<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=565596&amp;fmt=gif">

10 mins read

Automated Invoice Processing

Getting Started with Automated Accounting Software

by Yooz on 07.5.2022

getting started

The age of automation in finance is here. Long gone are the days of long nights trying to dig around for invoices that have gone missing or hours spent filling in countless amounts of Excel spreadsheets. From Artificial Intelligence (AI) and Machine Learning to Robotic Process Automation (RPA), the new-look finance department is more futuristic than people might think. No more wasted time chasing invoices down, no more security issues, and definitely no more guesses on financial reporting and employee spending.

This is the dream scenario. In reality, there are still a lot of businesses that are choosing to bury their heads in the sand when it comes to automation. Recent research has shown that just 19% of European businesses are using tools for automated invoice processing and 11% for semi-automated tools such as Optical Character Recognition (OCR) technology. Even for companies that are using automation in the finance function, only 11% say they have completely eliminated manual processes.


So why are businesses not moving to automation? The same research found that the primary reason for reluctance, it seems, is from receiving multiple invoices from different vendors (35%), despite that being a relatively easy issue for automated accounting software to overcome. Complex accounts payable and approval processes (28%) and fears that a switch to accounts payable automation might be more time-consuming (22%) were also named as reasons to stick with current processes.


In a digital-first world, the old saying “If it ain’t broke, don’t fix it” simply won’t cut it anymore. Plus, it’s not necessarily true anyway. The digital transformation of the finance and accounting department is occurring at a rapid pace, with the finance leader expected to spearhead tech investment to achieve greater success. Finance and accounting departments have been broken by slow, outdated, and labour-intensive manual processes for decades, running with inefficiencies that have threatened to hurt growth, revenue, and even staff morale. Businesses, accounts payable staff, and vendors deserve better. With automated accounting software, this dream can become a reality.

 

 

CTA-UK Private Demo

 

 

How does automated accounting software work?

 

The technology works by taking pre-existing processes and problems within the accounting department and streamlining them through the use of automation. For example, one of the biggest challenges for accounts payable is the processing of invoices. With manual processes, invoices received have to be downloaded, scanned, entered into the accounting system, and approved. This is made ten times worse if businesses and vendors are still sending and receiving paper invoices without digitising documents, as one tiny error can lead to hours wasted trying to fix the problem.

 

There are other, more serious issues that automation can help solve. The problem with errors is that they can come from anywhere and lead to not just time and resources being wasted, but also money coming out of the business at the wrong amount, or simply when it wasn’t supposed to in the first place. Also, with practices that use basic accounting tools such as Excel spreadsheets and saving files on personal machines or unsecured cloud drives means they’re easily accessible, but not in a good way. Responsible for handling sensitive information, the accounting department is a top target for fraudsters looking for quick ways to syphon money into shell accounts. Without technology and tools to help accountants spot these practices, it’s often potluck as to if, or when, businesses become a victim of fraud.


Now let’s see how automated accounting software handles this same process. When digital invoices are received via email for example, the system picks them up, records them in the accounting system, and flags them for approval. Unless there is a specific reason for someone to intervene, if supplier information needs updating or the cost of goods wasn’t what was expected for example, then the invoice will be sent to the relevant finance manager to approve and send payment.


To reduce the likelihood of risk, three-way matching makes sure that the data held on each invoice matches directly with the initial purchase order raised as well as any receipt of goods and historic invoices - for example, goods orders, total cost, and vendor information. If there are any discrepancies, the system will immediately bring this to the attention of staff who can then take action to make sure information is correct and final payment can be sent to the right account. So not only can automated accounting software help to reduce the chance of fraud, but it also reduces the number of human errors made during the accounting process as well as making sure staff use a secure system that protects them and the business.

 

Why use automated accounting software?

 

Aside from the examples given above, the most obvious reason to use automation in the accounting process is time. With manual processes, what might seem as another simple procedure might suddenly throw up a surprise. When that happens, it can take hours of time away from staff who would be better spent focusing on more important tasks than trying to find a copy of an invoice stuffed inside a filing cabinet. Automated accounting software can reduce wasted time like this by as much as 80%, with staff able to quickly search for specific invoices, suppliers, or payment history inside one central system.

Accounting software delivered as-a-Service means can also provide benefits for remote teams or for those that work across different time zones. Accounting software hosted in the Cloud means information and processes are constantly kept up-to-date. Plus, as invoices and financial information is now deposited into one central system, there’s no more confusion as to who approved certain invoices or in which folder they were stored on the company server. With supporting mobile apps, employees can also work and approve invoices on the move.


There are also some not-so-obvious benefits in using automated accounting software, one of which is the improvement in staff morale. The accounting and accounts payable profession is stereotypically seen as one spent undertaking monotonous and meaningless tasks such as data entry into Excel spreadsheets. With automation, there’s no need for this. As data entry into accounting systems is automated through the use of Optical Character Recognition software as soon as an invoice is received, staff can spend more time focusing on jobs that require a personal touch, such as keeping vendors happy and financial reporting. Staff happiness ultimately increases, with automation helping take the robot out of the human and give staff much more freedom in a new-look role.


There is also a significant benefit in moving to one single system and away from several smaller pieces of technology that deliver the same thing. For example, one connected platform that offers complete, end-to-end automation - from invoice received right through to confirmed payment - will not only be more cost-effective than stitching together several different tools, but it will also lead to less confusion and hassle in the future. For example, if a problem arises using several different systems, it might not be easy to identify where the issue came from and who to go to for support. Staff utilising one platform also means less training as well as doing away with the need for complicated custom integrations.

 

Can automated accounting software help grow my business?

