The potential of invoice automation

Invoice automation offers not just incremental improvements but a major change of direction in terms of how finance functions operate. From cutting manual workload to strengthening compliance and enhancing control, automation is quickly moving from optional to essential.

This article explores how invoice automation works, why it matters now more than ever and how finance leaders can unlock its full potential in their organisation.

What is invoice automation?

Invoice automation refers to the use of digital tools to streamline the receipt, processing, approval and archiving of supplier invoices. It replaces manual tasks such as data entry, invoice matching, chasing approvals and document storage with intelligent workflows that reduce human intervention. This results in a quicker end-to-end process, that is less susceptible to errors, duplication and fraud.

Transformative effects of automating invoice processes

Making the transition from traditional to automated invoice management

Making the shift from manual to automated Accounts Payable will require a certain adjustment to daily operations and a degree of minor upfront investment. However, this change is not to be feared and promises significant returns in terms of saved time and money, along with the improvement of staff morale and supplier relationships. We will now look at the benefits of switching to a modern, automated Accounts Payable solution.

Key benefits of eliminating manual data entry

Moving from manual to automated invoice processing brings operational, financial and strategic gains.

1. From days to hours

Manual invoice approval cycles can take as long as 10 days or more. Automation reduces this timeline to a matter of hours, in some cases even minutes, by removing delays and bottlenecks. The reliable matching of purchase orders, invoices and goods received notes (GRN) and the secure online storage of this data in one centralised location greatly accelerates the process of searching for records, the performance of approval checks and the subsequent execution of payments.

2. From paper to visibility

Manual processes lack transparency. By automating these processes, stakeholders have real-time access to invoice status information and payment schedules, as well as any exceptions and anomalies that may occur.

3. From reactive to strategic

Human error and a lack of clear and up-to-date data means that manual Accounts Payable processes are often unreliable and fraught with error. By cleaning up the capture and recording of data, finance teams can shift their focus from firefighting and troubleshooting to added value tasks such as cash flow optimisation, spend analytics and supplier performance management.

4. From risk-prone to compliant

Automated audit trails and approvals drastically reduce the risk of errors, fraud and non-compliance. This prevents the significant outlay incurred as a result of fines or legal costs and also increases confidence and safeguards relationships with suppliers.

Essential features offered by leading invoice automation solutions

Modern automated Accounts Payable solutions offer a wide range of technologically advanced features that make the aforementioned benefits and improvements possible. In this section we will consider some of these ground-breaking features in greater detail.

Robust data capture and extraction capabilities

One of the most time-consuming aspects of traditional Accounts Payable processes is the manual isolation and recording of specific invoice elements, such as the supplier name, VAT number, VAT amount and total invoice amounts. The fact that invoices are submitted in a wide variety of formats (paper, email, PDF, Word, STFP) makes the identification and standardised recording of pertinent data all the more laborious. Accounts Payable automation solutions such as Yooz make clever use of technology to streamline and accelerate this process.

Optical Character Recognition (OCR) has long been used to extract data by converting images of types, handwritten or printed text into machine-encoded text. In addition to incorporating this tried and tested technology, the automated Accounts Payable solution from Yooz has built in AI-driven Smart Data Extraction technologies whereby, having extracted the text, the system uses machine learning to understand and extract relevant information from that text, drawing on data from over 200 million invoices and more than 1 million suppliers. This information is then securely stored on an online server, where it can be updated in real time and accessed by the relevant authorised stakeholders.

2-way and 3-way matching

Aligning data from purchase orders (PO) and invoices is essential in order to prevent duplicate or inaccurate payments. Accounts Payable automation solutions can automatically match the data across these different documents, instantly identifying discrepancies and issuing corresponding alerts. This can take the form of 2-way or 3-way matching, depending on whether goods receipt notices (GRN) are including in the matching process. The table below clarifies the difference at a glance.

Flexible approval workflows

Approval workflows can be adjusted and tailored to meet your organisation’s specific needs. This includes the routing of information to the appropriate authorised finance officers, the scheduling of approval and payment reminders, and the setting of dynamic spend limits and conditions. Flexible approval workflows allow your AP system to align with the payment approval policy in force within your organisation, while also ensuring accuracy and efficiency.

Integration with ERP and accounting software

When selecting an Accounts Payable automation solution it is important to ensure that your chosen platform integrates efficiently with your existing ERP and accounting software. This avoids causing unnecessary upheaval and financial outlay as a result of having to upgrade multiple systems simultaneously. Yooz is one of the leading AP automation solution providers in this regard, currently integrating with more than 250 financial packages and ERP systems worldwide. These include SAP, Sage, Oracle Netsuite, Microsoft Dynamics, Infor and Intuit Quickbooks, among others.

