For a long time, businesses and organizations have depended on manual AP systems to process their invoices. However, with evolving business dynamics and with changing priorities, there’s a pressing need for enterprises to adopt invoice automation. If you’re still dependent on a manual system to process your vendor invoice, not only is your system obsolete, you’re also putting yourself in a disadvantaged position.
Businesses process billions of invoices every year, and research suggests that the number of invoices sent and received will quadruple by 2035. For some business-to-business enterprises, this may represent a real threat, but to many, it may represent an opportunity.
Luckily, the innovative ones who utilize emerging technologies will benefit from greater accuracy and efficiency – and all the associated cost-savings that come with automation. So, is your invoice processing system steering your workflow, or is it slowing it down?
Here are the benefits of the automated invoice processing system.
Without digitization, the typical invoice process includes the following steps;
- Vendor generates invoice
- The vendor sends the invoice
- Buyer prints invoice
- Buyer enters the invoice data
- Buyer reviews data
- Approves invoice
- Buyer writes check
- Mails it to the seller
This strenuous and sophisticated process implies that if there are discrepancies in the ordered items or products, there will be serious delays between the supplier and the buyer before approval. This fully analog AP process may take 30 to 90 days per invoice when there are no errors in the cycle. However, with an automated invoice processing system, you can have your invoices completed in seconds, without the need for human intervention.
Research identifies that 87.6% of enterprises in Western Europe and more than 90% of organizations in the US experience frequent late payments. Nearly 50% of organizations in Great Britain have the highest proportion of past-due invoices. These statistics signify the pressing need for automated and speedy solutions in invoice processing.
2. Drive Efficiency
Automated invoice processing enables data capture directly from the invoices and feeds this information directly to the Accounts Payable system in real-time. Machine learning and AI software make this paperless process more effective. In addition, invoices are processed immediately, eliminating errors and bottlenecks while streamlining invoice processing workflows. Another way automated invoice processing drives efficiency is by capturing early payment discounts and preventing delayed payments which can damage supplier relationships. Also, by reducing time-consuming due to duplicate payments and invoices.
3. Improved Accuracy
Accuracy of financial records is an overriding factor of accountability and integrity. Automated invoice processing eliminates slow and error-prone manual processes. In addition, automation software eliminates sophisticated and complex entry procurements through automatic capture, thus facilitating invoice data integration and verification. The fact that invoice data can directly be captured eliminates possibilities for emission or errors, thus improving the accuracy of invoice processing.
4. Cost Savings
Time is money, and invoice processing is not different. By transitioning to e-invoicing, your enterprise can reduce labor costs, mailing and printing overheads, late and interest fees. Indeed, the cost per invoice without an automated invoice processing solution is $7.03, while the cost per invoice with an automated solution is $4.53. This transition from manual AP tasks to automatic solutions saves 35.6% of costs associated with invoice processing.
5. Better Cash Flow Management
As part of a broader, more holistic approach to the AP automation process, automatic invoice processing gives finance teams and AP departments better budget and cash flow management. This is because invoice automation extends end-to-end visibility, thus enabling spend commitments to be managed more effectively against existing business rules.
6. Performance Optimization
With better cash flow management comes superior performance optimization. This means that with expedited payments and expense reduction, you’ll have more cash in hand to invest in research, innovation, training new employees, or expanding your offerings. So, better cash flow management helps you to optimize performance across different areas of your business without tapping into non-existing capital or funds like loans.
The Shocking Truth About Manual AP-related Tasks
There’s a shocking truth about the manual accounts payable processing systems: the manual system is an inefficient technique with more than 101 shortcomings, each of these contributing to a poor invoice experience. If you’re processing your vendor invoices manually, you’re encountering these problems and harming your productivity. Some of the drawbacks associated with manual AP processing techniques include;
- Time-consuming – With a manual AP system, it takes weeks or months to approve a payment. Your finance team spends more time to get less significant operations done.
- Costly – On average, it costs $7.03 to manually process a single invoice. In addition, invoices with special conditions like non-PO invoices and exemption can cost up to $50 to process.
- Causes significant monetary losses – Issues of late payment penalties, duplicate payments, missed accounts, forgotten credit notes, and fraud are common with manual invoice processing. Whenever this happens, you lose money and your company’s bottom line is heavily impacted.
- Prone to human error – Since sophisticated financial information is manned by error-prone humans in a manual system, mistakes are inevitable.
- A lot of hassle – The manual AP processing system is inconvenient and convoluted. Whenever a supplier sends an invoice, you have to print it out, register it in the accounting or ERP system and convey it for different workflows.
- Outdated – Clinging to a manual processing system makes it feel like your employees are still operating in the 1960s. Modern, smart enterprises comply with the best technology can offer.
- Requires more hands – A manual invoice processing procedure needs more human workers to operate and function, given the fact that most related processes are hand-operated.
ProcurePort – Your Destination for E-Invoicing Solutions
Making invoicing faster, more accurate, and fully compliant through automation is a low-hanging fruit strategy to improve your enterprise efficiency, resiliency, and scalability. This is not to mention enormous cost savings on your end. Even beyond these benefits, invoice automation software ensures that all your invoices are still managed even when AP teams have to work remotely, and during periods of disruptions.
Contact ProcurePort for a time-to-value e-invoicing solution.