Finance departments frequently face the challenge of handling invoices arriving in diverse formats, including paper documents, digital PDFs, scanned files, and emails.
This blog explores the solution: Automated Invoice Processing.
Learn how automation can enhance efficiency and accuracy, from minimizing manual entry to optimizing payment procedures.
Table of Contents
What is Automated Invoice Processing?
Automated invoice processing is the practice of efficiently capturing invoice data, whether from paper invoices, PDFs, or other formats, and seamlessly integrating it into your Enterprise Resource Planning (ERP) system. This automation streamlines the payment process, reducing manual efforts and errors.
Why Automate Invoice Processing?
Automating invoice processing streamlines operations, reduces errors, and enhances cost-efficiency. It frees up valuable time for strategic financial analysis and decision-making, ultimately improving the overall financial health of the organization.
What is Automated Invoicing Software?
Automated invoicing software is a specialized tool that digitizes invoices, extracts crucial data, and automates tasks like validation and payment processing. This software enables you to manage invoices effectively, ensuring financial accuracy and compliance.
How does Automation Improve Invoice Processing?
Minimizes Manual Data Entry
Automation eliminates the need for manual data entry, reducing errors and saving valuable time for finance and accounting professionals.
Consider a finance team receiving 1,000 invoices monthly. Manual data entry could take hours, leading to potential errors. With automation, data extraction software accurately processes these invoices in minutes.
But automation reduces data entry errors from 5% to less than 1%, resulting in significant cost savings and improved financial accuracy.
Automates 3-Way Matching
Invoices, purchase orders, and receipts are often misaligned manually.
With automation, for instance, a system instantly verifies that an invoice matches the corresponding purchase order and receipt, ensuring seamless reconciliation.
This reduced their reconciliation time by 50%, preventing overpayments and eliminating costly discrepancies.
Automates Routing Of Invoices For Review And Approval
Invoices are automatically routed to the appropriate personnel for review and approval, speeding up decision-making and ensuring compliance.
For example: In a large organization, hundreds of invoices need approval daily. Automation routes invoices based on predefined rules, sending them directly to the respective department heads or approvers.
This reduced their approval cycle times by 75%, allowing faster processing and preventing bottlenecks.
Centralizes Records
Automation centralizes all invoice records in one digital repository, simplifying access, retrieval, and audit trails.
Imagine all your invoices stored electronically in a centralized system. You can easily search, retrieve, and access historical data for audits, compliance, or analysis.
This reduces physical storage costs and improves data accessibility, saving both time and money.
Improves Performance
Overall, automation enhances efficiency, reduces processing times, and enables finance and accounting departments to perform at their best, focusing on strategic financial management.
A finance team that once spent 80% of their time on data entry now allocates 80% to financial analysis, forecasting, and strategic planning.
Automation improves invoice processing efficiency, allowing finance professionals to focus on value-added tasks.
How Do I Automate Invoice Processing?
Step 1: Start With a Pre-Built Template or Create Your Own Form
Imagine you’re in the finance department of a manufacturing company. You decide to automate invoice processing.
You can start by selecting a pre-built template or creating a customized invoice form. Pre-built templates often come with standardized fields for vendor details, invoice numbers, and amounts.
You choose a pre-built template and customize it to include specific fields relevant to your industry, such as product codes and manufacturing dates, making it tailored to your organization’s needs.
Step 2: Customize Your Invoice Approval Workflow
As a finance professional, you know that invoices often require approval from different departments. With automation, you can create a customized approval workflow. For instance, invoices below $1,000 may need only one approval, while larger amounts require multiple approvals.
You set up a rule in the system that automatically routes invoices based on their amount. Smaller invoices are sent directly to department heads, while larger invoices are routed through a chain of approvers, ensuring compliance with your company’s policies.
Step 3: Integrate With Your Accounting System
In your accounting department, you use an ERP system to manage financial data. Integrating your automated invoice processing solution with this system is crucial. Once an invoice is approved, it seamlessly transfers data to your ERP, eliminating the need for manual data entry.
When an invoice is approved, the system automatically syncs it with your ERP, updating accounts payable and creating records without any manual intervention. This integration ensures data consistency and accuracy.
Step 1: Start With a Pre-Built Template or Create Your Own Form:
Select a ready-made template or craft a customized invoice form tailored to your requirements.
Step 2: Customize Your Invoice Approval Workflow:
Fine-tune the automated workflow to match your organization’s unique invoice approval process, complete with rule-based routing and timely notifications.
- Integrate With Your Accounting System:
Ensure seamless data flow and eliminate manual data entry by integrating your automated invoice processing solution with your accounting system or ERP.>
Benefits of Automated Invoice Processing
Reduced Manual Entry
Automated invoice processing drastically minimizes the need for manual data entry, reducing the likelihood of errors.
Experts in finance appreciate how automation frees them from tedious data input tasks, allowing for a more strategic use of their expertise.
Increased Productivity
Finance professionals experience a notable boost in productivity as automated workflows handle routine tasks.
They recognize that increased productivity means more time for in-depth financial analysis and decision-making.
Cost Savings
Automation leads to significant cost savings, not only by reducing labor costs but also by preventing late payment penalties and overpayments.
Financial experts understand that automation directly impacts the bottom line, making it a wise financial investment.