Fraud detection

By cutting out a large proportion of human intervention and leveraging technology such as AI and machine learning, modern automated AP solutions can automate invoice matching and apply smart data analytics, pattern recognition and rules-based systems to proactively detect and prevent fraud in the Accounts Payable process. Duplicate, suspicious or atypical transactions can be recognised and alerts sent to the appropriate higher-level staff. The reliable and accurate extraction and recording of data also ensures a transparent audit trail, whereby access to data is traceable and data can only be amended by employees with sufficient clearance.

Supplier statement reconciliation

Manual supplier statement reconciliations on a large scale often pose a major challenge given the amount of time consumed. Consequently, this task is often rushed or overlooked, resulting in errors, incorrect payments and the need to address supplier queries. By fully automating the reconciliation process companies can save money and free up staff to focus on more strategic tasks.

Recap: The benefits of invoice automation, at a glance

It is clear that automating the Accounts Payable process within your organisation offers numerous benefits. To summarise, implementing invoice automation in place of a manual AP procedure will enable you to:

Best practices for successful invoice automation

The introduction of an invoice automation system will impact processes and employees in multiple departments and across all hierarchical levels. Therefore, when implementing a systemic change such as AP automation, it is important to have a suitable plan in place for effective implementation and for the onboarding of staff members.

Steps for effective implementation might include:

1. Assessing current Accounts Payable processes: Identify pain points, bottlenecks and areas requiring excessive time to be spent on the manual processing. Mapping out each step of existing processes and pinpointing areas prone to errors and delays is an important step in mastering the AP process.
2. Choosing an Accounts Payable automation solution than can address identified issues and that can be tailored to the specific requirements of the organisation.
3. Integration with existing ERP and accounting solutions: The chosen solution provider will be able to provide assistance with the installation and integration of the platform, thus ensuring a holistic, end-to-end Accounts Payable procedure.
4. With the chosen solution installed, it is now time to begin the process of scanning and digitising existing invoices to create a standardised central data repository.
5. Monitoring and optimisation: The overarching objective of the implementation of invoice automation is to increase efficiency and accuracy, accelerate the Accounts Payable process, and avoid wasted time and error correction. To ensure that a new solution is delivering all that it promised, it is essential to implement a system that can track performance metrics, identify areas for improvement and make adjustments where necessary.
6. Ensuring acceptance through training and change management: In spite of talk of minimising staff intervention and human error, a new solution will only be successful if it is wholeheartedly adopted by all of the stakeholders who will be using it. Those responsible for implementation must provide assurances as to how the new system will benefit these users, enhance their daily working lives and improve relationships with suppliers. Appropriate training must also be provided on the new system to ensure that staff do not feel out of their depth.

Addressing challenges in invoice automation

Managing resistance to new technologies

Ensuring the widespread adoption and acceptance of a new AP automation solution requires open and transparent communication and a strong focus on the many benefits that your new platform can offer. Emphasise the fact that many of the AP tasks that are automated are those considered monotonous and time-consuming. Employees will then be able to devote themselves to more rewarding and intellectually challenging tasks. Focus also on the financial benefits to the company and improvements in supplier relationships, which in turn provide security and stability in the long term.

While fostering an openness to change among employees is crucial, this effort can prove futile if staff are not provided with in-depth training on the use of the new system. A new system will only function at optimal efficiency if staff know what they are doing and feel comfortable.

Ensuring compliance and data security

Automated Accounts Payable solutions take care of a lot of the leg work when it comes to ensuring compliance with data security regulations and the fulfilment of auditing requirements. However, human input is still required for the scanning of documents and approval of payments. Therefore, it must be ensured that robust checks are in place, including the appropriate permissions and traceability to ensure that sensitive information can only be accessed by those who genuinely need it and are duly authorised.

Securing buy-in and investment from senior management

When it comes to onboarding company executives, here the focus should be on the long-term cost benefits of streamlined and accurate AP operations. Easy access to accurate and up-to-date data is a major selling point in this regard, as it will provide a valuable source of information on which to base decisions that will shape the company’s future investments and strategies.

Conclusion

Converting to an automated Accounts Payable procedure is a major undertaking, and one that requires a great deal of research and planning. The benefits that streamlined and accurate AP operations can offer a business in terms of streamlining the receipt of invoices, extracting and storing data, and ensuring fast and accurate payments are game-changing. Furthermore, the introduction of an automated accounts payable process will improve employees’ job satisfaction by eliminating monotonous tasks and freeing them up to focus on areas that bring greater added value.

For more information on the benefits that invoice automation can offer your business, the expert team of advisors at Yooz would be more than happy to provide an in-depth consultation.