invoice processing is relatively simple, as it’s all done for you. All you need to do is sign up to an automated invoice processing software package. GoCardless offers purpose-built integrations for many invoice processing tools, putting you in control of when you get paid and allowing you to automatically reconcile your invoices.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. We offer seamless integration with over 200 partners, including Xero, Quickbooks, and Sage 50.