Behind the scenes of every business, the accounts payable and receivable departments keep things running smoothly. While many other teams may contribute to the daily success of a company’s mission, accounting staff are the ones who make sure the business stays afloat. Meeting obligations from other vendors and issuing invoices to those your business serves are critical steps. Without prompt invoicing procedures, losing sight of a company’s cash flow and liquidity is surprisingly easy—and it happens fast.
On the surface, the overall invoicing process is not hard to understand. A business purchases a service or orders goods, and the vendor creates and issues an invoice stating the price. The purchasing business must take the invoice, verify that it matches the original purchase order, and validate the various aspects of the requested payment. Only once all the information reconciles correctly can a business leader authorize the invoice for payment.
There are an equal number of steps to consider for the issuing business. Ensuring the invoice matches the received PO, ensuring that the actual goods or services were provided, and tracking late payments are all tasks that require human oversight. While this has been the standard way of doing things for many decades, is it really the best option?
Where Traditional Invoicing Workflows Fall Short
Ask any AP professional about the most common headaches they deal with, and you’re likely to receive a long list of complaints. While it’s easy to describe the process of issuing and paying invoices, the actual steps involved are many and rife with opportunities for error. Many of these problems can lead to real consequences, such as lost revenue, late fees, and degraded relationships with your suppliers. Let’s take a quick look at the most typical issues encountered with manual invoice processing:
- Data entry errors. Many offices still require staff to open mailed invoices and manually enter that data into the system. For tired or overwhelmed staff, it’s all too easy to introduce errors into invoice information at this key stage.
- Lost and late invoices. Without a good process for capturing data from invoices, your department could misplace invoices, raising the risk of late fees and missed payments.
- Difficulty managing multiple invoice streams. When working with many vendors, you might receive invoices in many ways — via fax, via mail, via email, and so on. Unifying this data can be a persistent problem.
- Poor data visibility or slow reporting. Understanding what’s happening with your business financially requires good data and oversight. Manual processes make that hard to manage consistently or affordably.
New opportunities have arisen with so many issues inherent in the old way of doing things. With exciting automation technologies, accounts payable and receivable can take a big step into the future.
How Automation Affects the Modern Office
Automation in the workplace doesn’t typically refer to “real” physical robots—but we can build programs that mimic the way humans interact with computer systems. Robotic process automation, or RPA, is one of the most popular ways for businesses of any size to explore these new opportunities. RPA operates in a digital environment defined by strict rules. It is ideal for highly repetitive and standardized tasks.
Combining RPA with emerging opportunities to embrace machine intelligence in areas such as document capture opens the door to incredible savings. How are these technologies impacting invoicing right now?
Invoice Automation: A New Approach
With a blend of automation and human skills, it’s possible to overhaul the invoicing process into an area of strength for a business. Reducing the time it takes to process an invoice is one of the key advantages. Consider a basic overview of how an automated invoice system would work:
- A software robot monitors specific hard drive folders, network locations, or email accounts for data in a precisely defined format. When a new invoice goes through the capture process, it grabs the invoice and moves it to the next step.
- With ML-enabled document intelligence, the system identifies the contents of the invoice, even if the format changes between clients or orders. A full-text digital copy of the invoice is the result.
- More software robots input this digital information into accounting and invoicing software. The process of matching invoices to POs and reconciling other account information becomes automatic too.
- Robots automatically notify or remind key stakeholders responsible for invoice approvals when ready.
Although this is a simplification, it’s easy to see the many opportunities in this advanced process to realize quick wins on speed and accuracy right away.
The Pros and Cons of Invoice Automation
What are the key reasons businesses invest in automation today—and are there any drawbacks that are important to understand? By investing in a well-configured automated invoice system, you can unlock advantages that include:
- Eliminating human errors that often cause delays, waste money, and frustrate vendors.
- Breaking down silos between computer systems, allowing for more visibility into the business’s finances.
- Accurate and fast reporting.
- Opportunities to realize early payment discounts, plus the data necessary to optimize payment schedules for balancing cash flow with discounts.
- Dramatically reducing both the time it takes to process an invoice and the cost per invoice.
What about the downsides?
- Good document capture technology is still essential for avoiding errors. Excellent results flow from quality, accurate data.
- RPA alone can enable important elements of invoice automation, but it works best when paired with a platform that can lead toward intelligent automation. It’s important not to lose sight of a longer-term strategy.
- Encouraging adoption of the new system can be tricky in offices that have long used the same methods.
- Process failures or deviations still require human intervention.
No technology is 100% perfect, but invoice automation can help businesses achieve better results than it is possible to recognize consistently with old paper-based workflows.
Transforming the Invoicing Process for the Future of Work
The agility required to remain competitive in today’s marketplace has only increased in recent years. With the need for better speed, increased oversight, and total control over your data, traditional invoicing solutions fall short in the face of current demands. Empowering accountants and AP/AR professionals to do more and do it faster every day makes it possible to strike the ideal balance between human experience and automated consistency.
Technologies such as RPA, which prove so valuable to the forward-thinking AP department, don’t replace the role of humans in the business. Instead, software robots magnify human importance. By taking the most tedious and error-prone steps and converting them into automated workflows, skilled workers can refocus their expertise on more valuable business processes.
Ultimately, this hybrid workforce will be the engine of the office of tomorrow. With the right kind of automation, it’s possible to do more than save money–you can make your business more competitive and your staff happier, too. Can your business afford to overlook the value of such an investment?
Director, Product Marketing at Kofax
Dan Johnson is Director, Product Marketing – Intelligent Automation at Kofax. He delivers global product positioning, sales & partner enablement, and go-to-market strategy for Kofax’s Intelligent Automation Platform, transforming information-intensive business operations start to finish. Prior to Kofax, Dan held similar roles at Alcatel-Lucent, Nitel, Nokia and Revenera. Dan holds a master of business administration, marketing degree from Keller Graduate School of Management of DeVry University, and a bachelor of science, marketing & economics from Elmhurst University.