Every company goes through audits at least once a year, where there are countless moments of anxiety, apprehension, and panic. The collection of all invoices and financial documents from a mammoth pile of files for scrutiny, and the anticipation of the outcomes are big reasons why audit times are a stressful period for all. Audits expose loopholes in a company’s financial records, making the business liable to scrutiny and penalties.
This is why the finance department is usually very particular about the availability of necessary invoices. However, compiling all required data by tirelessly going through the files is easier said than done. Here’s where Automated Invoice Processing plays an important role too. Want to know how? Let’s find out!
Every company deals with tons of invoices, and handling so many papers or digital files is really a headache for the accounts department. The data stored in each of these invoices is equally important and especially consequential for audits. A process where companies are able to extract data from all such invoices and automatically feed it into their Enterprise Resource Planning (ERP) software is called Automated Invoice Processing.
In simple terms, getting every bit of information in your invoice sheets on your computer without actually typing it is the essence of Invoice Automation. Once the data is obtained in a digitized form, processing the payments becomes a matter of only a few clicks. Moreover, having data transformed from physical or digital documents to a computer-usable form opens the gate to automate and expedite several other tasks, and an audit is one of those.
Why Audits Become Hectic for Accounting Personnel?
Audits become a stressful period for the accounting personnel for two main reasons. The first is that many companies around the globe are still in a traditional mode where they are oblivious to the benefits of automated extraction tools. Thus, the people working in the accounts departments of these companies do not make use of tools like Optical Character Recognition software and hence cannot get physical data in a digitized form.
Since this cannot be done, the subsequent process of automated invoice processing cannot be implemented either. Eventually, all compilation work of physical records has to be completed by this personnel manually. One can imagine the pressure under which this work gets completed.
The second main reason why audits become a challenge for accounting personnel is that while they are using automated tools like OCR, they are still stuck on the traditional forms of the same. This means that their OCR tools are unable to extract data accurately from documents, just because they are all present in varying formats. Ultimately, the output generated by such software is full of errors, exposing the company to penalties without any real fault.
How Does An Automated Invoice Processing System Help During Audits
● Easy Validation and Cross-Checking
Automated invoice processing helps in validating the authenticity of all payments. Firstly, when invoice processing gets automated, every invoice is assigned a specific electronic label. This label is a sign that the payment has been approved by relevant authorities. Secondly, with automated invoice processing, the digital record of how and when the processing took place is automatically stored. So, auditors can track the entire process at the same place, without scrolling through different documents.
The data captured from invoices can three way reconciled with supplier master data, data from the issued purchase orders to the suppliers and data from your goods received notes data. This helps in automated matching and invoice knock-off, so that those can be pushed to payment approval.
● Easy Searching
The information about the required documents for the audit is conveyed beforehand to the account section so that they can make arrangements. However, during the course of the audit, there can be several other details that the auditors might require.
Automated invoice processing helps in overcoming these real-time challenges because it involves the conversion of physical data into a digitized form in the first place. This data is stored in searchable PDFs or on the company’s database. Therefore, it won’t take long for the accounts personnel to find the exact piece of data to present before the auditors.
● No Duplicate Payments
During the physical processing of invoices, making duplicate payments is very common. These make the audit process challenging and quite obviously, the results will also not be an accurate representation of how things happened. Automated systems have mechanisms of closing a transaction permanently once final processing is over. So, there are no dual payments, no mentions in audit reports, and most importantly no unwanted expenditure.
● No Compliance Issues
Automated invoice processing, just like any other automated process, is predominantly rule-based. A fixed procedure will always be followed for invoice processing, and any non-compliant record will not be processed. It ensures that the accounts section is always compliant with internal policies and laws established by the federal government concerning invoice preparation and processing. So, this acts as a great way of preventing audit risks that very commonly surface due to invoice non-compliance.
● Fraud Detection
When the entire invoice-to-pay process gets digitized, a digital record of all approvals is automatically created. Therefore, the streamlining of payment steps and the presence of security check-points like two-factor authentication, ensure that all payments are secure, relevant, and legal. If the auditors find any discrepancies within these, they can surely suspect a case of fraud.
Further, since there is a segregation of duties during Automated Invoice Processing, every stakeholder can be individually scrutinized to seek information about any dubious approvals.
KlearStack Automated Invoice Processing Software
KlearStack offers Automated Invoice Processing services that make life easier for both the accountants as well as the auditors. Our OCR software solution empowered by Artificial Intelligence helps in the easy extraction and digitization of invoice data.
Not just this, the processing capabilities of KlearStack’s OCR software are so elite, that all errors in the output are detected and rectified automatically. Most importantly, all this can be performed on invoices of any template or format whatsoever. Auditors can spot inconsistencies easily in the crystal clear digitized invoice records prepared with the help of KlearStack OCR. To know more, contact our representatives today.