 

The unfortunate truth is that the majority of businesses which implement automated accounting software will only really realise a tiny proportion of its potential. As the system is put into place, leadership teams often think it is a tool which works to support a specific function and area of the business. But automated software in accounting can have a profound effect on other areas outside of the finance department - one of which is its effect in being able to cut unnecessary expenditure and grow revenue. Because the accounting software automates processes such as invoicing, expenses, and data entry tasks, staff can get a better view of real-time financial reports to manage cash flow and make more informed and strategic decisions. With time saved from robotic tasks, accounts payable teams can take advantage of key insights that improve customer service and, ultimately, lead to increased sales.

And this is where the value of automation comes in. By automating time-consuming manual tasks, you can free up accounting staff to do more strategic work. One use of that extra time is the better management of accounts receivables. Staff with more time and freedom means more timely payments, helping improve other areas of accounts receivables such as monthly recurring payments, deposits, or late payment fees. Essentially, by diverting their focus away from just one role of the accounting department, staff can gain better, more all-round skills in the entire finance function. Only with automation liberating tasks will you see the benefits rippling through the entire business as well as the bottom line.


Then there’s the effect automated accounting has on cost savings. Although it might seem as an extra outlay, automated accounting software has a proven ROI - and not just in increasing staff productivity as it has a direct impact on a company’s own finances. Automated accounting software reduces the cost-per-invoice by around 80% compared to manual processes - from around £8 per invoice to just £1 - savings which can then be passed on to customers. Plus, by streamlining and improving the process in which other vendors and suppliers get paid, it makes you an attractive one to do repeated business with, while some vendors even offer early payment discounts. It can also reduce expenses by avoiding costly late fees on overlooked payments.

 

 

How does automated accounting software help with Making Tax Digital?

 

Although Making Tax Digital is nothing new, businesses are still struggling to get their heads around the changes needed to support changes in processes. The UK’s long-term ambition to transform the way businesses and sole-traders submit their tax returns will ultimately see businesses of all shapes and sizes deploy digital software to transform their finances. This is, of course, only a good thing as digital-first is now the new normal, but there are still plenty of businesses that are having trouble with using new platforms alongside manual processes.


The key is to get rid of the latter. It’s clear that manual processes are having a detrimental effect on the way businesses organise and process their finances, and the addition of legislation in the form of Making Tax Digital means accounts payable departments and project owners will be under more pressure than ever to get it right. This, however, cannot be guaranteed. We are all human at the end of the day, and mistakes can creep in from anywhere and anyone. The only thing we can do to stop this is to put a system in place which does the mind-numbing, granular tasks with greater speed, efficiency, and accuracy than a human ever could. The best for the job, it seems, is our new robotic colleague.


For Making Tax Digital, automated accounting software is preventing finance teams from making costly errors as well as providing better tools for record-keeping and auditing purposes. The use of automation has already helped businesses in this regard, reducing the room for error when filling out tax forms by completely ridding the need for manual intervention. With automation, not only can businesses ensure they get it right, they can also make sure they don’t get caught out by potential error-led penalties and late fees.

 

How does automated accounting software help with EU e-invoicing requirements?

 

Similar to Making Tax Digital in the UK, the EU’S e-invoicing requirements have forced companies (for the better) to deploy digital methods and tools in the finance department. The 2010 European Directive has since made the digitalisation of invoices unavoidable for organisations that do business across the European Union, using an electronic software platform for audit trails.


In 2014, this was expanded to encourage the use of e-Invoicing, with businesses ensuring they are able to receive and process electronic invoices sent by suppliers. Although some organisations still choose to use paper invoices and then digitise them, the directives have helped standardise the invoicing process across the EU. Before the laws were put in place, there were several different invoice formats that were being used, none of which conformed with a certain layout or template. Organisations had to set aside extra time, costs, and resources to process invoices, and is the reason why automated accounting software quickly became a must-have for accounts payable staff.


Used alongside an automated accounting system, e-invoicing has been proven to be far more reliable than manual processes and paper documents, while also being highly flexible and scalable both up and down. While e-invoices have helped reduce the likelihood of errors during data entry tasks, they have also helped reduce time taken to process invoices and payments. The development of OCR technology has also meant that, even if a paper invoice is received or a unique format is used, the accounting software is still able to read the information, make sense of it, and lay it out in a way that can be analysed, reported, and audited.


The introduction of e-invoicing requirements have been one of the biggest drivers in digital accounting practices across European business and eliminating insufficient manual processes. Although not all businesses are yet on board with automation, there’s no stopping the progress of technology. Those that don’t move fast enough to transform their accounting practices will only be left behind.

 

Getting started with automated accounting software

 

Automated accounting software and solutions that utilise AI, Machine Learning and RPA have become the bedrock of the finance department. Indeed, within the digital age, automation is an essential step in building future-proofed solutions that can remove manual inefficiencies, free up staff from mundane tasks, and optimise processes now and in the future. With automation, businesses can realise greater productivity in the accounting department while spending less on pointless overheads.
What’s more, with Cloud accounting software, businesses have the ability to and flexibility to scale their needs up and down depending on their needs - for example, during peak seasons or holiday periods where the level of invoices received can quickly change. This gives businesses not only the freedom to choose the level of automation that suits them, but also the confidence to rely on a system no matter what comes their way.


Accounting teams armed with automation can say goodbye to days wasted spent filling out Excel spreadsheets. No matter how complex the current accounts payable process is or how many invoices are received, investing in automation is a surefire way to realise the full potential of the finance department. Thanks to the increasing sophistication of the technology, this new-look accounting department can be ready to suit the needs of the digital age.

 

CTA-UK-Whitepaper-AP Top Performer

levvel 2021 everything about ap vendor invoice automation november 2021

Discover now

See What Automated Invoice Processing Can Do For You