Pay on Time, Every Time: Streamlining Invoice Workflows with Invoice Automation

In a 2022 survey by PYMNTS.com, 9 out of 10 CFOs reported that their companies had already started their digital transformation or planned to do so. However, with just 52% of invoices received electronically and the rest in paper format, finance businesses still have a long way to go.

A crucial way to start is digitizing the mainstay of financial operations: invoice processing. Existing automation technologies—such as RPA (Robotic Process Automation), IA (Intelligent Automation), and OCR (Optical Character Recognition)—are all well-suited for handling many AP tasks, including invoice processing. As Generative AI and other solutions become more sophisticated, invoice automation capabilities will only improve.

Keen to find out more about the ins and outs of invoice automation and what the future holds for invoice processing? Read on.

Let’s start with the essentials: what’s invoice automation? Put simply, it refers to handing over steps of invoice processing workflows to software. Invoice automation systems are integrated with other business platforms, such as ERP, which instantly extract and update AP information, supporting the transition to digitized accounting. Similar finance automation technologies are commonly applied in payroll, banking, and accounting.

Invoice automation aims to reduce—and ideally replace—the manual effort, leading to lower costs, higher efficiency, improved accuracy, and less employee burnout.

Watch our RPA bot automatically processing an invoice submitted via ClickUp form.

Do traditional invoice processing methods work? Most of the time, they do. Do they work accurately and quickly? Most of the time, they don’t. Here are the most common challenges accounting departments face when dealing with invoices manually:

Invoice IDs, addresses, dates, billing, and vendor details must all be extracted from the invoice and entered into your accounting system. This tedious chore requires hours of daily manual effort and prevents AP specialists from focusing on higher-value tasks.

Time inefficiencies are only half of the story; worst of all, manual invoice processing inevitably leads to human error. These mistakes include duplicate invoices, misplacements, inconsistencies, incorrect payments, etc.

Paper invoices may quickly pile up, and the more there are, the tougher it gets to screen accounting processes for errors and discrepancies continuously. Once invoices are processed, they end up scanned or, in the worst-case scenario, physically stored in files or folders, which makes them difficult to retrieve.

Handling sensitive transactional data manually puts an organization at risk. Manual invoice processing leaves gaps that bad actors may seek to exploit, e.g., by submitting fraudulent bills. Manual auditing may also prove insufficient, potentially leading to non-compliance and severe penalties.

Manual approvals, handovers, version control, and managing past payments all contribute to slower invoice processing workflows. This forces businesses into a vicious cycle of endlessly recruiting additional accountants as the company grows.

All challenges listed above affect the cash flow in and out of your organization. Income bottlenecks can have profound consequences, especially for SMEs or businesses without emergency reserves.