Invoice automation: Simplifying invoice processing

Drowning in a sea of paperwork? Tired of chasing down approvals and hunting for missing invoices? Manual invoice processing can be time-consuming, error-prone, and a major headache for your accounts payable team. Luckily, invoice automation is here to clear the chaos. 

Invoice automation uses software to digitize and automate the invoice workflow from start to finish, resulting in faster processing, fewer errors, and happier suppliers. In this article, we'll break down exactly what invoice automation is, how it works, and the amazing benefits it can bring to your business. 

What is invoice processing automation?

Invoice automation uses technology to streamline the entire process of creating, sending, receiving, and processing invoices, reducing manual work. It automates tasks like: 

• Data entry
• Routing
• Approval
• Payment

With manual invoice processing, you risk errors, slowdowns, and even lost invoices (we've all been there!). But automation saves the day with advanced features like digital data extraction, automatic routing to the right approvers, and even three-way matching to make sure everything lines up perfectly with purchase orders and receipts.

In a nutshell, invoice automation eliminates those tedious, repetitive tasks that bog down your accounts payable (AP) team. It's faster, more accurate, and frees up your finance folks to focus on more strategic tasks. 

How does automated invoicing work?

Accounts payable invoice automation acts as a well-organized digital assembly line for your invoices. Here’s how it works:

1. Data capture: The software captures invoice data from various sources, like email, PDFs, or even scanned paper invoices. It "reads" these invoices using technology like optical character recognition (OCR), extracting key information like vendor details, invoice numbers, and amounts.
2. Three-way match: Next, the system automatically matches the invoice with its corresponding purchase order and receiving information. This ensures you're only paying for goods and services that were actually ordered and received. 
3. Automated approval workflow: No more chasing down signatures! The invoice is routed to the appropriate people for approval, following the pre-defined workflows you set up.
4. Payment processing: Once approved, the system schedules the payment according to your payment terms and policies. It can even integrate with your accounting software to automatically update records.
5. Record keeping: All invoice data, from the initial capture to the final payment, is securely stored and easily accessible in a digital archive. This creates a clear audit trail and simplifies record retrieval.

The whole process is faster and more accurate than manual invoice processing, giving you complete visibility into where each invoice is in the pipeline.

Benefits of invoice automation

Invoice automation isn't just about making things easier—it's about boosting your bottom line and making your whole business run smoother. Here are some of the benefits you can expect from automation:

• Saves time: Say goodbye to manual data entry and endless paperwork shuffling. Automated systems take over those tedious tasks, freeing up your team for more strategic work.
• Prevents late payments: Automated workflows and payment scheduling ensure invoices are paid on time, every time.
• Speeds up approval process: Automated routing and digital approvals accelerate the invoice approval cycle, reducing delays and bottlenecks that can slow down operational efficiency.
• Reduces errors: Manual data entry is a recipe for mistakes. Automation minimizes errors, leading to more accurate financial records.
• Predicts cash flow: Invoice automation provides valuable data for financial forecasting, allowing you to anticipate cash flow needs and make informed decisions.
• Improves supplier relationships: Timely payments and efficient communication keep your suppliers happy. Stronger supplier relationships mean better deals and smoother operations.
• Saves on labor costs: Reduce the need for manual labor and free up your team for higher-value tasks. This can lead to significant cost savings in the long run.
• Enables workflow customization: Tailor your invoice process to fit your specific needs. Automation software allows you to customize workflows, approval processes, and reporting to match your business requirements.

Key features of invoice automation software

Invoice automation software offers a range of features designed to streamline and optimize invoice processing. Here's a brief overview of key capabilities to look for in an invoice automation solution:

Automated data capture

Invoice automation software excels at eliminating manual data entry. Using OCR and machine learning, these solutions can automatically extract key information from invoices, like vendor details, invoice number, date, line items, and total amount. This means no more typos or tedious manual entry, which saves you time and prevents costly errors.  

Workflow automation

Streamline the entire invoice approval process with automated AP workflows. AP invoice automation solutions can automatically route invoices to the appropriate individuals or departments based on pre-defined rules, like invoice amount or vendor. This keeps approvals flowing smoothly and prevents invoices from getting stuck in someone's inbox.

Reporting and analytics

Invoice automation software doesn't just handle the grunt work; it also gives you valuable insights into your invoice process. It can track key metrics, like average invoice processing time and number of invoices processed, to help you optimize your AP processes and identify areas for improvement.

Integration with ERP systems

Connecting your different business systems, like your accounting software, purchasing platforms, and even your bank, makes for smooth and easy payment processing. This enables data to flow smoothly between each system, keeping everything in sync while giving you a complete picture of your finances. No more manually transferring data or worrying about inconsistencies—it's all handled automatically.

When everything is connected, you can automate payments, easily track what you owe and what's owed to you, and keep your financial records accurate without all the manual work. It's a win-win for keeping your business finances organized and healthy.

Best practices for implementing invoice automation software

Getting started with invoice automation? Here are a few tips for a seamless transition and maximum benefits:

• Set clear goals: Before you dive in, define what you want to achieve with invoice automation. Are you focused on reducing errors, speeding up approvals, or improving spend management? Clear goals will guide your implementation and help you measure success.
• Collect feedback on pain points from employees: Your AP team knows the ins and outs of your current invoice process better than anyone. Talk to them about their challenges and frustrations to identify key areas where automation can make the biggest impact.
• Use workflows to reduce specific bottlenecks: Identify any bottlenecks in your existing process and design automated workflows to address them. This could involve automating approval routing, setting up automatic reminders, or streamlining data entry.
• Don’t neglect security and compliance: Choose a solution that prioritizes data security and complies with relevant regulations. Look for features like encryption, access controls, and audit trails to protect sensitive information.
• Regularly test and revisit your workflows: Once you've implemented your solution, don't just set it and forget it! Regularly review your workflows and make adjustments as needed to optimize efficiency and address any new challenges that arise.
  

Simplify your invoice processing with Zip automation software

Thinking of giving invoice automation a try? You’re not alone—in fact, over 40% of finance professionals are prioritizing procurement automation to stay on top in today’s competitive landscape. 

When it comes to automating manual AP tasks, Zip’s Procure-to-Pay software has you covered. With features like automatic PO creation, AI-powered invoice processing, and dynamic approval workflows, Zip is your solution to driving spend visibility and control. Request a demo and discover how automation can transform your AP department.