Invoice processing is traditionally one of the most time-consuming tasks for accounts payable and finance teams, at companies of all sizes. Processing paper and electronic invoices by hand requires the involvement of multiple stakeholders, including the supplier’s point of contact, budget managers, and financial controllers.
AP departments still handle too many responsibilities manually, from purchase orders and supplier invoicing, to approvals and accounting. However, even the most organized paperless AP systems can still result in double handling, duplicate payments, and delayed reimbursements––risking supplier relationships and frustrating employees.
So it's no surprise that a growing number of finance teams are turning to process automation to solve these struggles. By eliminating slow, repetitive processes that waste countless hours each month, finance teams save time and money, while simplifying cross-team collaboration and driving company growth.
In this post, we break down exactly what automated invoice processing is and how it works, as well as the key benefits it brings to finance teams.
What is automated invoice processing?
Accounts payable automation uses digital tools or processes to eliminate the manual aspects of accounts payable by automating them with software instead.
There are several AP automation tools on the market, their basic premise being the ability to submit and approve purchase orders and invoices digitally, rather than physically handling and depositing them.
The real game-changer for the accounts payable system is automated data extraction and invoice matching. These platforms will automatically extract invoice information, then populate this data into your AP systems, eliminating error-prone manual data entry.
The purpose of automation solutions is to let teams work faster, reduce oversight, and increase accuracy. Which in turn helps the company scale.
Depending on which invoice management software you use, your finance teams can benefit from increased visibility and control over the entire AP process.
How does invoice automation work?
Traditionally, manual invoice processing starts when a supplier invoice is delivered to the accounting team, either physically or electronically. The invoice is matched to its according purchase order and sent onto the next touchpoint for approval, usually a budget manager. If the supplier’s invoice bills an exceptionally large amount, then multiple rounds of approval may be required from the company.
After approval is granted, the invoice is marked for payment in the books. As mentioned earlier, without a centralized digital platform to document the progress of all invoices and expenses, duplicate and late payments are unfortunately common struggles for many businesses.
Compared with traditional accounting systems, accounts payable software solutions use workflow automation to cut down the number of steps and increase accuracy. This speeds up the procure-to-pay process.
AP automation is commonly used to streamline the following tasks:
- Managing purchase orders and supplier invoices
- Extracting data and entering it into ERP systems
- Matching accounts receivable against accounts payable
- Making digital payment transfers
So when multiple supplier invoices are sent to the AP department, they are immediately uploaded into the online automation software for scanning and data capture. No more tackling invoices one-by-one, giving accounting teams precious time to focus on other more pressing or strategic responsibilities.
Solutions like Spendesk' invoice management use OCR (optical character recognition) technology. It automatically scans, extracts, and then populates data into designated fields within a centralized online platform.
Even better, the data that is processed and mapped into the automated AP platform can be customized to save specific fields of supplier information (like business name, date, pricing, product/service details, and more). So every piece of necessary data is always captured.
All employees and managers who are involved in the accounts payable process have shared access to the latest information, status, and pending actions for each asset they’re responsible for.
Budget managers are immediately notified in-platform of purchase order requests and supplier invoices the moment they're submitted. They can approve invoices instantly within the same interface, automatically moving it along to the next step in the process. This eliminates manual messages that are easy to overlook. It also greatly reduces the risk of discrepancies within invoice processing.
Key benefits of AP process automation
Automating the accounts payable process boasts tangible benefits for finance teams. Of course, like any other business tool, implementing automation into your operations is an investment.
The good news is that depending on your company and the accounting software(s) you choose, it will bring significant returns, for areas outside your AP department as well. Here’s how AP automation transforms your business, for the better:
- Prevents costly errors. Whether due to distraction, misunderstanding, or an honest mistake, human error in business processes can lead to expensive consequences. But machines can read and process extremely large quantities of data at once, without fault.
- Saves time. Automation increases accuracy, while vastly reducing the processing time per invoice. With accounting automation, reconciliation and financial closing are the biggest time-savers, as the tedious task of cross-referencing records is done the moment balances are settled. Of course, you also need a good accountant to verify the final numbers.
- Increases productivity. Some finance professionals may fear their jobs being made redundant by automation, but it’s actually the opposite scenario. In reality, it gives team members freedom to perform the high-level skills that really matter.
- Provides full AP accessibility, from anywhere. Automation makes paper-based accounting a thing of the past. Cloud-based technology ensures every step of the electronic invoicing process is accessible from wherever you are, as long as there’s an internet connection.
- Encourages autonomy in other teams. The best AP automation applications enable all teams, not just finance, to eliminate inefficiencies in their processes by streamlining collaborative workflows. With transparent and equal access to a centralized platform (a single source-of-truth), other teams can autonomously file purchase orders and expense reimbursements, without any hand-holding or micromanagement.
It doesn’t stop here. The extent to which invoice automation is transforming business processes continues to develop. Disruptive cloud-based technology has proven to save companies immense resources in terms of labor, cost, and time. All while strengthening supplier relationships, employee autonomy, and even company reputation.
As innovation and global enterprises grow at faster speeds than ever before, centralized spend management platforms are becoming the key for businesses of all sizes and industries to run efficient AP operations.
Automate your accounting system today
To summarize, the purpose of automated invoice processing is to simplify the complexities and reduce hefty costs of traditional AP practices. All-in-one software like Spendesk eliminates reliance on out-of-date methods, and streamlines the invoicing process within one centralized platform.
Ensuring that your company pays its debts efficiently can improve cash flow management while lowering business liability risks. In addition, employees and managers win back time to focus on work that truly pushes the company forward. That’s a win-win for everyone, not just for finance teams.