Here's your step-by-step guide to invoice processing automation
In the past, businesses were accustomed to the lengthy process of invoice processing. It was a time-consuming and error-prone affair, but not anymore. With invoice processing automation on the horizon, it is easier than ever to streamline your business transactions and save countless hours of work. How to automate your invoicing process?
From manual to automated invoice processing (step-by-step)
What is meant by invoice processing?
Invoice processing is a critical part of any business, but it can also be a time-consuming and labor-intensive process. That's why it's important to automate invoice processing as much as possible as part of a more global electronic invoicing process.
What are the steps of invoice processing automation?
Here are the steps to invoice processing automation:
- Implement an automatic invoice collection solution
- Validate and normalize invoice data
- Create workflow rules and assign them to employees or departments based on job function, location or other criteria
- Set up rules and triggers
- Build out a dashboard with visualizations to track key metrics
Step 1: Implement an automatic invoice collection solution
The first step to automate your invoicing process is to implement an automatic invoice collection solution. These solutions are often referred to as invoicing software, and they allow you to automate the process of scanning and sorting all of your invoices through OCR invoice scanning (Capture all payment details digitally). Using an Optical character recognition (OCR) that knows how to read an invoice, you can collect, centralise and approve your invoices in a snap.
Step 2: Validate and normalize invoice data
Invoices may come in from different sources and formats, so it's important to validate their structure and content before attempting automated processing. A lot of companies use spreadsheets as a way to manage their invoices. However, these can be cumbersome because they're not designed specifically for this purpose, especially with different types of invoices. Using an automation platform like Libeo helps you easily validate and normalize invoice data so that it's more consistent across your company.
Step 3: Create an automated invoice processing workflow
The next step in automating your invoice processing workflow is to create an automated workflow that will handle all the steps in your process. This could include steps like collecting, controlling, validating and sending invoices to the accounting software. Thus when your invoice is ready it will be processed automatically.
Step 4: Set up rules and triggers
Once you have your automated workflow set up, you can start adding rules and triggers that will trigger actions based on certain conditions. For example, if an invoice has been paid by a customer or if it's past due, then send an email reminder or call them directly to ask them about their payment status.
Step 5: Build out a dashboard with visualizations to track key metrics
Build out a dashboard with visualizations to track key metrics, such as payment status and invoice aging. This will give you an at-a-glance view of where your business stands and help you spot potential problems before they become serious issues.
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How does automated invoice processing work?
Invoice processing automation services are provided by companies like Libeo, enabling businesses to automate their invoice payment process and eliminate manual invoicing. They give you access to an electronic platform so that you can send and receive invoices electronically — no more printing or faxing paper!
These platforms will also allow you to accept payments online from customers, vendors or other third parties using ACH (Automated Clearing House) transfers or credit cards.
Libeo enables SME business owners, financial directors and accountants across Europe to centralise and pay their supplier invoices in one click, without chasing bank account details or logging into your online banking. The platform allows for end-to-end management of the accounts payable process:
- One single platform to manage and pay all your supplier invoices
- Scans and sorts all of your invoices
- Reduces manual processing errors and secures payments to prevent fraud
- Digitization of your approval workflows
- Simple and secure payments without chasing bank account details or logging into your online banking
- Integration with several accounting tools
Does my business qualify for invoice processing automation?
If your company has more than one employee and you make more than 300 invoices a year, then yes! You can automate your invoicing process with the right tools and systems in place. There are three criteria that will help you determine whether or not you qualify:
- Your invoices require a lot of manual data entry (e.g., address changes, payment terms).
- Your business has multiple payment methods and currencies, which means more time spent on tedious tasks like currency conversion and multi-currency reporting.
- You want to eliminate manual errors that can occur when using spreadsheets or other paper-based methods of invoice management.
If your company is in the following industries, then a bulk invoice processing solution is a smart investment:
- Manufacturing and distribution companies
- National retailers and distributors (like Target or Wal-Mart)
- Wholesalers and distributors
- Service providers (like landscaping companies)
How do I get started?
Before choosing an invoice processing automation platform, it's important to decide exactly what you need from it. It's important to understand your business needs and goals. Ask yourself:
- What are my top priorities?
- What are my specific needs?
- What is the impact of not automating invoice processing?
For example, if you manage multiple locations or have complex billing requirements, then you'll likely need a more advanced invoicing solution.
If you only send out invoices once a month or less often and need basic reporting capabilities, then a simpler solution may suffice. It's also worth considering how much time you want to spend on managing your invoices — if it's not much, then perhaps an automated system will make sense for you.
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