Believe it or not, even today close to 82% of finance departments are overwhelmed by the high numbers of invoices they are expected to process on a daily basis and the different types of formats they’re received in. The Accounts Payable (AP) department of an organization might not directly contribute to your revenue, but it is an essential part of doing business. Many organizations are encumbered with several accounts payable issues that can prove detrimental if left unattended. For as long as there have been invoices, invoice processing has remained one of the biggest challenges for an AP division of an organization, contributing to staggering costs and inefficient use of resources.
Invoice processing is a necessary and, in most cases, an expensive endeavour, solely because it demands proper due diligence to ensure that a business pays for a bill that’s legitimate. The real challenge lies in how document-intensive the process is. Processing a large number of invoices received from different vendors in different formats requires a great deal of effort. A study by the Institute of Financial Operations (IFO) revealed that on an average, 50% of invoices are still received on paper. Each invoice must be analysed, data should be accurately extracted and it needs to be structured into a format that can then be processed by accounting. Despite enterprise’s piecing together processes to make invoice processing easier, they still rely on manual data entry that eats into time, resources and gives rise to unnecessary costs.
Some of the issues that arise out of poor invoice processing include:
- Requires tremendous effort
- Prone to errors
- High cost per invoice
- Lengthy invoice processing times
- Lagging on payment releases
- Vendor relationships get strained
Eliminating these issues and bringing in a more streamlined and efficient approach to invoice processing requires a re-evaluation of the existing system and a complete overhaul that can yield substantial ROI in the long run. It’s high time for enterprises to move on from manual and cumbersome invoice processing and embrace the newer ways to get the job done.
Automation: The way forward for invoice processing
Automation has been around for a while; it’s a promising avenue that enables enterprises to break free from redundant manual tasks, alleviate burden on resources, and get more done for less. It’s the future of work, and an increasing number of enterprises have already embraced automation as the way forward to meet explosive change and growth. Automation has become a must-have to keep pace with the ever-increasing speed of digital transformation bringing in greater reliability, accuracy, and efficiency. Right from being used to automate workflows to innumerable back office tasks, automation is driving change like no other. And it’s no different when it comes to invoice processing.
According to Gartner, automation of accounts payable invoices can produce one of the largest ROIs compared to other technology investments. Another research by Ardent Partners, indicates that organizations can cut back on invoice processing costs by upto 70% through automation. Despite the promising numbers, several enterprises are still stuck behind times, and getting invoices processes ‘the way they always have’. There are huge potential savings that come with the implementation of automation technologies, right from time, effort to resources.
Let’s take a look at some of the benefits that automated invoice processing system can bring in:
#1) Faster invoice processing
Perhaps, the most prominent benefits of automation in invoice processing is the cut back on the lengthy processing times that are usually associated with manual work. Automated invoice management systems leverage a range of technologies that digitize data and intelligently extract data to significantly boost processing times, reduce errors, and lower the costs associated for processing invoices. Faster processing also ensures on-time payment releases, strengthens vendor relationships, and also reduces the burden on resources.
#2) Maintain positive relationships with vendors and suppliers
Delays in payments are one of the most leading causes of strained relationships with vendors and suppliers. With faster invoice processing, you can ensure timely payments, which keeps your suppliers happy, thus ensuring that you always have reliable vendors to fill your orders. With automation, you make things easier for the people you do business with. The process is simplified, payments are faster, and the hassle of constant follow-ups and calls is avoided, making the experience seamless.
#3) Quick approval of invoices
In most cases, invoices are often stuck for long periods at the approval stage, due to dependency on upper management or other teams. With the incorporation of automation at the workflow level, the process can be dramatically speeded up. For example, a workflow can be set up for travel reimbursement invoices to be routed to a specific supervisor, who will then receive the invoice for review with a deadline. Inbuilt notifications and reminders can be configured or alternate authorities for approval can be set up that can further shorten the approval process.
#4) Liberates employees from tedious work
There’s more to do in your accounts department than tackling the paperwork associated with invoices. With automation, there’s no more manual filing, data entry and payment processing. Rather, with an intelligent invoice processing system in place, over 90% of invoices can be processed without human help, leaving the 10% to exceptions that can be handled by employees. With minimized tedious work, your employees have a chance to focus on more important tasks. Automation also reduces the number of resources you require for the job by allotting a significant chunk of the work to technology.
#5) Increased transparency and visibility
One of the biggest advantages of taking the automation route with invoice processing is that it ushers in greater visibility throughout the entire process. Often, there’s a limitation in terms of understanding why a particular invoice has been delayed, or which stage of the approval flow it is in. These fragmented non-transparent processes are bogged with errors, are largely inefficient and prove expensive. Automated invoice processing systems rely on streamlining the processes and data, offering real-time visibility and analytics into invoice status, process bottlenecks, volumes, and other aspects.
Achieving automation of invoice processing:
For decades, OCR technologies have been used to extract text from images, however, legacy OCR solutions have proved slow, expensive to deploy and inaccurate. But in the past two decades, there has been revolutionary change in the way technology has been used to automate invoice processing. Right from automated data capture with advanced Optical Character Recognition (OCR) technologies to the aid of BPM tools, e-invoicing, EDI ingestion, among others, technology has truly evolved to deliver a well-rounded, automated approach to invoice processing promising a range of benefits. There are also several Plug-and-Play solutions available in the market for the same that can be set up and deployed in days and seamlessly integrated with the existing infrastructure. Vuram is a hyperautomation services company that’s focused on building solutions that solve modern-day enterprise problems. One of their solutions is an Intelligent Invoice Processing system designed specifically to eliminate the tedious data entry, increase accuracy and cut down time to process invoices significantly.
With innumerable options available in the market, and automation proving highly effective in producing substantial ROI, it is no longer an option, rather a mandate for enterprises seeking to leave behind their inefficient and manual invoice processing.
To sum up, automation is the future; it’s the right time to get your enterprise ready for an automated invoice management system!