Invoice Automation: what it is and why you should consider it
A lot of steps need to happen for your company to pay its bills. The invoice must be received, services and/or supplies must be verified, managers need to be available to approve payments, and other arrangements must be made before the actual payment can be sent, usually by check. Then, staff must find an available time in their busy schedule to cash checks before they can reconcile and file the completed invoice away.
There are many different expressions in the industry for solutions that improve the accounts payable (AP) process, like “AP automation,” “payments automation”, “approval workflow processing,” etc. Each of these expressions can apply to some or all of those aforementioned steps.
When you hear the term “invoice automation”, what does that really mean?
The short answer:
A solution that automates steps associated with the actual invoice.
Let’s talk more about the details of invoice automation solutions - What are they, what are the benefits, and most importantly, if they are worth your consideration.
Defining “invoice automation”
At its core, invoice automation streamlines the early parts of your AP process – everything that needs to happen before payment.
From the moment your company receives an invoice to the moment it’s approved for payment, invoice automation creates trackable, repeatable processes from manual tasks. By using the latest technology, it can cut down your days to approve invoices, your costs per invoice and your payment exceptions, among many other benefits.
So how does it work? At a minimum, invoice automation solutions should help you convert your invoices into a digital format as early as possible in the process and store them in a central place or system. Then, once the invoice is in the system, the solution can approve the invoice for payment based on business rules or matching to the purchase order/receivers, notify an approver that their action is needed, or identify an exception that needs review within a matter of seconds.
Digital invoices provide complete transparency. And for cloud-based or Software-as-a-Service (SaaS) solutions, you can access invoices anytime, anywhere. You can get the full benefits of a seamless process when the solution works with your ERP system. And when paired with payments automation on top of that, you can add electronic payment records and reconciliation to your AP departments, all but eliminating the need for printing checks, and paper storage.
Does this even apply to me?
Any company that employs an AP department staff is a great candidate for invoice automation. And it’s becoming ubiquitous. Almost a quarter of companies have already implemented some form of automation and 75% more plan on implementing some sort of AP automation within the next 3 years, according to PYMNTS.com.
The reason they are so popular is the undeniable ROI that automation solutions bring. Invoice automation particularly can remove a substantial amount of paper from employees’ desks while creating a time cost-savings by reducing the number of invoices manually entered into an organizations ERP system. On a larger scale, it improves several other pain points, such as:
- Approvals dependent on employee availability – when a paper invoice is sitting on an approver’s desk, it can only move to the next step after that person returns. With digital invoices, approvers can make approvals online anytime, anywhere, and can even get notified when an invoice is pending their approval.
- Lack of invoice audit history – paper is inherently hard to track. With invoice automation, companies can view an invoice’s entire journey at the click of button, complete with information on who approved it, on which date, and any changes that were made. Because everything is searchable, auditing is a breeze.
- No analytics – when AP staff is overwhelmed by their day-to-day work, analyzing the overall department’s statistics is difficult. By letting technology do the work, the technology can create reports and analytics that AP staff didn’t have time – or maybe never even thought – to track.
- Non-compliant storage – rather than storing your suppliers’ sensitive data in filing cabinets on-premises, add a layer of security by keeping electronic records in a secure, encrypted location.
What does an AP department look like with invoice automation?
With an invoice automation solution in place, companies can streamline a variety of manual, time-sensitive tasks, unlocking the potential for some major cost and time savings. Companies have been able to cut their days to process an invoice from an average 16.3 days down to only 4.1 days. And the cost per invoice has seen a drop from $16.67 each to only $3.34*. That’s significant savings in both time and money.
Invoice automation can have measurable impacts on any size AP department. By replacing manual processes with automation, you’re actually building a scalable AP department set up for growth. Read this article to learn more about the true impact of invoice automation.
Of course, you’ll want to look closely at each solution to find the one that works best for your business. An automation consultant can help you gain an outside perspective of your AP processes to learn which solutions would provide the biggest benefits.