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5 mins read

Automated Invoice Processing

Why Would My Business Need Invoice Capture Software?

by Yooz on 02.24.2022

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The process of walking over to a scanner to manually scan invoices, upload them onto your device, manually insert and validate the data, and finally communicate with either the accounting or ERP system isn’t just old-fashioned; it’s ancient and almost completely obsolete. It’s also incredibly time-consuming, occupies staff resources that could be used for more important tasks, and increases the chance of mistakes entering the fold.

Despite automated invoice processing software being widely available for use in the market, the manual method is still the typical situation found in many businesses today. Accounts payable (AP) teams are still using the traditional method of manually scanning invoices, entering relevant data - VAT numbers, supplier or client information, total price of goods etc. - into specific fields on a spreadsheet item by item, and then sending it off for approval. With any luck the information on the invoice matched the original receipt of goods and purchase order number, but even so, it could take days or even weeks to approve the final payment.


Now imagine that you’re having to deal with hundreds or even thousands of invoices coming into the business every month. Under these circumstances, the process of manually scanning, handling, and managing invoices goes from a simple task to a sheer mountain of work. Tasks that are constantly repeated day after day, taking up hours of the staff’s time without guaranteeing either accuracy or security.


In fact, a recent survey of finance leaders in the UK found that one-third (35%) felt time-consuming processes were the biggest problem related to manual accounts payable tasks, while 17% of companies said they spend more than 100 hours per month processing supplier invoices. Issues such as the manual validation of invoices and a reliance on the use of paper documents that need to be printed and shared across the business for authorization result not only in delays but also a risk of errors, especially across multi-site organizations. In short, the issues surrounding invoice capture are much bigger than businesses currently think.

 

What is invoice capture software?

 

Invoice scanning used to mean simply digitizing a paper-based invoice through use of an actual electronic scanner. However, today businesses hardly ever use hardware scanners anymore (usually they simply don’t even have one at hand) but instead take high-resolution photos. Unfortunately, even this wasn’t a solution to solve the problem of manual accounts payable practices. Businesses required an automated step in the invoice capture process, able to automatically glean data from an invoice to speed up time while becoming more accurate.

The use of an invoice capture software solution helps with the first process for AP teams in extracting invoice information - from paper or digital documents to handwritten or typed. Businesses would typically do this by integrating and using optical character recognition (OCR) technology which scans documents (PDF, handwritten, etc.) and turns the information into readable text that can be used, stored, and analysed in a business’ ERP or accounting system.


AP automation solutions today typically include this type of invoice capture functionality out-the-box, helping businesses automate their workflows all the way from initial receipt of goods right through to final payment. Plus, with the use of Machine Learning and Artificial Intelligence (AI) in AP software, invoice capture software is really the first step in a fully automated, hands-off approach.


Using invoice capture software might make the whole process sound so simple, but it’s an important step in fully digitizing the AP department. And rather than outsourcing invoice scanning data to external parties and waiting days for validation, the invoice capture software solution does it all in real-time. Only when supplier and vendor invoices are available in a digital format can businesses streamline their invoice processing and save time, costs, and resources.

 

The benefits of using an automated invoice capture software solution

 

Automating the crucial first step of invoice capture has provided a saving grace for AP teams, decreasing the time taken to manually process invoices while providing better reliability, accuracy, and security. For example, according to one report, UK businesses with more than 50 employees process around 1,500 invoices every month on average, taking around 43 hours per month just to manage the invoice approval process. Now compare this with automation, where invoice capture software offers time reductions of up to 30% and processing time is counted in seconds and minutes instead of hours (or days, or more). In addition, remember that as the technology utilizes Machine Learning (ML) and Artificial Intelligence (AI), the software is constantly learning and improving the more invoices that it processes.


While time saving (and self-improvement) is key, it is certainly not the only positive to automating the process. There is no question that making the switch to an automated invoice capture software solution offers several great advantages beyond speeding up the process. Automating invoice capture offers significant benefits by reducing the possibility of human error, lost documents, late payments, and fraud by providing better reliability, accuracy, and security.


The use of invoice automation is a cost saver. In fact, the move to an automated invoice capture software solution can also lead to significant cost savings of around 50-75% when compared to manual processing. For example, whereas manually processing a paper invoice would typically cost a business around £7, automation can reduce this to around £2 per invoice processed. For businesses processing hundreds or thousands of invoices every month, the savings can quickly add up and provide a very healthy return on investment (ROI).


Using an automation solution also creates a complete audit trail of invoices, payments, and financial documents that are need to keep businesses compliant and secure. This digital trail includes eliminating any of the unnecessary confusion resulting from manual processing, specifically the complications of being able to quickly work out who created, managed, and approved certain invoices (especially when dealing with multiple suppliers, locations, and a mixture of paper and digital documents).


However, one of the best benefits for accounts payable departments today is the ability for an invoice capture software solution to automatically "pick up" invoices and start processing them without any manual intervention from staff. There are no delays, and nobody needs to be physically present. For example, when an invoice is received via email, the software automatically sends it into the accounting or ERP system to be scanned, recorded, and analyzed - perfect for teams that work in different locations or over different hours from one another.


The benefit above - the solution's automatic "pick up" - helps to improve relationships both inside and outside of the business itself. While CFOs and financial leaders gain real-time, accurate data in real-time to use for better business forecasting, suppliers and vendors also gain from a more streamlined process with faster invoice approvals without the risk of late payments. The use of invoice capture software also significantly increases the productivity of accounts payable staff, with repetitive work replaced for more strategic, high-value tasks that require critical thinking and a more human touch.

 

You can read more on the benefits of invoice capture software here.

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