9. February 2023

Document Management for Invoice Processing: A Beginner's Guide

When you evaluate a Document Management solution to automate invoice processing, you’ll have a lot of questions. This blog post describes the essential aspects of digitising these processes. Once you have a good grasp of how accounts payable systems are automated, you’ll have the working knowledge you need to make an educated decision and choose the right solution for your organisation.

Challenges accounts payable faces without workflow automation

An accounts payable (AP) team does more than just pay the bills. They also reconcile an invoice with the purchase order and delivery ticket, maintain vendor relationships and negotiate credit terms. It makes sense not to weigh down AP staff with time-consuming, manual, paper-based tasks.

These are just a few of the obstacles that manual processes create:

Some common downsides of paper process

  • Employees waste time filing and retrieving paper invoices. They also expend extra effort searching for lost or misfiled invoices and correcting mistakes.
  • Manual data entry is time-consuming and error-prone. 
  • A paper accounting archive takes up space that could be repurposed or is housed in expensive, off-site storage.
  • No way to flag duplicates or overpayments and correcting these errors costs time, and money and creates extra work.
  • Invoices that arrive by email are printed out and processed like paper.

Slow approvals cause other issues besides delayed payments

  • Late payments result in problems like extra fees and credit holds that may lead to the suspension of deliveries.
  • Approvals may stall because an approver is out of the office or the invoice is routed to the wrong person.
  • There is no way to automatically route invoices to the correct cost center or to pass invoices under a certain amount through without approval.
  • There’s no mobile or remote access so invoices can only be reviewed and approved in the office.

Lack of information for monitoring cash flow and intelligent workforce planning

  • The inability to generate an overview that gives an accurate, real-time overview of monthly spending and outstanding payables has a negative impact on cash flow
  • No insight into how many invoices are assigned to each staff member interferes with resource planning
  • When an uptick in sales results in an increased number of incoming invoices, additional employees have to be hired

Error-proofing invoice processing

When invoice processing is completely automated, every step is well defined from data capture to approval to generating a transaction record for posting directly to your accounting or ERP system.

The solution should trigger approval workflows based on your business rules to ensure accurate and rapid processing. It should check mandatory data, purchase orders, duplicate invoices, and onboard new vendors quickly. The system should also integrate directly with your accounting or ERP system to eliminate duplicate data entry and manual errors.

A digital invoice processing solution delivers many productivity benefits. With an automated system, your accounting staff can:

  • Capture invoices using artificial intelligence. The power of our solution starts with DocuWare Intelligent Indexing, a machine-learning system that understands and extracts data from any invoice. This critical index data drives workflow processes. DocuWare Intelligent Indexing replaces error-prone and time-consuming manual data entry by recognizing and recording unstructured data on invoices.
  • Securely store and effortlessly archive and retrieve digital documents. All invoices are stored within a secure, accessible repository and are tightly organized based on captured index data. Apply retention policies, rapidly collect for audits, or analyze for departmental process improvements. Access anytime, anywhere, from any device — including mobile.

Automated workflows are the key to success

Digital workflows automate, track, and report on any accounting process. A comprehensive digital workflow allows you to track a document at any stage of the process life cycle. A full range of reports enables you to see how many documents are at any given process stage.

The invoice processing workflow should automatically check for duplicate invoices and determine if a vendor is already in the system. If not, the solution should initiate an automated vendor onboarding process. This built-in verification helps eliminate fraudulent invoices.

Automation enables sharing information with anyone on your team who needs visibility into a workflow process. Every employee responsible for completing a particular task can view it in the office automation solution. Email updates can be sent to alert employees to new tasks in their work queues. Exceptions and escalations can be configured easily. At a glance, a manager can see what steps are complete and what remains to be done.

Protecting proprietary data is a number one priority for most organisations. Security is a big concern when documents are stored in a digital archive. Not only do strong security and backup measures ensure information recovery in the case of a disaster, but they keep unauthorized employees out and help meet critical compliance requirements.

What exactly should your invoice processing solution do?

