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Automated invoice processing: all you need to know

KI & ML

FinTech

Accounts payable (AP) teams deal with hundreds, sometimes thousands, of invoices every month. These come in all shapes and sizes — PDFs, emails, paper — and often, they’re a mess. That leads to late payments, delayed deliveries, fines, and an exhausted team drowning in paperwork.

Welcome to the age of automation — where boring, repetitive tasks are getting kicked to the curb. Invoice processing automation cuts out manual entry, reduces errors, speeds things up, and clears communication issues. Let’s dive in and see how it works!

What is invoice processing automation?

Automated invoice processing uses software to take the hassle out of handling invoices. It pulls invoice data straight into your ERP and CRM systems, thus saving you time, money, and cutting down on errors. Unlike manual processing, automation gets invoices through the workflow much faster as it takes care of all those repetitive tasks your AP team has to deal with — like price matching, purchase orders verification, and data entry.

But you might be wondering, how does all this happen? Let’s take a look at the key tech that powers automated invoice processing software.

Optische Erkennung von Zeichen (OCR)

OCR tech helps enter the data from physical documents by scanning digital images. It quickly picks up letters, numbers, and symbols and enters them into a digital invoice processing system. Basic OCR just grabs the text but keeps it as an image. More advanced OCR, though, converts those characters into editable text. Then there’s AI-powered OCR with ICR (Intelligent Character Recognition), which can even recognize languages and different handwriting styles. It keeps the text size, formatting, and layout intact, all as editable text. All of that makes data entry way easier: instead of stuffing filing cabinets, you can store everything digitally, giving your team easy access to all your docs anytime, anywhere.

ML-Algorithmen

While AI tools can extract and sort data from invoices, cutting down on manual entry and mistakes, ML does a lot more than that. ML can actually learn your approval process and start making smart calls — like auto-approving invoices based on set rules. It also helps with spotting fraud by picking up on unusual patterns and can even predict your cash flow needs through advanced analytics.

Robotergestützte Prozessautomatisierung (RPA)

RPA basically acts like a human inside software, handling repetitive tasks that follow specific rules. RPA is great at filling the gaps between different software systems: instead of a person bouncing between apps, you can have an RPA bot logging into a supplier’s website, grabbing invoice data, and then dropping it into a folder where OCR or ML tools can scan and pull out the details. That speeds up the work quite a bit.

How automated invoice processing works

So, Invoice processing automation lets you handle your entire finance workflow from one place — you get fast payment approvals, clear cash flow insights, and stronger vendor relationships — all with speed and efficiency.

But how do invoices actually get processed?

Let’s see how a typical automated invoice processing workflow looks like.

Invoice arrived

Your AP team gets an invoice, and OCR technology steps in to capture the data. It translates everything into digital text and enters it into your system — quick and easy!

Invoice checked

The automation software double-checks that all the data is accurate and everything you need is there. It compares the info against your set standards and matches it with supplier records.

Invoice authorized

The invoice goes to your accounting team for approval. Depending on the amount, it could be cleared by a manager or might need sign-off from a higher-up.

Payment sent

After approval, the payment is processed, and a confirmation is sent out to let the vendor know the money's on its way via electronic transfer.

Invoice archived

Once the payment is made, the invoice is securely stored in your AP digital library. It’s kept there permanently, giving you easy access whenever you need it in the future.

01 Invoice arrived

Your AP team gets an invoice, and OCR technology steps in to capture the data. It translates everything into digital text and enters it into your system — quick and easy!

02 Invoice checked

The automation software double-checks that all the data is accurate and everything you need is there. It compares the info against your set standards and matches it with supplier records.

03 Invoice authorized

The invoice goes to your accounting team for approval. Depending on the amount, it could be cleared by a manager or might need sign-off from a higher-up.

04 Payment sent

After approval, the payment is processed, and a confirmation is sent out to let the vendor know the money's on its way via electronic transfer.

05 Invoice archived

Once the payment is made, the invoice is securely stored in your AP digital library. It’s kept there permanently, giving you easy access whenever you need it in the future.

Cost factors: invoice automation vs manual processing

According to IOFM’s 2021 World Class AP Performance report, companies at the lowest maturity level without automation were paying $6.20 per invoice, while those at the top level paid $1.83.

Now, for companies using full invoice automation, those with the lowest maturity level dropped their cost to $3.03, and the most efficient ones paid just $1.45 per invoice. Big difference, right?

Reported invoice cost for companies without automation

$6.20

At the lowest maturity level

$1.83

At the top maturity level

Reported invoice cost for companies with automation

$3.03

At the lowest maturity level

$1.45

At the top maturity level

We know how to streamline your invoice workflows.

