Understanding Invoice Processing Automation
What is Invoice Automation?
Invoice processing automation is technology used by businesses to pay their vendor invoices efficiently and streamline the entire accounts payable process. Invoice process automation extracts data from invoices, enters data into accounting software, routes invoices and payments for approval and posts the payment into the general ledger. Invoice automation solutions typically use optical character recognition (OCR), auto-fill technology and automated workflows.
Why Invest in Invoice Processing Automation?
Traditional invoice processing requires accounts payable teams to receive paper invoices, enter data from invoices into ledgers, physically obtain approval from the appropriate managers, write checks, stuff envelopes and physically mail payment to vendors.
Traditional invoice processing is notoriously inefficient and error-prone. Accounts payable processes are also a popular target of fraudsters.
When properly leveraged, invoice automation can reduce the cost of processing an invoice by as much as 80% compared to traditional AP processing. Learn More: How Much Does it Cost to Process an Invoice?
Benefits of Invoice Processing Automation
- Streamlines a Clunky Process: As we said, traditional processing is slow and clunky. Automation streamlines invoice processing.
- Saves Money: By increasing efficiency, invoice processing automation reduces accounting overhead.
- Enables Remote Work: These days being able to work remote is a necessity. Traditional invoice processing makes teleworking next to impossible.
- Increases Control and Audit Readiness: With improved traceability, automation software takes the stress out of audits.
- Improves Vendor Relations: With fewer late payments and fewer errors, invoice automation is a key component to vendor relationship management.
- Prevents Fraud: With built in security features, invoice automation software protects a business against fraud.
- Improves Cash Flow Management: With a more efficient payments process and reliable data, automated invoice processing improves cash flow management.
How Invoice Processing Automation Works
Most automated invoice processing technology uses the following features:
- Invoice data extraction
- Approval routing workflows
- Automatic reminders to approvers
- Applies electronic signatures
- Pay fulfillment including ACH, Check fulfillment
- Auto pay
- Scans for invoice duplication
- PO matching
- Scans for errors
- Audit tracing
- ERP Integration
Best-in-class invoice processing automation software also includes multi-location management with location-based approvals. Check out how one pizza restaurant chain automated their process.
How to Choose an Automated Invoice Processing Solution
1. Ease of Use
Easy to use software is critical to a successful implementation and will help assure adoption by your accounting team.
2. Accounting Integrations
Being able to manage invoice processing directly from your primary accounting software is vital to improving efficiency and accuracy.
Businesses have to find the balance between price and robustness of the features when choosing any software solution. The right solution will pay for itself quickly.
Businesses should choose a software provider with a proven track record of good service.
5. Fraud Prevention Features
It's important to pick a solution that includes fraud prevention features as payments fraud is a growing problem in most industries.