Accounting departments seem to be working harder than ever to keep up with an increasing flow of purchasing and payments. Yet it’s a simple fact that these teams could create more value by attending to higher-level tasks instead of individually processing hundreds or thousands of waiting invoices.
This article offers a comprehensive look at the mechanics and benefits of invoice automation. It provides a list of accounts payable (AP) software options for organizations to consider when moving toward full automation.
If your AP team is drowning in a cumbersome manual invoice cycle, it’s time to upgrade to automated invoicing.
What is automated invoicing?
Automated invoicing, also known as e-invoicing, is a technology-driven accounts payable process that allows a company to receive and process invoices automatically. An automation solution eliminates manual invoice management, increasing efficiency and reducing errors. It uses digital tools and software programs to produce purchase orders, track shipments, receive and process AP invoices, and schedule payments for completed purchases.
How does invoice automation work?
The invoice automation process begins when the organization buys supplies from a vendor. Software captures the details of this transaction from online e-commerce sites, integrated platforms, virtual procurement cards, or otherwise connected vendors. These details include customer information, product or service data, prices, taxes, discounts, and more. Once all relevant info has been gathered, the software generates a purchase order for submission to the supplier.
The procurement system then aggregates the necessary information for the order, matches it against the invoice from the supplier, checks for discrepancies, and captures all details for eventual spend analysis.
Most systems also have the option to incorporate payment processing into the platform. Additionally, automation can make tracking unpaid invoices easier, allowing administrators or AP staff to view invoice status across vendors on a single screen to quickly access up-to-date info.
Invoice processing with an automated system allows businesses to streamline their financial operations while improving accuracy and saving time on administrative tasks. With over 50 percent of AP teams spending more than 10 hours per week on the time-consuming task of processing invoices, automation's time and labor savings can’t be overstated.
Benefits of automated invoicing
Automated invoicing can enhance efficiency and improve the work experience of accounting and finance teams. Here are some of the ways automation benefits organizations and enhances accounting processes.
Increased efficiency: Automation reduces the time necessary to receive, reconcile, process, and pay invoices, freeing up resources for other important tasks. Nearly 50 percent of CFOs report that burnout and attrition contribute to talent shortages in their organizations. Teams that use automation in their business processes are more productive and less prone to burnout.
Enhanced accuracy: Automated systems minimize the risk of human errors in invoice calculations, ensuring accuracy and consistency across all invoices. This reduces research and corrections while improving the confidence in the organization’s month-end close and financial reporting.
Improved cash flow management: Automating invoice processing and payments makes it easier to manage cash for stronger financial positioning.
Cost savings: By reducing manual labor and paper processing, automated invoicing can lead to significant cost savings for businesses. It makes accounting teams more efficient, freeing them from repetitive tasks and allowing them to move beyond processing payments into other value-creation activities.
Faster payments: Automated invoices get delivered instantly via email or other digital means, speeding up the payment process and shortening the overall processing cycle. Faster payment also opens the door to early pay discounts.
Better spend management: With automated invoicing, all invoices are stored electronically in a central location, making retrieving past orders or auditing financial records easier. Analysis tools available in some spend management software also allow finance teams and department heads to review spend and budget performance in real time.
Stronger vendor relationships: Automated systems often offer an easy, seamless experience for paying vendors, resulting in better partnerships and potentially stronger negotiations. Automation works best with a strategic approach to sourcing using a shortlist of vendor partners, strengthening each partnership while unlocking volume discounts and other benefits.
Getting started: How to implement automation into your invoice processing workflow
Deciding which invoicing tasks to automate
End-to-end automation for invoice processing makes sense for most organizations. It allows teams to focus on higher-level tasks instead of completing repetitive activities for an ever-increasing flow of invoices.
The following seven steps in the invoice processing workflow are prime candidates for automation:
Invoice receipt: Automation can be used to receive invoices from various sources such as email, fax, or mail. It ensures invoice centralization in one location for easy access and processing.
Data capture: Automated systems can extract and interpret data from received invoices. This includes vendor details, invoice numbers, dates, line item details, and totals. Some systems also create real-time data reviews. Detailed data capture facilitates analysis and helps finance teams identify trends in spending.
Invoice validation and matching: Automation can validate invoice data against purchase orders or contracts to ensure accuracy. It checks for any discrepancies, such as incorrect amounts or unapproved items. Matching systems provide accurate invoice reconciliation for purchase orders, deliveries, and invoices.
Approval routing: Based on predefined rules, automation routes each invoice to the appropriate individual or department for approval. This helps streamline the process and reduces delays in order approvals, invoice processing, and payments.
