Has the manual effort of the invoicing process turned into daunting tasks that are resulting in errors and revenue loss? If so, you’re not alone. According to research, conducted by Levvel Research, 50% of businesses regardless of size (SME, mid-market, enterprises) have yet to automate their accounts payable (AP) processes. The research further concluded that the most common pain points for organizations are manual data entry (71%), manual routing of invoices for approval (61%), and lost or missing invoices (42%). In fact, the study concludes by stating… The question of whether an organization should automate its payables processes has become irrelevant. It has been replaced by, “How should an organization automate its processes?” To avoid these pain points and realize AP invoicing benefits, companies are turning to invoice automation software to streamline their processes.
What is Invoice Automation Software?
Using advanced technology, invoice automation software automates certain AP tasks. For instance, it can:
- Leverage algorithms to check for errors and omissions.
- Use automated workflows to manage the accounts payable process (including sending payments automatically and generating financial reports).
- Provide dashboards for a real-time view of invoices set for payment, invoices requiring approval, and invoices that have been paid.
The process becomes even more streamlined and efficient when integrated with Enterprise Resource Planning (ERP) and customer relationship management (CRM) systems. Relying solely on your ERP system for AP functionality results in additional manual work and process delays which slow the payment process. When invoice automation software is integrated with your ERP system, it becomes a powerful force that simplifies time-consuming tasks. Tasks like posting invoices, recording payments, reconciling balances, and managing disputed invoices. This helps speed up invoice approvals, minimize errors, and reduce processing costs. Additionally, the two-way data synchronization ensures consistent data across both systems.
The benefits of integrating invoice automation software with your CRM system is equally as rewarding. When CRM is integrated with invoice automation software, you can eliminate the time-consuming process of manually uploading financial information to the CRM system. You can also leverage the inherent synchronization to trace earned revenue to specific sales and marketing activities, reduce human error, and gain the confidence that your data is always up-to-date and accurate.
When integrated, invoice automation software serves as a bridge for bi-directional communication of the systems, maximizing efficiencies, reducing human involvement, increasing accuracy, and decreasing costs.
Simplify the Complex with Invoice Automation Software
Regardless of the size of your company, there are certain steps that must be taken into consideration to process and pay an invoice. These include:
- Receive the Invoice: The accounting department verifies the product/service was procured and confirms the amount billed matches the original purchase order (PO). In the event of a discrepancy in the amount charged, the issue must be resolved before the invoice can be routed for approval.
- Approve the Invoice: The invoice is routed to internal personnel for approvals.
- Enter the Invoice in the General Ledger: Once the invoice is approved, it is entered as a credit in the general ledger’s accounts payable account and classified as an ‘open invoice’.
- Set the Invoice for Payment: Enter the payment date for the invoice based on pre-negotiated terms, e.g., 3% Net 20, 5% discount if paid within 10 days, etc.
- Debit the Appropriate Accounts: Debit the invoice amount to the appropriate accounts.
- Pay the Invoice: Send payment for the invoice amount.
- Remove the Invoice from Accounts Payable: Once paid, the invoice is removed from accounts payable with a debit and an offsetting credit to cash is entered.
Having an approved invoice process flow aids in efficiencies, but the cost associated when manually handling invoices is steep. Research has determined that it costs approximately $10 to manually process an invoice. When invoice automation software is introduced, the price to process an invoice drops to approximately $2 – nearly an 80% savings.
Benefits You Can Rely On
Aside from the above cost savings, invoice automation software delivers the following benefits.
1) Match Invoices with POs
Automation allows for the seamless matching of invoices with their purchase orders and checks for discrepancies. This enables you to quickly resolve issues, reduce inaccuracies and enable faster invoice processing.
2) Reduce Errors
Data re-entry across multiple systems takes time and effort. When data is automatically entered into the various systems, the risk of human error becomes negligible.
3) Increase Efficiency
When invoices are in a single location, it eliminates the need to manually search for invoices or request copies of invoices that have been lost or misplaced from the vendors.
4) Faster ROI
This benefit is twofold in that 1) by lessening data entry, fewer AP resources will be needed – freeing them for revenue generating activities, 2) invoices are paid on time, eliminating late fees and penalties.
5) Improved Visibility
Transparency is key to address issues in real-time. Invoice automation software provides the visibility to quickly address inefficient processes, realize under-reported expenses, know when accruals are incomplete, get an overview of outstanding payments, etc.
6) Develop Positive Vendor Relationships
When payments are late or invoices are processed incorrectly, the relationships you have with your vendors can become strained and negatively affect your business. Invoice automation software helps build positive relationships by ensuring on-time payments and eliminating repetitive communications around lost invoices, errors, etc.
7) Make Better Business Decisions
The extensive reporting capabilities, dashboards, and analytics provided by invoice automation software vendors gives you the insights needed for actionable and profitable decision making.
8) Gain Competitive Advantage
The time savings, cost savings, error reduction, etc. enabled by invoice automation software allows you to rise above the competition. This is especially true if you embrace automation prior to your competitors.
Not only does invoice automation software simplify the accounts payable process, but it also enables you to expedite the financial close process and manage your cash flow with better precision.
Automate Invoice Processing Today
There are several software solutions that automate the entire purchase-to-pay cycle. However, the right invoice automation software solution provides the intelligence, scalability, flexibility, reliability, and security needed for organizations to take full advantage of its automation. Tipalti, the leading automated global accounts payable solution provider, selected BillingPlatform’s cloud-based solution to drive operational efficiencies and scale to meet their growing business needs. “As we expanded, we needed a billing solution that could not only handle our growing volumes and complexity but also integrate to third-party solutions to round out the entire billing and revenue management process,” explained Sarah Spoja, CFO at Tipalti.
The unparalleled flexibility of our solution puts enterprises, like Tipalti, in control of how they differentiate in the market, maximize profitability, reduce operational costs, and improve the customer experience. For these reasons, as well as the solution’s flexibility, built-in data mediation capabilities, and third-party integrations that support Tipalti’s billing and revenue management processes, BillingPlatform emerged as the best solution to support Tipalti’s needs. Are you ready to join companies around the world who simplify invoice processing through automation? Contact our team of experts to learn more.