How Does Invoice Automation Work?
Verifying the accounts payable is not a very difficult process, and any one of your employees can do it. However, doing it manually can increase the number of human errors while also wasting a lot of your employee’s valuable time. In addition to that, the invoices have to be managed properly, which again is a daunting task and requires more capital as storage services have to be purchased.
The majority of the businesses cannot tackle invoice management, which further impacts cash flow and other associated processes severely. This is when opting for automated invoice management services can be a great option. It not only helps you cut down on the costs but shortens the time taken to process each as well.
Workflow of Manual Invoice Management
Usually, the invoice processing is managed by a team of accounts payable. They look after the workflow that starts from gathering the receipts to the last stage, which is payment. Here mentioned in a detailed overview of the workflow.
- Invoice Receipt Collection:
Invoice receipts can either be captured manually or stored through e-invoice programs and coding. This is conventionally done within the ledger and accounting program.
- Three-Way Matching:
Once gathered, the invoices have to be cross-checked and matched with each purchase order and receiving reports.
- Invoice Forwarding:
After matching, the invoices are then reviewed. This phase is known as the invoice approval process. Here, each invoice gets checked for acceptance, amendment or rejection.
- Invoice Payment:
After you have gathered the correct data, you will have to forward the accepted invoices to the finance department for payment. You can use ACH, EFT and even wire transfer to complete these payments. What platform you choose mainly depends on the vendor requirements.
- Invoice Payment Storage:
Once all payments are cleared, the invoices will have to be stored for future audit purposes and reporting.
Such a vast list of individual processes required to handle invoices can make the process rather tough. However, it is important to note that even a small business can have thousands of invoices every month.
This further makes it quite evident that relying on manual labour can lead to several issues with the process. It takes a lot of time, wastes staff hours and increases the risk of human errors. Even the slightest mistake in this process will impact not only your company’s reputation but also your financials negatively.
What Does Automated Invoice Processing Entail?
Quite contrary to the manual invoice process, automated services accelerate and streamline the workflow. It uses SaaS or on-premise software to manage each step of the procedure digitally. Instead, rather than being reliant on a dedicated team of experts to manage paper invoices, automated services help assist the teams by automatically completing the data extraction.
It then integrates the gathered data with the company’s ERP and accounting systems. Next, it automatically codes every invoice to the general ledger and verifies each invoice with three-way matching. Once done, it wastes no time sending the invoices to the approval chain before finally forwarding the approved ones to finance.
With automated services, manual handling and data entry is often eliminated. This makes the overall procedure a lot faster, efficient and reduces per invoice costs significantly. As per surveys, departments that implement invoice automation services often witness that the process is more than 70% faster and a cost reduction of about 80%.
Benefits of invoice automation
Now that you understand how invoice automation works, it is time to learn why you should opt for this option. There are numerous advantages of using automated invoice software, the more notable ones being mentioned here.
- Better supplier collaboration for faster error solving and on-boarding
- Enhanced efficiency by minimising manual labour
- Reduced costs by quickening invoice processing, verification and approval
- Simplify matching of receiving reports and purchase orders to invoices
- Easy accessibility helps enhance Accounts Payable responsiveness and payment control
- Transparency of matching mode details
With the information presented here, you will have no second thoughts about implementing invoice automation services. If you are looking for a reliable service, you can choose Monite. With some of the best reviews in the industry, choosing them will surely help take your company to the next level.
