If you are looking to build a company or are following up with the bug companies globally, then you would notice one thing that is increasingly common amongst these companies: this is a strong invoice automation process. In this article, we will discuss everything that every budding entrepreneur needs to know about invoice automation for their business and enhance their vendor relationship by leveraging automation into this crucial financial process. So, keep reading the article as we will be decoding some of the key insights about invoice automation.
What is Invoice Automation?
Folks, before we give you a detailed understanding of invoice automation, let me tell you about this financial process if you have not known about it already. Invoice automation is primarily the process of automating the invoice processing workflow. By leveraging the power of automation, this process is significantly streamlined. With invoicing automation, there is an increased streamlining of the accounts payable which processes automatically by paying the supplier invoices. With invoice automation, there is a significant amount of establishment of string vendor relationships, which includes key steps such as extraction of invoice data, entering the data into the accounting system, and reviewing and approving invoices automatically based on preset rules.
Vendors will experience these processes seamlessly, with the power of automation making a significant impact across the complex processes. Manual methods of invoice processing are inadequate in offering a seamless vendor management experience. With invoice automation, the key tasks in the entire process are significantly streamlined, which will save a huge amount of time and effort.
Now that you understand invoice automation, head to the next section of the article to decode the process and workflow in depth.
What is the Invoice Automation Workflow?
As mentioned earlier, this is one of the crucial financial processes which businesses rely upon to build and establish vendor relationships. With automation, there is a significant amount of bandwidth which is being saved in conducting the invoice automation workflow end-to-end.
Here are the key processes and the workflow of invoice automation:
Invoice Receipt
This is one of the key processes of the invoice automation workflow. Once the invoice is received, the team will verify if the product or the service was procured. The billed amount will then be matched with the amount on the original purchase order. Any discrepancy at this stage will be resolved with the vendor, and this will be done before routing the invoice for approval
Invoice Approval
When the invoice intention matches the PO and the goods receive a note, it will be routed for approval as per the company policies.
Invoice Payments
This is another one of the key processes in the entire invoice automation and is also crucial when it comes to vendor relationships. Approved invoices will be sent to the payout as per the terms that were negotiated with the vendor, and then, there will be some vendors who will be offering early bird discounts and will be making the payments to typically last within 10 days of issuing the invoice. An established invoice processing workflow will improve the efficiency of the accounts payable department and enable them to track and process invoices quickly and accurately.
What are the Steps in Invoice Payments Processing?
The above were the key steps that are in the invoice automation workflow. Here are the steps that you need to know about the entire process of invoice payment processing:
Verification
Once the accounting department receives the invoice, it will be verified and checked for the authenticity of the product or service procured. When delivery of the services or goods is received, the buyer raises the goods received note (GRN). This note consists of information on the number of goods and the billing amount.
Capturing the Data
Once the invoice has been verified, the data will be gathered, and the accounts team will do it. The invoice then needs to contain basic data that includes the amount owed, who is owed, payment terms, cost of goods (including shipping, taxes, and service charges), category of the invoice, and category codes for bookkeeping purposes.
3-Way Matching
This is another crucial step in the invoice payment process. The authenticity as well as the accuracy of the invoice will be verified before being sent for approval. The data on the purchase order, goods received the note, and the invoice needs to match accurately. 3-way matching prevents fraudulent or duplicate invoices from being sent for approval.
Right Internal Employee Delegation
This is the next step in the invoice automation process. For the invoices where there is a discrepancy or the ones which did not match with the company policies will be routed to the procurement manager first, and then they will be given to the accounts payable team
Following this, the invoices where there is any discrepancy, say in the amount when they are compared with the purchase order or the goods receiving a note, will be routed back to the vendor or the appropriate stakeholder for corrective action
Payment
The final step in the invoice payment is this. Payment of the invoice is carried out by the accounts payable team. The approved invoices are routed to the appropriate employee in the accounts payable department for processing the payment.
Now that you have a vivid understanding of the invoice process, head to the next section to decode how automation plays an important role in invoice automation.
How does Automation Help in Invoice Processing?
If you are looking to improve invoice processing, then here’s how automation helps to do the same:
Automates 3-Way Matching
This is one of the key ways where automation plays a pivotal role. In the tedious 3-way matching step in the invoice workflow, automation checks against any fraud or duplication. Accounts payable are susceptible to fraud and duplication. Accurate invoice matching helps prevent instances of AP fraud. Automated invoice processing improves the speed and accuracy of 3-way matching and integrates with the accounting system to flag discrepancies and prevent malpractices.
Minimizes Manual Data Entry
One of the key areas where automation is making a change is minimizing manual data entry. A common step in the AP approval process is entering the invoice data manually into the accounting system. When done manually, this step is prone to errors and overlooks. Not only is manual entry prone to errors, but it is time-consuming as well. However, with automation, this is taking a spin. Automation not only reduces manual errors but also saves a lot of efforts
Automating routing of invoices for review and approval
In invoice automation, there is automatic routing of invoices for review and approval to the stakeholder involved without having to intervene in the entire process for communication manually.
Conclusion
Invoice automation is truly changing the game in establishing strong vendor relationships and helping companies scale effortlessly. With the power of automation, manual processes are taking an operational spin. That’s all, folks. I hope the article will help you get all the information you need.
Also Read:
7 Features To Look For In the Best Free Invoicing Software in 2025
Unveiling the Top 3 Invoice Processing Platforms in 2023: Streamlining Financial Operations
