Top 5 Reasons to Automate Invoice Processing
Businesses around the globe process billions of invoices annually. As the process of purchasing materials and goods is refined and streamlined, this volume is only increasing. In fact, recent studies suggest that the volume of invoices received is likely to quadruple over the next decade. For this reason, many businesses are eager to automate invoice processing to better manage their cash flow.
The benefits of automated invoice processing are well documented, but many companies are still hesitant to take the leap. Many of these companies have heard the familiar pitches, including:
- Invoice automation increases efficiency
- Automating Accounts Payable improves accuracy
- AP Automation is a perfect entry point for digital transformation
But how can you be 100 percent certain that automating invoice processing is, in fact, the ideal solution for your business? In this article, we break down the top five reasons why companies are utilizing invoice automation to gain a competitive (and operational) advantage.
1. Automating Invoice Processing Saves Time
Do you still process invoices manually? If so, your process probably looks something like this:
- The invoice is generated by the supplier
- The supplier sends the invoice to the purchaser
- The invoice is printed and walked to an approver
- The data on the invoice is manually entered into the purchaser’s ERP system
- The invoice data is sent to the approver for review
- The invoice is approved
- The purchaser writers a check
- The check is mailed to the supplier
Of course, this process doesn’t necessarily end here. If there are any discrepancies or issues with the invoice, the purchaser and the supplier must work together to resolve them for approval.
Now, let’s compare the number of steps involved when this process has been automated. It looks like this:
- The invoice is submitted digitally via an invoicing platform (i.e., IntelliChief) to the purchaser
- The invoicing platform captures data from the invoice automatically
- The invoicing platform automatically processes the invoice through the correct approval routing procedures
- Once approved, payment is sent to the supplier
With invoice automation, the number of steps required to approve an invoice is cut in half. Better yet, each of these steps is occurring in real-time, which means your business doesn’t need to wait for an approver to interact with an invoice. Invoices are automatically captured and processed as they arrive without any human intervention, resulting in an 80 percent reduction in the amount of time it takes to process an invoice. In our research, we have found that it takes companies an average of 16.6 days to process an invoice manually as opposed to only 3.6 days with invoice automation.
Needless to say, time saved is money earned — bringing us to the second reason why businesses choose to automate invoice processing…
2. The Cost Savings Are Undeniable
When you can reduce the amount of time it takes to process invoices, you can get a more accurate look at your cash flow and make better decisions, but that’s only the beginning of the cost-saving benefits of invoice automation. You also save by:
- Decreasing the amount of labor required to satisfy your AP process
- Reducing paper-based overhead, including printing, mailing, and physical storage
- Eliminating late and duplicate payments
Over time, these savings add up. When your cost per invoice is up to 80 percent less, you can reinvest those dollars saved to help your business grow and evolve. We’ve done our own research by leveraging our database of hundreds of customers. We’ve found that on average, businesses that automate invoice processing pay an average of $2.94 per invoice. This cost spikes to $15.96 per invoice at companies with no automation.
3. Gain Superior Visibility and Cash Flow Management
With automated invoice processing, your business will have a more accurate picture of where it stands from a cash flow management perspective. Not only will you have a better idea of your total available cash flow but also how it is affected throughout the year. In other words, invoice automation makes it easier to plan your next move — growing your business has never been easier.
Here are some examples of what your business can accomplish with greater control over its cash flow:
- Invest in innovation
- Hire and train new workers for more fulfilling roles
- Expand product and service offerings or double down on your existing offerings by improving them
- Reinvest in other departments that can benefit from automation
It’s no secret that implementing automation makes it easier for businesses to scale as their needs evolve, but it also helps kickstart growth by providing some greatly needed stimulus. Plus, with better cash flow management, you can focus on further refining processes to become more efficient.
4. Redefine Efficiency and Eliminate Human Error
According to Billentis, 20-30 percent of invoices “have to be treated as exceptions in one form or another.” This is where the top-tier invoice automation solutions separate themselves from the pack. An important question to ask when considering invoice automation is this:
- Can the solution automate exceptions? And to what extent?
Most automated invoice processing systems can automate simple, PO-based invoices. When discrepancies occur, these systems break down and require manual approval. Unfortunately, this is also the scenario most likely to result in human error. What if your solution could automate the bulk of your discrepancies? IntelliChief can.
IntelliChief utilizes a variety of features based on approval logic to get the job done when other solutions can’t. Mismatched item numbers? No problem. Unconverted currencies? No problem. Missing vendor ID #s? No problem. The list goes on.
This helps you improve invoice approval accuracy while also benefiting from additional process controls, reporting, accountability checks, and more. What happens when the discrepancy can’t be automated? Invoices can be recalled on demand and instantly connected to other related documents, allowing you to analyze what went wrong and why. If the solution is repeatable, IntelliChief will take the proper action next time having learned it from your manual approver.
5. Reduce Stress With Automated Compliance
Your invoices are an important form of documentation when it comes to financial and tax compliance. Your auditor needs to know what you purchased, and for how much, to ensure that your business doesn’t have anything to hide. Unfortunately, paper-based invoices are easy to lose or damage, which can cause friction with your compliance requirements.
With invoice processing automation, you can essentially automate compliance by providing auditors with all of the information they need through a digital portal. With your system constantly updating itself in real-time, you don’t need to explain why a certain document is missing or features outdated information — everything is accounted for at all times.
The World Bank notes that invoice automation can help you fortify your tax compliance and legal security needs while reducing related costs by nearly 40 percent. Are you currently preparing for an upcoming audit? Rather than investing sweat equity and work hours into preparation each time an audit is required, you can automate the entire process from start to finish with virtually no maintenance — all thanks to automated invoice processing.
Are You Ready to Automate Invoice Processing?
Now that you understand how invoice automation can help you reduce invoice processing costs, decrease invoice cycle times, obtain more vendor discounts, eliminate paper/storage costs, and achieve superior visibility into your process, it’s time to speak with an expert about your specific goals and requirements. Before you start to shop around, it’s important to form an enterprise software selection committee and understand the integration requirements of your core technologies.
Once you have this information, contact IntelliChief to speak with an expert about your project. We’re happy to point you in the right direction to ensure that your automated invoice processing project helps your business gain a competitive advantage.