The Benefits of E-Invoicing and How to Get a Jump Start
E-invoicing (or electronic invoicing) is simply the receipt, validation, and archival of an invoice transmitted from a supplier to a purchaser in electronic format such as a managed file transfer, electronic data interchange, XML format, or email.
Ideally e-invoicing ensures data integration between the purchaser’s accounting or procurement system and the chosen invoice format. However, this is often not the case. Many suppliers are either not technically capable of producing easily-integrated invoices, or they cater invoice layout and design to only the larger subset of their purchasers.
Lack of any kind of universal invoice layout or format makes invoice automation projects difficult and expensive. Many of these projects are really just document digitization combined with manual invoice processing. And it makes sense — if an invoice has an error that can’t be automatically corrected or the originating purchase order (PO) intelligently matched, it must be manually reviewed.
If you haven’t had to process invoices at scale, say a couple of thousand invoices a day, then it may be difficult to understand why the process can become so complicated. Here are some of the complications that make invoice matching difficult:
- Line-item pricing discrepancies
- Quantity mismatch with the original PO
- Unexpected tax or other charges
- Incorrect, unexpected, or missing part numbers
- Assemblies made of subparts or vice versa
- PO number missing
- Multiple POs combined
It’s obvious that an intelligent solution is required, or even better that universal invoice format I mentioned earlier. Eventually government regulation will drive the adoption of standardized invoicing, but we’re a long way off from that. Research firm Gartner, Inc. reported in 2019 that globally only about 10% of invoices were submitted electronically.
However, with the right business outcomes in mind, and the right choice of technology, intelligent invoice automation with e-invoices is achievable. Here are some of the business outcomes driving accounts payable invoice automation:
- Early payment discounts
- Reduced invoice processing costs
- Increased procure to pay efficiency
- Regulatory compliance
How to Select an E-Invoicing Vendor?
The most important consideration for selecting an e-invoicing provider is choosing a vendor who will closely align with your most strategic business outcomes. Every organization is different and there is no one-size-fits-all solution. Here are some examples of e-invoicing goals we’ve seen:
- Reduce cost per invoice (CPI) — How? Basic digitization reduces touchpoints and drops CPI.
- Reduce payment cycle time (PCT) — How? Reducing manual data entry decrease errors and PCT.
- Achieve regulatory compliance — How? Build country-specific processes into workflows.
- Improve working capital — How? Reduced PCT takes advantage of early payment discounts.
- Reduce head count — How? Automate two and three-way PO matching and build exception-only workflows.
Robust e-invoicing solutions will align with and automate your internal processes. Modern solutions integrate with upstream applications such as your purchase order and contract management solutions and integrate key data to streamline the invoice approval process.
How to Get a Jump Start on E-Invoicing
Just because you receive paper invoices doesn’t mean you can’t have highly efficient and automated workflows.
If you receive most invoices as scanned documents or paper, your best option will be to choose an accounts payable invoice automation solution. Good digitization will be an important factor for success. Look for excellent image processing capabilities that will maximize optical character recognition (OCR) effectiveness.
Good OCR paves the way for machine intelligence to understand invoice content. With an accurate understanding of what’s printed on the invoice, AP automation will provide validation workflows to match your business rules and flag any invoice that doesn’t automatically match.
If your processes require approval workflows instead of PO lookups, intelligent automation now provides capabilities to route invoices based on invoice totals. Quickly route invoices to the proper approver through email or your content management solution.
Human-in-the-loop invoice automation is built on transparent artificial intelligence that is trainable by your subject matter experts. It shows how invoice data is extracted and verified to provide confidence in results.
Benefits of Intelligent Invoice Automation
- Integration: Connect to your scanners, accounting, email, and fax providers.
- Document management: Import digital invoices with auto-naming and metadata.
- Validations: Apply vendor lookups and mathematical validations.
- PO matching: Set automatic approval with two-way and three-way matching.
- Error review: Flag inconsistencies for rapid human review.
- High volume: Process thousands of invoices daily.
- No templates: Use rapid machine learning to identify and extract invoice data.
- Extract more data: Line-item extraction and automated reconciliation captures more data.
These solutions will integrate with cloud and local content management systems such as Box.com, ApplicationXtender, SharePoint, etc. to provide seamless access to invoices after processing.
The most important factor for success in choosing an e-invoice solution provider is the ability to integrate with existing accounting applications, PO processes, and approval workflows. Seamless integration that doesn’t require a suite of procurement software or a steep learning curve will prove rapid return on investment and eliminate costly manual processing.
Originally published at https://blog.bisok.com.