Accounts Payable Automation Software – Invoice Processing

Are you still processing invoices manually?

If you said yes, you are not alone.  A survey a couple of years ago reported that 84% of small businesses relied on manual processes. As you probably know, manually processing invoices is very tedious and labor-intensive. Accounts payable automation software can help your AP It costs $10 to process an invoice with little or no AP automation according to a recent study2. But, it costs $2.07 per invoice with AP automation.

accounts payable automation

The fact that manual invoice processing is expensive, is probably were not news to you. But maybe going the next step has been a stumbling point for you. That is the reason I am writing this article.  I will give you the information you need to determine what you need and pick a system to meet your needs.

What is Invoice Process Automation or Accounts Payable Automation?

Accounts Payable automation is software that streamlines and automates the AP processes. It removes manual tasks. And automates the approval process and reduces data entry errors.  Processing invoices are carried out in five main steps.

Capture

Invoices arrive at your office in several formats; paper, electronic, and via portals. You scan and OCR (optical character recognition) the papers invoices to capture the data.

invoice capture

Some documents arrive as electronic invoices. Most of them are PDFs. Your capture software extracts the text from the electronic documents.

You must download invoices delivered on vendor portals.

Capture is one of the most critical steps of the invoice process automation process. The invoice capture software uses zone OCR, pattern matching, machine learning, and artificial intelligence to recognize and capture data off of the invoices. It captures the vendor name, date, PO number, invoice total, and other important fields of information. And it stores the data for use later in the AP automation process. The format of vendor invoices vary, this makes capture complicated. And the critical data needed to be captured can be anyplace on the invoice.

Some accounts payable automation software systems can capture line item detail. The number of line items and the layout of the fields varies making this part of the capture complicated.

“Your AP automation workflow reduced the time we spend processing AP invoices by 50%.

I cannot even begin to express how elated I am with this product!!!!!!”

community health goes paperless using laserfiche and hemingway solutions

Dee Bradshaw, Community Health Centers, Winter Garden, FL


“I feel much more confident in the process now that there’s less risk of error (because of our Laserfiche AP workflow)”

They work with us as if they are a part of our Company.  The accounts payable workflow they created for us was comprehensive. and well done”.

Laserfiche success story

Thor Nelson, Chief Operating Officer, Aspen Waste


“When I needed an old finance report, I would have to search for it among 30 banker boxes. Now, those reports are available with the click of his mouse. You just can’t imagine how you appreciate that time savings when you’re busy.”

Win Grandstrand, Finance Director, Community Action Partnership of Suburban Hennepin


“I can’t imagine what we would do without Laserfiche.  I would never want to go back.”

bill AP success

Bill Ruhlman
CFO, Aspen Waste Systems

 

Capture Step – Realistic Expectations

It is good to have realistic expectations with the invoice capture software. OCR technology is 80%-95% accurate. Capturing data accurately off of PDFs also has its challenges because there are so many ways to create a PDF. Some methods are better than others. Some methods of creating a PDF also include the text that the PDF represents. If this is high quality, capturing the data is easy and accurate. But if the text is not high quality, getting accurate data is more challenging. And other PDF formats have no text, so the invoice capture software much uses the OCR process to capture data.  And since there are so many variations in the layout of the invoices that it is nearly impossible to capture invoices with 100% accuracy.

You should expect that you will have to manually verify the data. Which brings me to the next step in the processing invoices, the verification step.

Verification

verifying invoicesIn this step in the invoice processing process, the data extracted from the invoice is validated. This is done by a combination of manual and automated processes. An operator should look at the invoice and verify the data captured correctly. Also, the AP automation software validates the invoice by querying the accounting software. It verifies if the vendor captured off of the invoice is a valid vendor in your AP system.

If you use a POs, it can verify the invoice that matches the PO. In this step, the GL code information is added to the invoices meta-data. Once the invoice is verified, it moves to the next step approval.

Approval

invoice processing approvalIn the approval step of the invoice automation process, the issue that plagues manual AP processing is getting the appropriate approval for an invoice on time. For this, modern AP process automation systems use workflow products to automate it. You can program these workflow products to follow your exact approval process. It routes each invoice to the appropriate approvers. This ensures that every invoice follows your exact approval process.

Also, good workflow products can make sure approvals happen promptly. And when necessary, send reminders to approvers. If approvers do not respond, the system escalates invoices to their supervisor.

Once the workflow is completed the approval process, the invoice is ready for the data entry step.

Data Entry

data entry is part of processing invoicesIn this step, data is either entered manually into the accounting software or it is automatically entered by a software integration between the accounts payable automation software and your accounting software (ERP). When you choose to use the automatic method, you eliminate the chance for manual data entry errors and you save an enormous amount of time.

The automation method of data entry uses either a software integration sometime called an API with your accounting software. If no integration or API is available, new technology can be used. RPA (robotic process automation) is what we call this technology. In this method, the software replicates the keystrokes it would manually take to enter the data into the accounting software.

File

filing invoicesFinally, the last step is to archive the invoice in the proper location. There are several ways that people want their invoices archived. We have often combined the invoice, the PO, and the check into one document. And, stores it in the vendor paid file by vendor and date. This makes auditing very simple. But, no matter what your filing system looks like, a good workflow system should be able to automatically file your invoices in the proper location in the proper format.