IP Process Document 1

Your solution should enable these key functions:

  • Capture invoices from a scanner, MFP, email, a watched folder or drag-n-drop from your desktop.
  • Keep track of payment due dates and send email reminders.
  • Validate and route invoices based on the business rules you define.
  • Retrieve related documents directly from the document management system without leaving other business software such as your accounting system.
  • Provide an overview of  invoices, GL coding, and approval processes.
  • Supply downloadable data for input to your accounting or ERP system.
  • Enable mobile access to allow authorized personnel to approve invoices from any device at any time.
  • Offer robust integration capabilities that work seamlessly within your IT ecosystem. The invoice processing automation solution should integrate across email, team portals, CRM, ERP, HR systems, and homegrown software. 

AP automation without business disruption

Automating AP doesn’t have to require a large time commitment from your staff or a long, drawn-out implementation. Although business processes differ from company to company, they share key requirements and decision points. DocuWare for Invoice Processing is a preconfigured cloud solution with prebuilt workflows based on these common denominators. It can be easily adapted to fit your business rules, so the solution can be up and running within a few days. Watch this practical and engaging recorded demo to find out more. 

Case Study

Invoice processing automation has a positive impact at Graham 

With a turnover of GBP 508 million and almost 2,000 employees, Graham is one of the largest construction and asset management companies in the UK and Ireland. Headquartered in Belfast but with operations throughout the UK, the company receives in excess of 13,000 invoices every month in varying formats. After analysing the significant performance improvement, Graham Construction made the decision to go digital. Before the installation of Inpute’s solution, each one of these 13,000 invoices had to be processed, coded and approved manually. Purchase orders were cross checked with invoices and delivery dockets to ensure that everything was delivered as requiredGraham-construction-e1492882988138-1

Streamlining invoice processing workflow

A workflow process which was once characterised by very high volumes of paper is now entirely electronic. Incoming invoices are captured, then automatically validated by the system. The fact that staff no longer have to handle, process and file so much paper delivers substantial resource and time savings.

“It saves so much time,” says Jill Ross IT manager at Graham. “If, say, a contract manager wants a copy of an invoice, or if a supplier rings up with a query, you just go to the system. There’s no need to root through boxes and boxes of invoices or filing cabinets.”

All incoming invoices are now captured directly into the system. The software’s optical character recognition functionality extracts the data from relevant fields and automatically validates the invoice. The captured invoice data is automatically exported and picked up by the Grahams ERP. There, it is cross referenced with purchase order and delivery docket data to facilitate automatic authorisation.

Read the full case study

Document Management and Workflow Automation Glossary

When you venture into any foreign territory, you have to learn the language before you feel truly comfortable. The glossary below defines the frequently used terms you need to know.

Optical Character Recognition (OCR): OCR digitizes paper documents by “reading” them and converting alpha-numeric characters into a digital format.

Indexing: “Indexing” is the critical step that transforms documents into manageable information by reading key portions of data and storing each data point as an index value. These index values describe the purpose and content of the document and enable efficient searches.

Fulltext Search: This is just like using a search engine on the Internet. The search terms are highlighted within the document content. The first search term found on the document is highlighted. So, you’ll be able to see directly the overall context for the search terms.

Roles and groups: A role is used to assign tasks to a job title or department rather than to a person.

Business logic: Business logic describes the part of a software program that encodes an organisation’s underlying business rules to determine how data is organized and acted on.

Machine Learning: Machine learning is a subset of artificial intelligence technology. The development of computer programs that can take data and use it to learn for themselves by creating self-learning algorithms is its primary emphasis. Machine learning analyzes data and then uses this “knowledge” to make the correct decision, thus eliminating or minimizing human intervention.

Redundancy: Redundancy describes the practice of duplicating data and documents to facilitate disaster recovery in cases of natural disasters or human error. For cloud software, data centers should mirror data locally and store it in an off-site data center. For on-premises software, a copy of the archive should be stored off-site.

Encryption: All documents should be stored with AES, the U.S. encryption standard for documents that require a high level of security.

Public Cloud: A model in which cloud services are delivered over the Internet. The leading public cloud providers are Microsoft Azure and Amazon Web Services and Google Cloud.

This article originally appeared on DocuWare.com, Inpute are proud to be a partner of DocuWare.
If you’d like to discuss how intelligent automation can improve your organisation efficiencies get in touch today by emailing solutions@inpute.com.
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