Automatic incoming invoice processing as a critical success factor
The processing of incoming invoices in a company is, in principle, associated with a relatively large amount of work and thus high costs. Especially if the company has a majority of analog incoming invoices and performs invoice verification and processing manually. This is because the effectiveness that is already lost here is massive and the process design no longer really fits in with today’s times. It is not that the technological possibilities do not exist, after all, we are in the age of digitalization. So, if talking digitization, then better make fully use of its benefits. And why not start exactly where value can be created the most quickly and effectively, for example in the processing of incoming invoices? For many conventionally managed companies, this means in plain language: to welcome the digital transformation, a radical rethinking and above all a restructuring of the entire process of invoice processing, which includes automation as a critical success factor for the future.
Not least COVID-19 has confronted many companies with unprecedented challenges. The transition from the usual office routine to home offices took place overnight and turned one or the other usual work process upside down and confronted companies with difficult decisions. One of these work processes is the processing of AP invoices, which in many companies still runs manually and keeps costs unnecessarily high. This should definitely make companies think. Further disadvantages of manual processing cannot be overlooked:
- Internal processes generally slow down = longer throughout times and therefore higher costs
- Error rate is relatively high due to many manual interventions
- It is not always possible to benefit from cash discount deduction
- Dunning fees arise, because payment deadlines cannot be met
One reason for postponing automation is the widespread assumption that the implementation of automatic invoice processing is inevitably only possible with cost-intensive software purchases, which is not necessarily true. Rather, a cost-effective pay-as-you-go extraction solution – you pay only for your consumption and not for license fees – can be integrated into the existing software landscape, which is exactly what makes this process so suitable for driving the digital transformation forward.
When invoices physically arrive, they can be scanned and sent to the extraction software. Digitally arriving documents can also be easily forwarded to the platform. Now, instead of employees having to free up capacity to review and enter them into the system, documents are automatically captured and the data is sent to the leading system. Depending on how far you want to take the game, you can now use this data as a basis for all kinds of automated processes, such as order reconciliation, etc. But the complete elimination of manual data entry alone saves significant resources for most companies already.
The advantages of automated invoice processing are clearly underestimated by many companies. The previously mentioned negative aspects of manual processing can be transformed into positive aspects:
- Payments are made on time, thus securing cash discounts and avoiding dunning fees
- More transparency, thus less risk of fraud and better status overview of individual transactions/processes
- Working from a home office in difficult times (as currently due to COVID-19) is operationally possible
- Automation brings many companies a big step closer to their goal of completely eliminating paper invoices
- Basis for more process automation; employees can be assigned to more meaningful activities instead of administrative and repetitive work
So, the path of integrated automatic AP invoice processing begins with the decisive aspect of capturing invoice data by means of software. The implementation of automatic invoice processing not only keeps costs down, but is in many respects, as discussed above, a critical success factor for the company of the future.