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5 Tips for Getting Started With Automated Invoice Processing Tools

Automated invoice processing tool

Manually processing and checking purchase invoices is tedious and time-consuming. By leveraging automated invoice processing tools, businesses can free up resources and accelerate their accounts payable workflows. Whether you’re just learning about these tools or considering implementing a solution, these 5 practical tips will help you hit the ground running. From choosing the right solution to optimizing processes, this concise guide shares key advice to automate your invoice workflows effectively.

What is Automated Invoice Processing?

Automated invoice processing or invoice reconciliation uses technology to extract data and process & reconcile invoices to approve without human intervention. It helps companies streamline what is a time-consuming, manual task.

The way it works is that when for example, a purchase invoice comes in through email or a digital portal, automated systems use machine learning and data extraction & comparative analysis techniques to ‘read’ and assess the invoice against for example a purchase order or a specific shipment number. The analysis will ‘approve’ costs that match the PO or a shipment reference and flag all items on an invoice that do not correspond or are additional invoice entries.

Moreover, automated invoice processing substantially increases the efficiency of accounts payable processes and ensures accuracy. Companies can auto-classify supplier invoices, auto-approve invoices, quarantine invoices, flag inconsistencies such as monthly variables, get better visibility into spending, and take advantage of early payment discounts. You can also set up auto client e-billing activated upon receiving a related supplier invoice! 

Importantly, automated invoice checking can detect fraud and control products and suppliers.

Key Drivers of Invoice Processing Automation

Here are some of the key factors driving increased adoption of invoice processing automation:

  1. Cost savings – Implementing invoice automation software will significantly reduce the labor costs in your finance department associated with manual data entry and invoice processing. This allows companies to reduce headcount costs or reassign staff to more value-adding tasks.
  2. Accuracy – Automated systems extract and process invoice data far more accurately than humans performing manual invoice processing. This reduces costly errors and improves overall efficiency.
  3. Speed – Invoice processing automation enables faster turnaround times – from receipt to approval and payment. This improves supplier relationships and helps maintain a solid cash flow.
  4. Scalability – Manual invoice processing creates bottlenecks as transaction volumes increase. Automated tools easily scale up as business volumes grow while maintaining accuracy and speed.
  5. Compliance – Invoice Processing Solutions enhance auditing, reporting, and compliance with tax regulations and accounting standards. This reduces compliance risks and penalties.
  6. Data integration – Invoice automation solutions can seamlessly integrate with other business systems like procurement tools, ERPs and accounting platforms. This facilitates useful insights from rich analytics.
  7. Supplier onboarding – eInvoicing solutions enable easy onboarding and management of suppliers onto electronic networks, facilitating real-time exchange of invoices.
  8. Purchase Invoice Pass-through e-Invoicing—Businesses that sell specific services or goods can auto-e-invoice clients upon receipt of a corresponding purchase invoice. 
  9. Security & Accountability – Automate systems enhance security ensuring no invoice or line entry is missed. Auto systems also flag and mark invoices or line entries on an invoice as required, including settings for fraud detection. Auto processing assists greatly with a business’s annual or quarterly audit with full accountability and transparency.

Tips to Start Using Automated Invoice Processing Tools

1. Assess Your Current Invoicing Processes

It’s important to take stock of your current manual invoicing processes before implementing an automated system. Look at key metrics like your monthly invoice volumes, number of suppliers, average payment terms, frequency of exceptions or errors, staff numbers & time allocated, and typical vendor interactions. Understanding the baseline will allow you to realistically set targets for outcomes from automation, like reducing invoice errors by x%, cutting approval times by y days on average, and realizing specific cost savings in labour. Clear goals aligned to measurable business outcomes are key for defining automation requirements and measuring future success.

2. Choose the Right Automated Invoice Processing Tool 

With clear goals around volumes, turnaround times, and cost savings, you can better evaluate automated invoice processing tools to choose the right solution. Key features to look for include intelligent document capture and extraction, efficient workflow classification rules, integration with your accounting systems, supporting PO and non-PO invoices, handling exceptions, and providing easy-to-interpret analytics. Match functional capabilities with your outlined objectives and get hands-on evaluations before purchasing. Implementing applications that align well with your needs and processes is critical for user adoption and realizing the benefits of automation.

3. Plan for a Gradual Implementation 

An incremental rollout of the automated invoice processing system is highly recommended. Start by onboarding one or no more than a few suppliers to serve as a pilot before expanding across all suppliers. Beginning with 1-2 key vendors or business units allows you to work through inevitable workflow issues, collect user feedback to fine-tune processes, and complete training. Communicate timelines and changes clearly to set appropriate expectations across the organization.

4. Train Your Team

User adoption requires a degree of up-skilling. Develop training programs tailored to different roles, addressing day-to-day application usage, process changes, exception handling, and troubleshooting options. Recognize that some employees may require extra guidance to embrace new technologies. Employ strategies like peer training and data reviews to reinforce system benefits positively. Provide avenues for continual feedback even post-launch to foster engagement and supply user tips and tricks in FAQs or help portals to support adoption. Engage with auditors to align with audit requirements.

5. Monitor, Optimize, Benchmark, Analyse and Report

Once implemented, regularly assess how the automated invoice processing system performs against those original cost reduction, accuracy, and productivity goals. Leverage reporting dashboards and analytics to identify optimization opportunities. Conduct periodic provisional audits to confirm extractor accuracy or identify process bottlenecks. Use insights gained to target user training, adjust matching logic, or confirm vendor data quality issues. The key is continually monitoring effectiveness and making incremental enhancements so that the benefits of invoice automation compound over time.

Purchasing Intelligence

Automated invoice reconciliation delivers  ‘Purchasing’ business intelligence. That is, over time, a significant body of comparative supplier and product information will be available for interrogation and analysis. Further, you can enhance the value with blending quotes and other market information to enable benchmarking of costs, services, and performance from suppliers, the market, and similar products. The finance department is able to deliver far more powerful strategic information to the CFO and the CEO.  

Invoice Management Made Better with Logilink

Logilink’s comprehensive LogiFin finance solution provides organizations with powerful invoice management capabilities. As an all-in-one accounts receivable, payable, and e-billing package, it delivers timely billing, payment collection, and expense tracking through configurable electronic workflows. Businesses can expect increased productivity, cost savings, and financial visibility with Logilink’s integrated receivables and payables automation tools.

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