Invoice capture, or the process of extracting information from an invoice in order to process it, has evolved quite a bit in recent years. Previously, every invoice had to be manually input into a computer. Which took a lot of time and frequently led to expensive errors. With the recent development of artificial intelligence tools. Businesses may now use automation solutions to greatly simplify the process. This results in huge time savings and fewer errors.
Let’s go over a few tips when it comes to selecting and implementing an automated invoice capture solution.
1. Organizing and maintaining accurate vendor information
You probably have a complete vendor database in your accounting system. But it may not be up-to-date. It is important when it comes to automating invoice capture.
Maintaining a vendor database
There are three possibilities for maintaining a vendor database.
- Many invoice capture solutions can access your vendor database in your accounting system directly. This is great because it takes the least amount of effort and is the most accurate.
- But, in many situations, the database cannot be accessed by the tool. In that case, you will need to create another database by exporting the vendor data from your accounting system and importing it. You will need to come up with a process to keep this database up-to-date. The issue comes in when you add a new vendor and need to make a payment right away.
- Sometimes invoice capture software cannot access outside databases. And requires the vendor information to be manually entered into the tool. This might work ok for organizations that don’t have a lot of vendors and don’t change very often. But, if that doesn’t describe your organization, I would shy away from that invoice capture software.
2. Train Your Vendor How to Submit Invoices
The next tip in streamlining your invoice processing is to drop as many manual processes as possible. I suggest that you have your vendors submit invoices electronically. They can easily be imported into the invoice automation software. Electronic invoices submitted via email are much easier to process than paper invoices.
I suggest you set up an email box for incoming invoices. An example would be apinvoices@yourcompany.com. This will make invoice management less cumbersome. And train your vendors to email invoices to it rather than to a personal email box.
And creating additional inboxes that can have invoices assigned to the correct department or cost center saves even more time.
3. Validate Invoices Before Submitting Them to The Invoice Capture Tool
Many people automatically import their invoices to their invoice processing software. I don’t recommend it. Because you will get emails that are not invoices or could even be fraudulent invoices. I think that someone in the accounts payable department should be responsible for verifying invoices. That way only legitimate invoices that need to be paid, are imported. This actually saves time in the long run.
4. Don’t Worry If You Don’t Get 100% Capture Accuracy
The goal of invoice capture tools is the streamline the time-consuming part of processing vendor invoices. A good invoice automated system should easily reduce data entry by 90%. The effort it would take you to get to 100% accuracy is not worth what it will save you. So, don’t fret over a wrong invoice data field that was captured incorrectly by the OCR, simply fix it and move on.
5. Check for accuracy before processing
With some of the modern invoice capture software tools using artificial intelligence (ai) technology, we are consistently seeing invoices captured with 95 percent plus accuracy. But, it is still important to quality-check the invoice data before moving the invoices to the next step in the process. It is much more expensive to correct errors the farther down the process you go. You certainly don’t want to pay the wrong amount or the wrong vendor.
Many invoice capture systems have the ability to match the purchase order with the invoice and validate if the amount on the invoice matches the PO. Also, they can check for duplicate invoices and make sure the correct information was captured.
6. Invoice Approvals
Another time-consuming manual task of an accounts payable team is making sure all invoices are approved in a timely manner. In most organizations, invoice approval is a very inefficient process. I suggest that when you are looking at purchasing invoice capture software it has workflow capability to be able to route invoices to the proper approver and give the accounting team visibility into the progress of the invoices. This is much more efficient than manually moving around a paper copy or emailing a number of invoices to the right person to approve. Again, this depends on the level of automation your software allows, so it is a good thing to keep in mind when picking a solution.
7. Integration into Your Accounting System
Another time-consuming task is the manual data entry of invoice data into your accounting or ERP system. Most organizations still require bookkeeping to do manual data entry. But, most ERP and accounting system has an API (a programmer’s interface) or allow CSV file import. Using this capability is a huge benefit to the AP department. It will reduce the chance of human error, enable invoices to be paid on time, and, avoid late payment fees.
8. Don’t Forget – Storage and Retrieval Considerations
Once the accounts payable process is completed, you still have to save the supplier invoices for reference. Many organizations still store the paper invoices in a filing cabinet or store the PDFs in a directory on their network. This is not the best practice. It is quite easy for a team member to delete them or accidentally move them to a new directory.
Finding an invoice is very difficult when they are stored electronically in this manner. This leads to a lot of problems for the accounting department. It would be so sad to save time on the front end of the accounts payable process, only to lose it on the back end. How great would it be to find an invoice by a purchase order number, invoice number, invoice date, check number, invoice amount, vendor name, or any data from an invoice? Or a combination of any of these criteria? That is why I recommend finance teams use Laserfiche ECM to process invoices and automatically store them so they can be found that way. And having invoice capture grab the data from an invoice and store it in metadata fields without the need to enter it, saves on the workload of the accounting team.
9. When You Follow These Tips and Select a Great Invoice Capture Solution
Here are a few things I suggest you look for in an invoice capture solution:
- At least 80% accuracy in capturing the critical data off of your invoices. Make sure you try a good sample of various vendors.
- The system stores completed invoices in a paperless software system such as Laserfiche ECM. And gives you the ability to search on all the data on an invoice.
- Has workflow capability to route invoices to the correct people for approval.
- Can adapt to your way of doing business rather than requiring you to change to match the software.
- Has ability to check for duplicate invoices and match POs to the invoice.
- Ability to use your vendor information with the least amount of manual work to maintain.
In this article, I gave you some good tips to help you select and implement an invoice capture solution for your business. We have found that when businesses follow this plan they experience these benefits:
- Reduce the cost per invoice to process an invoice.
- Able to increase invoice volume without adding additional accountants.
- Allow you to quit going from desk to desk to find invoices.
- Reduce the total cost of their ap process.
- Reduce small accounting mistakes.
- Reduce the delay in payments.
- Have much happier vendors.
- Eliminate the cost of storing paper documents.
- Reduce equipment costs such as printers and scanners.
- Have less staff turnover.
- Enables the business to grow.
- Gain better insights and visibility into their business.
- Manage cash flow better.
- Strengthen relationships with customers and staff.
- Save money.
- Enable ap staff to spend time on more valuable tasks.
If you have any questions or would like more information on this, feel free to reach out to Larry on his cell at 612-382-4069 or email at lphelps@hemingwaysolutions.net
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Invoice Capture and AP Automation