Exception handling: In cases of discrepancies between an invoice and its matching purchase order or contract, automated workflows can alert relevant parties for resolution.
Payment processing: Once approved, automation facilitates seamless payment processing. Depending on an organization's preferences, this could include scheduling payments to take advantage of early payment discounts or prevent late fees.
Spend analysis and reporting: After payment, automation captures invoice data for future forecasting, budgeting, and audit trails. It also generates insightful reports that help organizations analyze their spending patterns and improve their financial strategies.
Finding the right invoice automation tool
There are several invoice automation and spend management tools on the market. The key to choosing one is finding the option offering the best features and capabilities alongside an easy-to-use interface.
When researching automation tools, consider the following features of top-tier software solutions:
Integration: An automation and spend management tool should integrate effectively with existing financial systems, enhancing pre-accounting processes and workflows.
Real-time analysis: Robust analysis features enable real-time review of current invoices, departmental spend, and budget performance, providing actionable insights for better decision-making.
Vendor management: Spend management tools should offer an easy and seamless experience for selecting goods, substituting out-of-stock items, paying vendors, and unlocking discounts.
Customization: The software solution chosen should be flexible enough to adapt to the specific needs of the organization's invoicing process, business model, supplier list, and logistics requirements.
Ease of use: An intuitive interface is critical for user adoption. The tool should offer functional design and training to help stakeholders understand and use it.
Data security: Robust security features are essential when handling sensitive financial data. Look for tools that offer secure vendor connections, safe transactions, and role-based user permissions.
Comprehensive reporting: An ideal invoice automation tool will generate detailed reports that provide deep insights into a company's spending habits.
Scalability: As a business grows, so do its invoice processing needs. Choose a tool that can adapt to the organization's volume changes over time.
Customer support: Reliable customer service is vital for implementation, onboarding, and ongoing user support. Look for a tool that handles issues by uniting a robust platform with the human touch.
A change management approach makes adopting invoice automation easier for everyone. Intuitive tools make this process faster and more efficient, but training ensures everyone feels confident using the system to submit orders, route approvals, process invoices, and initiate payments.
The steps below are helpful for any change process. Following these guidelines ensures a smooth transition from manual invoice processing to an automated system.
1. Identify stakeholders
The first step in training staff on new software involves identifying key stakeholders. This includes those using the software directly and those needing to access the tool for information and reporting purposes. Loop IT and security partners into the change management plan to ensure the best outcome.
2. Communicate the change
Information makes adoption easier. Communicate the reason for migrating to new software, how it will affect each user's role, and the benefits it will bring the organization. Highlight the changes that will have a tangible impact on work satisfaction and productivity.
3. Implement a training plan
A comprehensive training plan should include group sessions and provide access to a knowledgeable contact. Cover all aspects of the new software, from basic functions to advanced features, and present the training according to the users’ roles.
4. Conduct training sessions
Involve participants in hands-on training to spur adoption. This approach allows users to learn by doing and makes training more engaging. The implementation team for the chosen software solution may offer training and support for the transition.
5. Provide support materials
Interactive resources help outline processes and summarize key points to reinforce learning. Software implementation teams can often provide resources and references for users onboarding the new system.
Building out the invoice process
Invoice processing should be as simple as possible, with a repeatable workflow for every purchase. Whether building an invoice processing system for the first time or refining a current manual process through automation, consider the following best practices:
Involve key stakeholders: Identify staff members who will drive the processing workflow. This can include accountants, managers, and other relevant department leaders. Ask what works and what needs improvement, then use the feedback to develop a plan.
Define the workflow steps: Using the current invoice approval process as a baseline, outline each step from receiving an order to making payment. This could involve things like order processing, invoice handling, approvals, reconciliation, and payment.
Implement a tracking system: Incorporate a system that allows for invoice tracking at every stage. Spend management and procure-to-pay (P2P) software often have features for real-time tracking.
Assign an approval workflow: Construct a chain of command for order and invoice approval. Involve relevant approvers from the department as well as finance, security, legal, or (for high-dollar contracts or purchases) executive team members.
Integrate with accounting software: Sync the organization’s workflow with the accounting software to automatically update financial records and minimize manual data entry.
5 Intuitive invoice automation tools
Looking for a procurement tool that streamlines the purchase and invoice automation process? Here are five options worth considering:
Order.co is the first procurement platform that empowers users to buy supplies, easily substitute out-of-stock items, and forward orders for approval, processing, and payment. It incorporates automation for invoice processing, multi-department approvals, payment processing, reporting, and more. Order.co is also the first vendor-agnostic tool of its kind, allowing organizations to submit orders to any vendor (even paper PO or phone orders) with full spend capture and automation.
