Automated Invoice Processing for AP
As soon as a new invoice enters your company, automated invoice processing extracts the data you need and ushers it into your ERP for efficient, fast, and accurate handling by your accounts payable.
Streamline AP Invoice Processing with MHC
Think about the normal lifecycle of an invoice. Once it arrives to your business, the valuable data it carries must be captured, matched, and reviewed – usually all through manual entry – and then entered into your ERP so the invoice can be paid through yet another manual process. As important as invoices are to any business, this lifecycle involves a lot of handholding by your team, not to mention the errors and delays that are likely to occur.
Automated invoice processing essentially superpowers the invoice lifecycle. Once the invoice enters your company, automation steps in to scan and intelligently capture every crucial piece of data – be it from a paper or digital invoice – to match and review each one. If everything lines up, the invoice moves on; if there’s a discrepancy, automated invoice processing alerts a team member for review. Then it’s on to your ERP where the invoice is automatically connected to vendor and remittance data and the ultimate automated payment of the invoice.
Aside from a click here and there, the humans in your accounts payable team let automated invoice processing work on the minutiae while they work on the tasks that need their focus and strategy. More than that, because automation is shaving off the time dedicated to each invoice, you’re able to pay invoices sooner than ever before, which can mean discounts and better vendor relationships for your business.
Now you may be asking, “How precisely does this all work?” Let’s look more closely at the basic steps of automated invoice processing as it relates to accounts payable.
I. Automated Invoice Collection and Capture
1. Accept the Invoice
Whether coming by way of a paper document, PDF, fax, email, Word, Excel, or something else, automated invoice collection is an all-encompassing entry point for every invoice. It’s a vast improvement over a physical in-tray or a team of people taking time to route documents as they arrive.
2. Scan the Invoice
Each different type of invoice you receive is transformed by your automated invoice process into a digestible format your ERP can understand. More than that, every scrap of data – every alphabetic, numeric, or alphanumeric entry – is read and captured intelligently by OCR and our solution, Billing Data Analyzer (BDA) for more complex invoices.
3. Retrieve the Invoice
Once each invoice is ingested into your ERP through automation, each invoice is essentially at your beck and call whenever and wherever you need it. By entering a quick search term or keyword, your automated invoice process can pull up the exact document you need.
4. Track the Invoice
Once the invoice is part of your internal system, automation makes it possible for you to track it through every step of its lifecycle, from arrival to reconciliation once payment is made. While paper invoices often create a panicked scramble to find a physical document, automated invoices are ever-present and accounted for.
5. Store the Invoice
Every invoice you process must be stored and retained for a number of compliance and auditing reasons, and automation saves your documents securely and accessibly in the cloud. You’ll find secure cloud access to be far preferable to thumbing through file folders in acres of filing cabinets that take up valuable office space.
6. Report on the Invoice
With a place for every invoice and every invoice in its place, invoice reporting is transformed for your business. Automated invoice processing features a variety of canned report templates for rapid use, and you can also create your own ad-hoc reports as needed.
First things first: an invoice must be received into your business before you can do anything with it. Automated invoice processing does everything necessary to bring the invoice in, scan and capture the required data, and store it into your ERP for secure, 24/7 access and processing. If you need to pull up an invoice down the road, automation allows you to quickly find and open the documents you need (including those that relate to the invoice itself).
A Bit More About Automated Invoice Capture
Scanning in and capturing data from a document has been around for a while, and it happens through a process known as OCR (Optical Character Recognition). Essentially this happens as an invoice is scanned in or digitized into your system: in addition to creating an image or picture of the document, each character (letter, number, symbol, even tables) is detected, translated, and transformed into the data formats and fields your system uses to process documents. It’s like when you used to fill in little bubbles on a standardized test or form and your responses were scanned in to provide you with a score or grade; today OCR goes even farther by seeing every bubble and character and line and knowing how to parse that into data that you can work with.
