Invoice automation – Gain a powerful invoice process by automating invoices in 2021
Published on: 22 April 2021
The efficiency of purchase invoice automation software is why companies are looking for invoice automation solutions. The automation capabilities or user experience of the current solution in an organization might be lacking. So to find the best solution, it’s good to know exactly what invoice automation consists of.
Knowing what is possible makes it easier to look at internal processes anew, instead of trying to copy older business processes that are based on a paper-based manual workflow.
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One of the most significant features of purchase invoice automation is foreknowledge. When an invoice is based on pre-existing information, such as a purchase order or contract, processing a purchase invoice is faster and easier. As well, when you’re aware of the arrival of purchase invoices in advance you can assess the financial impact of the expenditures.
If a company receives a lot of unexpected invoices, it’s a good idea to ask the question: how can we make sure we’re aware of these vendor invoices in advance?
We have raised some of the most important themes for automating invoices in this blog post.
Digitizing invoice data is the bread and butter of automation. Whereas e-invoices are in digital form from the outset, paper invoices and pdf invoices must be digitized before invoice automation is possible. To make this happen companies use various scanning services and OCR-technology. That means that a separate program recognizes the invoice data from paper and brings it to electronic form automatically. Companies can also scan paper invoices themselves if there are a reasonable volume of invoices.
However, e-invoicing is at the heart of invoice automation and should be actively requested from suppliers to improve the purchase invoicing process.
Much of indirect procurement is based on purchase orders, which determines what has been agreed on, from whom it has been purchased and at what price. When an invoice for a purchase arrives, you want to compare the purchase order with the purchase invoice to confirm the correctness of the invoice. If purchase orders are in digital form and in the same system as purchase invoices, the matching takes place automatically and can be executed without manual effort.
Learn more about Purchase Order Automation
Each company has a significant number of invoices based on contracts. Recurring invoices are relevant in the context of invoice processes and invoice automation. A recurring invoice is generated when a vendor automatically charges customers for goods or services at regular intervals. Recurring invoices are usually associated with cell phone bills, utilities, cleaning services, and maintenance fees.
Another area to consider when it comes to contracts is self-billing. For example, a property lease is an example of a contract and payment that will not be invoiced, but payment must still be made monthly. For this instance a recurring invoice can be created using self-billing.
Once contract information has been entered into the system, all recurring invoices can be automated up to 100%. Incoming invoices are automatically matched to the contract, and if they match, the invoice will be transferred to payment without contacting approvers. The information included in the agreement is also inherited on the invoice, such as accounting information.
Learn more about automation of Recurring Invoices
Rules and an automated approval workflow for automating invoices helps to refine the process further:
The approval workflow refers to the process of approving invoices before they are paid. The approval workflow is a very important process to ensure that the invoice is legitimate and that there are no inconsistencies between the invoice and the original purchase documents. Invoices can also be assigned different workflows in a variety of ways, such as based on a contract or reference.
Rarely is the invoice amount the same from month to month, even with recurring invoices. For example, a cleaning company may charge more in the winter months than in the summer. Tolerances can be used to set total limits for contracts e.g., how much the amount of the invoice can vary. Slightly different invoices do not have to be processed manually and the purchase invoice process becomes more efficient. If the purchase invoice deviates too much from the defined tolerance limits, invoice automation takes over and the invoice is transferred to the approval workflow for approval.
Few business processes are ever actually complete, and this also applies to the field of invoice automation. It’s important your organization has an efficient and user-friendly invoice processing solution with versatile possibilities for automation.
There should be time and resources in the financial department for the continuous development of optimal AP Automation processes.