Many companies face problems involving processing invoices because it involves a lot of time and effort and utilizes company resources. Automating the whole process with the help of tools like KlearStack ends up saving almost three weeks in invoice processing time, bringing the duration down from 25 days to 5-10 days at the most. It is essentially a tool that simplifies the task of processing invoices by having it automated via integrating AI with your system.
Automated bulk invoice processing captures incoming invoices in a document solution in the format of your choice. It then pushes them into a finance or enterprise resource planning package. In the process, an invoice enters the system which is usually through scanned paper or through an email. It can also be dragged and dropped from the desktop. Therefore, it is the process by which you configure your invoices to operate automatically. This is done through technology which reduces the requirement of human labor and saves a lot of time, and altogether minimizes errors. This process saves time for all the businesses that use this method.
Let’s take a look at an example of batch invoicing. All companies have multiple clients and vendors, and process invoices from them all. A useful application of batch invoicing would be to create one invoice for multiple clients who are billed on a monthly basis instead of a job-based system.
How does invoice automation work?
Invoice automation uses a couple of processes to provide you with the most accurate results. These are artificial intelligence (AI) backed by machine learning (ML), optical character recognition (OCR), and purchase order matching. Each process adds its own utility to the process of invoice automation.
Invoice automation tools like KlearStack use artificial intelligence to extract data from an invoice and enter it into a system. The automated system puts it directly into the ERP or accounts payable system. Using Optical Character Recognition (OCR), the images are processed and converted into a machine-readable text format. This optimizes payments and makes the whole process run very smoothly and efficiently.
This saves much more time and labor as compared to the traditional method of invoice document management. Traditional methods of invoice processing can be rather tedious, seeing as they not only involve the accounting department but also others in terms of gaining the necessary approvals for making payments. After getting the approval, the invoice needs to be manually entered into the system and involves many more steps before payments are finally processed. In comparison, bulk invoice processing completely streamlines the process using ML-backed AI and eliminates the many unnecessary middle steps.
Optical Character Recognition
Automated invoicing is very straightforward and easy to integrate because of optical character recognition (OCR). OCR serves the purpose of extracting ‘optical characters’ from scanned files. Optical characters generally refer to alphabets and larger pieces of text. Using OCR, the system accepts the invoice, be it in the form of an email, scanned document, or dragged from the desktop, and directly inserts it into the system. This form of invoice processing saves many hours of labor as it directly converts textual data into a computer-readable document.
Furthermore, details of the invoice are easier to find (and replace if need be) because they’re automatically entered into easy-to-read formats. This includes many details such as the supplier name, amounts to be paid, quantity etc.
Entering the details of purchase orders into databases is possibly one of the most tedious tasks of the traditional method of invoice processing. The invoice sent in by vendors need to be matched with the purchase orders put forth by your company. Manually searching for all necessary details, verifying the details to match with the purchase order and finally paying them is a long process.
Automating Purchase Order (PO) Matching involves extracting data, and automatically comparing it with the invoice line items that are automatically synced with the accounting system. It makes sure everything is tallied, and flags when details are not matching or adding up. A notable study tells us that a whopping 42% of purchase order matched invoices were paid on time as compared to only the 25% when not automated.
Benefits of bulk invoice processing
In manually attending to the dozens of invoices to be processed monthly, there are bound to be human errors. Hours of manual invoice processing can be exhausting and can lead to many human errors. However, in bulk invoice processing, there is no need for communication between various departments. Of the 64% companies that have adopted automated invoice processing across the world, a significant 13% have been able to divert their employees’ time to other pressing matters within the company.
The chances of error reduce drastically. Sometimes, invoices tend to get lost while manually handling them, especially when there are a large number of items to process but this is not the case with batch invoice processing. Bulk invoice payments increase accuracy as it reduces many human errors, especially errors while calculating the values in the invoice.
Automating the whole process makes the whole system much easier because it removes the unnecessary work that one may need to put in to get the same results. Bulk invoice processing makes the life of the accounting department much easier without a doubt. Not only does it speed up the process manifold in comparison with traditional methods, but it also helps relieve a lot of stress and increase efficiency.
With minimal human involvement in the whole process, it significantly speeds up. Without an automation tool, it would often take up to more than a week to process the invoices since it involves validating the numbers and getting the required approvals. This becomes a very long process and can be made very short and efficient.
An automated system removes the need for unvaried steps such as receiving, processing, and getting the required approvals and essentially, sets a streamlined workflow for the entire process.
Keeping up Customer & Vendor Relations
Sometimes, vendors will charge a fee for their late payments and add penalties, increasing easily avoidable additional costs. Avoiding late payments helps keep the relationship with the vendors positive. Late payments tend to cause a strain in the relationship.