Improved Accuracy
Finance professionals know the critical importance of accurate financial records.
Automation significantly reduces the margin for error, preventing costly mistakes in financial reporting and compliance.
Improved Vendor Relationship Management
Timely, accurate processing enhances vendor relations, crucial for efficient operations.
Experts stress that strong vendor relationships contribute to an efficient supply chain, potential cost savings, and improved overall business performance.
Why Choose KlearStack for Automated Invoice Processing?
KlearStack, an automated AP software, makes your monthy invoice processing a hassle-free process.
- Eliminate manual paper work.
- Process 1000+ invoices, receipts, bank statements a day.
- Reduce operational costs by 70%
- Make AP process 99% error free and touch-less.
| Aspect | Other Automated Invoice Processing Software | KlearStack Automated Invoice Processing |
| Customization and Flexibility | Limited customization options. | Highly customizable to match specific workflows. |
| Integration with ERPs | May require additional development. | Seamless integration with various ERPs and accounting systems. |
| Accuracy | Accuracy varies. Manual corrections are required. | Reduces 99% errors. |
| Costs and ROI | Costs vary. ROI takes longer to achieve. | 70% cost-effective. Quicker ROI |
| 3-Way Matching Automation | May not offer | Offers 3-way automation. Prevents discrepancies. |
With Klearstack, you don’t have to worry about templates, setup costs, or subscription.
Say NO to templates. Easy setup. Cancel anytime.
Book a demo session with KlearStack today!
How to Implement KlearStack’s Automated Invoice Processing?
Step 1: Assessment
Assess your organization’s invoice processing needs. Identify pain points, goals, and specific requirements.
Step 2: Request Demo
Book a demo and explore the features and functionalities of KlearStack’s solution.
Step 3: Customization
Configure templates, approval hierarchies, and integration points.
Step 4: Integration
Connect with your ERP.
Step 5: Go-Live
Start processing live invoices.
Step 6: Monitoring
Continuously monitor the system’s performance, fine-tune settings and workflows for optimal results.
Step 7: Benefits
Process 1000+ invoices and emjoy benefits like 99% accuracy and 70% cost savings.
Use case
Transforming Manual Invoice Processing with KlearStack AI
A Fortune 100 manufacturing enterprise faced challenges with manual document processing, particularly in handling bilingual invoices. This involved labor-intensive tasks like data extraction, classification, validation, and data entry into Excel and SAP, leading to slow turnaround times, high operational costs, inaccuracies, and vendor dissatisfaction.
Challenges:
- Slow transaction turnaround time.
- High operational costs.
- Increased data entry errors.
- Dissatisfied vendors due to delays.
- Unexpected penalty charges for late payments.
Solution – KlearStack AI:
The enterprise adopted KlearStack AI, leveraging advanced OCR technology and machine learning models. KlearStack automated the end-to-end document processing within SAP S4/HANA, eliminating manual intervention.
Automation Steps:
- Step 01: Data extraction without templates.
- Step 02: Validation through KlearStack AI rule engine.
- Step 03: Validated data forwarded to SAP via RESTful API.
- Step 04: Data processed with configurable review, exception handling, and approval workflows within KlearStack SAP extension, resulting in automatic accounting entries.
Results:
- Approximately 2x increase in productivity.
- Achieved over 95% field-level accuracy, with 80% straight-through processing.
- Improved operational agility.
- Savings of about 1,000 personnel hours per month.
- 90% reduction in penalty charges for late vendor payments.
The adoption of KlearStack AI led to remarkable improvements, enhancing efficiency, accuracy, and cost savings for the manufacturing enterprise.
KlearStack is a globally recognized, award-winning solution trusted by leading brands and Fortune-100 companies across diverse industries.
In the past, it streamlined:
- Banking: Enhanced KYC, automated accounts payable, and expedited loan processing.
- Trade: Revolutionized trade finance with efficient document processing.
- Inventory Management: Automated data tasks, ensuring error-free reconciliations.
KlearStack’s past applications brought speed, accuracy, and efficiency to diverse industries, allowing organizations to focus on strategic initiatives and customer service.
FAQs
What is automated invoicing system?
Automated invoice processing is the practice of efficiently capturing invoice data, whether from paper invoices, PDFs, or other formats, and seamlessly integrating it into your Enterprise Resource Planning (ERP) system. This automation streamlines the payment process, reducing manual efforts and errors.
Why automate invoice processing?
Automating invoice processing streamlines operations, reduces errors, and enhances cost-efficiency. It frees up valuable time for strategic financial analysis and decision-making, ultimately improving the overall financial health of the organization.
What is AI invoice processing?
AI invoice processing employs artificial intelligence to automate tasks like data extraction, validation, and routing within the invoicing process, enhancing accuracy and efficiency.
What is invoice processing in RPA?
Invoice processing in Robotic Process Automation (RPA) involves using software robots to handle invoice-related tasks, reducing manual intervention and ensuring consistency.
How does invoice automation work?
Invoice automation utilizes technology to streamline the entire invoice lifecycle, from receipt to payment. It employs data capture, validation rules, and workflow automation to optimize the process.
What is invoice automation software?
Invoice automation software efficiently captures invoice data, whether from paper invoices, PDFs, or other formats, and seamlessly integrates it into your Enterprise Resource Planning (ERP) system.
