Updated: Nov 25
A guide for enterprises
Efficient invoice management has a high value in every company. And yet, to date, 86% of small and medium-sized enterprises (SMEs) and 22% of the big enterprises still have a manual invoice management process. In this blog post, you'll learn how the transition from manual to autonomous invoice management works and what benefits this transition offers you.
But before we start, it is essential to define invoice management first.
To keep it short and simple, invoice management is the process by which companies receive, record, process, and file invoices.
Is manual invoice management the root of all evil?
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
Manual invoice processing depends on many players in your business and is strongly connected to your cash flow. Different departments are involved in the process that handles the same data several times. Overall, this process takes a lot of time, resources and money. In addition, the involvement of different people increases the risk of human error during the process.
In many companies, invoice management has already become a significant challenge. Almost every day, a pile of new invoices is added to be processed, in many cases, manually. The urgency for an alternative solution to manual invoice management is particularly evident in finance departments, where 82% report being overwhelmed and overloaded with the amount of work related to manual invoice processing.
Manual data entry and inefficient processes
Invoice to payment matching
Lost or missing invoice
Duplicate invoices or payments
Inconsistent AP process throughout the company
Due to the manual handling, the data may be incorrect or might violate compliance. It also engages employees with other tasks that aren't necessarily their concern. Manual invoice processing thus reduces their efficiency and employee satisfaction at work.
Manual invoice management often entails additional costs regarding paper materials, document storage, and work process monitoring. Overall, manual invoice management costs you time and resources. Internally manual invoice management can cause problems in your cash flow, slow down your internal processes and prevents your company and its employees from growing effectively. In addition, it can negatively affect your supplier relationships and the whole 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 autonomous 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:
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 mailbox can be created for invoices. All invoices from here will be automatically imported into the system.
Invoice scanning and data upload: All the data is scanned with OCR and uploaded to the system. Errors are automatically flagged.
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: AI and ML help you find problems, and company policies handle everything.
Paying the supplier: A critical step during this process is the payment of the supplier. We are all familiar with the struggle after receiving the green light for a payment. Our vendor is waiting for their money to arrive, but finance still needs to allocate the resources; procurement is caught between the two parties. Digital payments can solve these issues. Virtual cards provide transparency, and we are ready to pay the invoice immediately after approval or schedule the payment when it is due.
Uploading to the accounting system: Manually extracting data from thousands of invoices is a hassle no company should deal with. Instead, all data needed to post transactions should be automatically collected and easily integrated with your accounting systems.
The advantages of autonomous invoice management
Autonomous invoice management has several advantages for enterprises and their employees. The bar chart reflects some benefits of autonomous invoice management.
Money is one of the critical drivers in the decision-making process in big enterprises. 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 autonomous invoice management reduce costs by up to 20 times.
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.