We can go even farther with our Billing Data Analyzer (BDA) technology. No two invoices are exactly alike, and some select industries specialize in services that generate volumes of itemization and pages that comprise a single invoice. For complex invoices and billing documents, BDA is able to perform high-volume scanning and capturing of every scrap of data throughout the entire ream of pages and bring it into your accounts payable system.
Capturing every vital component of your invoices, from arrival and due dates to detailed fees and charges is a huge part of how automated invoice processing does the heavy lifting for your accounts payable.
Invoice capturing, tracking, reporting, retrieval: all of these are ways that automation can handle the invoice itself.
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II. Automated Invoice Processing
Manage Your Invoices
Even before an invoice is sent to your business, automated invoice processing allows you to track invoice documents you haven’t yet received. You can also track status for invoices in process, approved, and paid.
Manage Your Inventory
Thanks to automation, any inventory impacted by invoices you process will be updated in sync with the related invoices and supporting documentation. All of these records can be retrieved and reviewed at a glance.
Audit Your Invoices
Your automated invoice process can be configured to check and validate invoices according to your preferences and compliance rules. Errors and discrepancies can be picked up far faster and more accurately by the automated system.
Every invoice is not as straightforward as Company A billing Company B for a product or service. When complexities in billing are present, automated invoice processing can parse out costs and allocate them to the appropriate entities automatically.
Code General Ledgers (GL)
GL coding powered by automation does the leg work for the accounts payable team by applying cost categories to invoice charges. Additionally, trends can be identified and brought to your team’s attention thanks to visibility provided by automation.
When vendors dispute your invoice payment or processing, the originating invoice and supporting documents are automatically synced up with the dispute for easy reference and easier resolution.
Route Reviews & Approvals
Rather than shuffling a physical piece of paper or forwarding a digital one via email across your organization, automation follows your customized flows to get each invoice to the proper person for rapid and accurate reviews and approvals, all while providing visibility for each step.
Your to-do list for all things related to an invoice can feel overwhelming even in the best of times. Throughout a year the volume of invoices you must manage can fluctuate, plus your team can go through seasons where bandwidth (or lack thereof) makes invoice processing more of a challenge. The task list above goes along with every single invoice without stressing about it, because automated invoice processing can do all of these for you.
Integration with Accounts Payable
Invoices and accounts payable walk hand-in-hand, which is why automated invoice processing is a boon for your AP team. As automation works with each invoice’s lifecycle, integrating with your AP process also happens seamlessly.
Produce Invoice Data File
As each invoice is approved for payment, the automated process produces the data file to feed directly into your accounting system. Each invoice is automatically queued for payment by accounts payable, yet with alerts in place should human review be required.
Monitor AP Status
As each invoice is paid out by your AP process, posting information and payment journals are fed back into your automated system so that status is reflected accurately and in real-time. You’ll know the instant an invoice payment is posted.
Report on Invoice Status
For times when an invoice is hung up in the process, often due to review or approval delays or errors already detected along the way, you’ll be in the know to help you avoid costly consequences like service disruptions or vendor friction.
The Benefits of Using AP Invoice Processing
So much goes into invoice processing, even seeing it on a single page feels overwhelming. Except with the power of automation, your team can see the benefits as your invoice sees every step of an effective, customized process.
- Instead of each invoice taking days or even weeks to process, you can reduce processing time to hours or even minutes.
- Instead of relying on the human eye, which can get strained and tired over several hours of reviewing documents, eliminate errors with highly accurate automation checks.
- Instead of paying invoices barely on time or even after due dates and incurring late fees, pay invoices early and start receiving early payment discounts from vendors who appreciate rapid turnaround.
- Instead of paying your skilled team to perform mundane and intensive tasks like data entry and review, let the automated invoice processing handle the details while your team focuses on strategy and business-building tasks.
- Instead of trying out a new system every time your business or team grows, use a scalable automated invoice process that steps in even when your invoice volume increases by leaps and bounds.