A guide for enterprises
Efficient invoice management is crucial for the smooth functioning of any enterprise. Despite the availability of sophisticated automation solutions, a surprising number of large enterprises continue to depend on manual processes for managing their invoices. Approximately 80% of companies still use manual invoice management. This blog post guides you through the transition from manual to automated invoice management, detailing the myriad benefits that accompany this switch.
But before we delve into the advantages of automation, let's define what we mean by 'invoice management.'
Simply put, it is the process through which companies receive, record, process, and archive invoices.
Why Manual Invoice Management is a Roadblock for Enterprise Efficiency
Manual invoice management in enterprises is a laborious multi-step journey. It begins when the supplier sends an invoice, then through validation, approval, and supplier onboarding, culminates in payment and ledger recording. The process doesn't only involve one or two departments; it loops in several, each revisiting the same data.
The standard procedure for the manual invoice management process consists of the following steps:
The supplier sends the invoice
Accounting or procurement validates whether the invoice is legitimate.
The invoice goes through the approval flow
Finance onboards the supplier
Payment of the supplier
Payment is recorded in the ledger
This not only saps time but also diverts manpower from other crucial tasks while increasing the risk of error.
Manual data entry and inefficient processes
Invoice to payment matching
Lost or missing invoice
Duplicate invoices or payments
Inconsistent AP process throughout the company
Manual invoice management can result in inaccuracies and compliance violations, preventing employees from focusing on their core responsibilities and reducing efficiency and job satisfaction. Moreover, additional costs can be incurred owing to paper, document storage and monitoring. This not only affects the organisations' cash flow, internal process and effective growth, but it also could have negative effects on supplier relationships with suppliers and disrupt the entire supply chain.
Let's face it. Enterprises have been craving a new solution for invoice management, where administrative tasks do not halt their growth.
How automated invoice management works
To overcome human error, we need to introduce automation and machine learning.
With automating your invoice management you can eliminate many bottlenecks from manual processes and improve your bottom line. The basis for automated invoice management are the technologies of artificial intelligence (AI) and machine learning (ML).
Let's go through which steps can be automated from the invoice processing and how:
Automated invoice upload
Invoice scanning and data upload
Auditing and compliance checks
Paying the supplier
Uploading to accounting systems
Pre-approval: With automated approval flows, each invoice is already approved before the purchase. The flows are customisable, so only those are getting involved who need to be.
Automated invoice upload: A unique mailbox can be created for invoices. All invoices from here will be automatically imported into the system.
Invoice scanning and data upload: Data can be scanned with OCR technology and uploaded to the system, without the need to introduce it manually. Errors can be flagged automatically.
Supplier onboarding: A crucial point is uploading the suppliers to the ERP system, even when it is a so-called one-time supplier. The automated system includes several functions like sanction screening, supplier data validation, supplier registration and updating the data continuously.
Auditing and compliance checks: The automated system includes several features like sanction screening, supplier data validation and supplier registration. With the help of AI, we detect discrepancies and make sure that company policies are compliant.
Paying the supplier: Digital payments and the use of automation make it easier and more compliant to process invoices immediately or schedule them for the due date after receipt.
Uploading to the accounting system: Instead of extracting data manually, the information of thousands of invoices is automatically collected and integrated with your accounting systems.
The advantages of automated invoice management
Automated invoice management has several advantages for enterprises and their employees. The bar chart reflects some of these benefits.
Reduced cost per invoice
Reduced processing time
No human error and accurate data
Improved supplier relationships
Opportunity for customization
Easy access to invoices
1. Reduced cost per invoice
Invoice management is associated with relatively high costs. There are often "hidden" costs, for example, for classification. In the worst case, if the invoice is lost or incorrectly assigned, processing this error can result in $200 per invoice. This makes it hard to be competitive. It is already proven that companies with automated invoice management reduce costs by up to 20 times.
2. Reduced processing time
The market is developing incredibly fast, and the competition never sleeps. Therefore, time, especially the effective use of available time, is more critical today than ever. Invoice management becomes more efficient and profitable by eliminating the hassle of paper invoices and establishing fluid and reliable approval processes across the enterprise. As a result, employees can devote their time to other valuable tasks.
3. No human error and accurate data
Integrating AI and ML offers several beneficial opportunities for your invoice management, e.g., regular sanction screening, continuous updating of supplier data, real-time monitoring, easy and automated data sharing and validation according to compliance rules. You can mitigate human error, duplicate or lost invoices, and incorrect payments with automated processes.
4. Increased transparency
A complete audit trail ensures that each invoice can be traced back until the request. This ensures accountability and compliance.
5. Improved supplier relationships
Automation makes payments to suppliers timely and accurate which at the same time improves and fosters long-lasting supplier relationships, creating trust and reliability.
6. Opportunity for customisation
Automated invoice management solutions can be adapted to meet your company's specific needs. For instance, approval processes can be tailored to your organisation's structure and business rules. For large companies, embracing new solutions can be challenging, but with a well-thought-out solution that prioritises ease of use and customisation, any company can easily reap the benefits.
7. Easy access to invoices
Since automation manages invoices digitally, they are all uploaded to the cloud which can be accessed easily by the authorised and from anywhere. This can be convenient if your business has global entities, and need access to invoices in real-time when needed.
A holistic solution beyond automated invoice management
Mazepay enables a global B2B ecosystem that supports buyers and suppliers. An ecosystem that removes all the unnecessary complexity in today's long-tail procurement and instead facilitates trade based on trust, compliance, and on-time payments.
We provide a platform for enterprises to control their spend by simplifying and automating processes and workflows for every layer of the organisation. With the help of Mazepay, invoices can live long, but without all the drawbacks and extra costs.
If you want to know more about how to get in control of your invoices and improve supplier relations, contact us or book a demo.