Benefits of invoice processing automation

Apart from higher cost, manual invoice data capture forces your AP team to spend countless hours pulling out and typing in data. Automated invoice processing software appears to be a much more efficient option on that front, as it saves you both money and time of repetitive work and multi-layered approvals. Here are some other perks it brings to the table.

Less paper storage

With automated data entry, there’s no need for physical storage space anymore. Smart OCR tools let companies sort and save everything online — either on cloud or on-premises. Plus, with proper backups, your data is safe and easy to share with others when needed.

Simplified digital workflows

Tasks like receiving and entering invoice details, which are usually repetitive and prone to errors, can be automatically sorted based on set rules. They’ll get sent to the right team for approval and payment, hassle-free.

Reduced duplicate payment risk

With invoice processing automation software, you get two-way or three-way matching, where the system compares the invoice with the purchase order and the goods receipt. This process improves accuracy and reduces the chance of incorrect or duplicate payments.

Höhere Genauigkeit

With AI-powered invoice processing, smart algorithms catch and fix typos and mistakes before they cause problems. You’ll achieve near-perfect accuracy, leaving behind the hassle of late or missing payments and keeping your operations on track.

Better vendor relationships

Paying on time and getting the details right means your vendors will trust you more. Fewer delays, fewer mistakes, and smoother communication will make working with them a whole lot easier.

Geringere Kosten

With invoice automation, you can reduce overheads and cut down on training expenses. Fewer manual tasks mean fewer mistakes, so you’ll avoid costly errors like bad debts caused by wrong invoice data getting into your system.

“Invoice mistakes happen, but they don’t have to. With RPA handling the process, every detail gets double-checked — from data entry to approvals — so nothing slips through the cracks. It speeds things up, cuts down errors, and saves you from the headache of missed deadlines. “

Dzianis Kryvitski

Delivery Manager in FinTech

Future trends in automated invoice processing

Invoice processing automation continues to evolve at a steady pace. Several emerging trends are likely to shape the future of invoice processing, offering further improvements in efficiency and accuracy. Here’s a look at some of the key trends on the horizon.

Wider use of blockchain

The use of blockchain will speed up cross-border payments by cutting out currency exchanges and bank fees. Plus, since blockchain records can’t be altered, you get a clear audit trail, making it easier to settle any payment disputes and lock in secure transaction records to reduce fraud.

The rise of predictive analytics

Predictive analytics is becoming a big deal in invoice processing automation. By analyzing past invoice data and spotting trends, it helps predict future payments and cash flow needs. It also helps catch potential payment delays or discrepancies before they turn into bigger issues.

Eco-friendly practices

By automating invoice processing and adopting digital invoicing, businesses will cut down on paper use, reduce their carbon footprint, and streamline workflows. With increasing pressure from consumers and regulators, automating your invoice processing with eco-friendly solutions is quickly becoming a smart and responsible move for businesses.

Automation through smart contracts

Smart contracts can make invoicing a whole lot easier by automating payments once certain conditions are hit. For example, you could set up a smart contract to pay a supplier as soon as the delivery is confirmed. It’s a simple way to speed up payments and take a load off your team by cutting down on all the admin work.

Localization and global compliance

When building automated invoice processing software, developers will increasingly adapt their solutions to handle all the different global tax rules. They’ll take care of the complicated tax laws and compliance aspects so that your invoices get processed correctly no matter which country you’re working with.

FAQ

Why should I do invoice automation?

Manual processes come with their fair share of headaches — costly mistakes, frustrated employees, and strained vendor relationships. That’s where invoice automation steps in. It handles the routine stuff like data entry, speeds up payments, gives you a clear picture of your cash flow, and saves you money over time.

What are the common challenges in implementing automated invoice processing?

One common challenge with automated invoice processing is the upfront cost. Integrating the software can get pricey, especially if you need customization. But think about it — how much are you spending on fixing invoice errors or wrong payments? In the long run, the savings usually make the investment worth it.

How can businesses choose the right automated invoice processing solution?

First off, think about what you really need — are you looking for something simple, or do you need a tool that’s more customizable? Make sure whatever solution you choose can easily integrate with your existing systems, like your ERP or accounting software. And don’t forget to consider scalability — will the platform grow with your business as things expand?

Siarhei Sukhadolski FinTech-Experte

Datum: 15. Dezember 2024

Siarhei Sukhadolski FinTech-Experte

Datum: 15. Dezember 2024

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