- The platform offers vendor-agnostic ordering with role-based guided procurement and automated approvals.
- Procurement happens within a curated catalog of favorite vendors and items for easy and consistent supply ordering and replenishment.
- The tool features next-generation automation from the point of purchase to invoice capture, reconciliation, payment, tracking, and reporting.
- The platform enables invoice consolidation, allowing managers to pay multiple invoices across vendors with a single payment.
- Order.co is the only AP automation and procurement tool to offer virtual procurement cards, universal net terms, and preferred advance financing of up to $500K.
- The platform doesn't offer OCR (optical character recognition), as transactions happen within the platform.
- Order.co is for indirect spend categories; it doesn’t support the RFP/bid processes.
- The system isn’t for direct purchases of software or services; however, the virtual P-card feature allows users to pay for these purchases and capture spend automatically.
2. Glantus (formerly Basware)
Glantus offers full AI and machine learning (ML)-enhanced AP automation to eliminate manual processes and accounting slowdowns. The system boasts AI-powered SmartPDF capture technology to eliminate data-quality issues from OCR. It also offers automation for non-PO invoices for faster processing and data capture.
- The tool features easy-to-understand dashboards that help casual users understand AP data.
- Basware offers fast and accurate GL coding for speedy invoice handling.
- The UI is easy to learn and is supported by customer service teams to ensure new users understand and adopt the system.
- The reporting tools lack customization and sometimes leave out important details.
- When invoices are rejected or returned for correction, an internal Basware admin must manually remove invoices from the workflow.
- Permissions are sometimes restrictive, limiting users' ability to search for vendors.
Airbase spend management solutions enable AP automation for invoice processing and other automated AP workflows. The platform uses OCR and AI technology to capture and verify invoice data. It offers payment integration to automate vendor payments once invoices have been approved.
- The platform has a strong customer service department for handling onboarding and user issues.
- It offers a simple UI with effective processes for getting users up to speed.
- Airbase’s integrations allow users to tie together information systems to reduce redundancy.
- Some reconciliation tools are missing for handling prepaid accounts and amortization expenses.
- Many users report issues with the Airbase app and trying to log in from a mobile device using SSO (single sign-on).
Procurify is a spend management platform that provides real-time visibility into organizational spend. It uses cloud-based functionality to help finance teams manage procurement and expenses from anywhere. It offers features for supplier performance management, AP automation, invoice processing, and integrations with other key systems.
- The platform offers extensive training materials and resources through its Procurify Academy knowledge base.
- Procurify uses algorithms and AI enhancements to ensure data accuracy and error detection.
- Onboarding time for Procurify is extensive, with a reported 4- to 6-week timeline for lighter implementation and up to 12 weeks for implementation with NetSuite integration.
- Procurify does not directly facilitate procurement. Organizations must have a procurement stakeholder in place to process purchase orders.
- Direct order processing requires an integration through the platform’s PunchOuts add-on, but the system is not vendor-agnostic.
- The UI is sometimes difficult to navigate, for instance, when looking for historical PO data.
Stampli is an accounts payable automation software designed to streamline and simplify accounting workflows. It features a user-friendly interface that integrates seamlessly with most existing ERP (enterprise resource planning) systems, enabling organizations to maintain their current workflows while improving efficiency. Billy the Bot, Stampli’s AI and machine learning technology, learns the organization’s current AP processes for invoice capture, coding, and approvals.
- Stampli is competitively priced for the features provided, according to online reviews.
- Its simple features and user-friendly design make it easy for new operators to get up to speed with the system.
- It provides AI/OCR-powered invoice capture with some GL coding options.
- The system makes it difficult to filter out duplicate invoices, leading to confusion and potential inaccuracies in spend data.
- Deleting duplicate or erroneous invoices from the system can be challenging.
- Several users report that the platform is prone to lagging and crashes.
Automate every AP process with Order.co
The procure-to-pay features in Order.co allow users to get the supplies they need within a guided procurement experience, automating the AP process from purchase order to payment. By automating invoicing, approval workflows, GL coding, and three-way matching while consolidating payment options, Order.co helps users purchase items, pay invoices, capture spend data, and achieve total spend visibility automatically.
Need a way to track and manage the invoice process? Use our free invoice tracking template to get started.
Schedule a demo to see how Order.co can simplify buying for your business.
"*" indicates required fields