Automation Paves the Way: New Trends in Invoice Processing
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Bill Gates once said, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency…” The trend toward touchless or automated processes in business seems to surround us. Automation has largely replaced bank tellers, store cashiers, toll road clerks, and video rental stores, reducing labor costs and improving the speed of service to consumers. Phone Apps have replaced equipment such as fax machines and scanners. On a grander scale software, such as Oracle and Fishbowl can manage large-scale distribution centers and integrate all facets of business operations.
As technology evolves and becomes more accessible to businesses, many organizations are exploring options to improve efficiency through automated processes. Touchless invoicing has come front and center in the debate on whether to automate. The reason? Manual invoicing is prone to process gaps that are remedied by the adaptation of touchless invoicing technology.
When it comes to invoice processing, the biggest businesses with the highest capabilities and a staggering number of invoices are seeing the results of automating business processes. It’s no surprise that they jump on board, while others clutch paper invoices and file cabinets for dear life. Why? Because change is intimidating and expensive, and options are limited for smaller companies. Initially, this was the case with implementing touchless invoicing when the trend began. Setup fees and training of existing employees were substantial barriers to entry into the automated processing game for smaller firms. The confusion regarding which Application Programming Interface (API) or Electronic Data Interchange (EDI) to utilize was enough for management to nix consideration before the idea got off the ground.
Manual versus automated invoice processing
Businesses that have not previously utilized automation need to understand the shortcomings of manual invoice processing and how those are eliminated with a touchless process.
Manual invoicing involves multiple touchpoints, physical storage of information, and manual data entry. The invoicing process takes place on a recurring basis according to terms, reporting, and reconciliation. Invoice numbers, purchase orders, and critical information for vendors are all stored physically and entered manually. Although practice makes perfect, this process is time-consuming and redundant.
Manual invoicing is subject to human error. People are only as good as their training, tools, and work ethic, and the invoicing process is only as reliable as the individuals performing the job. Statistically speaking, the larger volume of invoices a firm is generating, the greater the margin of error, and these errors are costly.
Manual invoicing can lead to adverse effects on vendor and buyer relationships. It does not have the ability to automatically reject invoices that have incorrect anomalies such as price variances or incorrect data. On the other hand, automated invoice processing supports vendor and buyer relationships. It facilitates a seamless flow of data that optimizes tracking and transparency since invoicing is performed near real-time.
Manual invoicing is more cumbersome for global companies. In these cases, taxation laws, invoicing standards, and compliance can be a nightmare. They tend to be in constant flux and penalties for non-compliance can be rigid.
Manual invoicing is inconvenient. Ever spent hours searching for an invoice or worse, paid for off-site storage of invoices that must be retained? The accessible look-up of past invoices, paired with the elimination of storage costs should be factored into the equation.
Manual invoicing is not consistent for companies that are fans of eco-friendly business practices. Touchless invoicing reduces paper costs and saves trees.
Overall, the benefits of automated invoice processing include measurably reduced errors, redundancies, and timely do-overs, which have been drivers for escalating costs in manual invoicing processing.
Key considerations before making the move
In implementing new processes, thoughtful consideration is imperative to mitigate risk and ensure success going forward. The shift to touchless invoicing is no exception. When contemplating the specific product mix to facilitate automation, one size does not fit all. Options vary across Application Programming Interfaces, Electronic Data Interchanges, Enterprise Resource Portals, and Online Portals. Outsourcing may be an attractive option to low-cost regions. The volume of invoice processing that is performed should be considered when deciding the initial cost that will be invested. The broad options available to corporations today assist in easing vendors with varying scales to participate in touchless invoicing as a value-added strategy, as opposed to a reason to incur crippling setup costs. Although many businesses fall under the 80/20 rule, where 80 percent of invoices are generated from 20 percent of vendors, the goal is to set up an efficient process for all involved in the business mix. Software as a Service (SaaS) providers offer cloud-based, or on-demand services which allow firms to essentially pay-as-you-go, without straining IT and management. Be prepared to explore features such as portal onboarding for smaller companies with limited technological capabilities so that no vendor is left behind.
Identify a process
As for the steps involved in moving to an automated process, knowledge is king.
Step one: Evaluate whether a process will become more efficient when it is automated. Not all processes will benefit from automation. Functions that require human interaction and judgment are danger zones. Departments such as Human Resources may use automated support to a degree, but the human factor plays a significant role in employee retention and development. Fortunately, a wealth of information and experience is available to make an informed decision. This is no time to reinvent the wheel. Benchmarking with similar firms in terms of volume is a helpful tool.
Step two: Don’t rush the pre-planning. Once a decision to move to touchless invoicing has been made, design the process and execute the plan carefully. The main goal during the planning stage is to create a positive experience when onboarding vendors and to ensure that all vendors are willing and able to move seamlessly from manual to automated invoicing.
Step three: Develop a strategic approach. Create a selection of standardized fields, followed by procedures for internal documentation, training, and onboarding. Providing options to vendors contingent on individual capabilities and scaling the business is key to a strategic setup process. In invoicing, performance is contingent on the accuracy of the data provided. Automation works when it is applied to a well-built data foundation with clearly identified, attainable expectations.
Step four: Develop company policies that are well-defined. As imperative as it is to onboard all vendors, it is equally important to make sure internal controls are in place. Consistency and thoroughness are key. Create a system for monitoring and adhering to these policies with diligence and uniformity.
Wave of the future
Invoicing as the wave of the future has gained momentum and for good reason. Due to the rapid adaptation of this trend, measurable data on its performance across industries is circulating. A 2019 blog by iPaybles reports the cost of processing an invoice is decreased by as much as 70 percent when using touchless invoicing versus its manual counterpart. GoCardless, an authority that produced, Invoicing in the US: A Complete Guide, states that firms using automated invoicing get paid 33 percent faster, on average. With this data rolling in, it is no surprise that automation in business processing is being deemed a vital strategic initiative.
The IBM Institute of Business perhaps said it best in a 2018 executive report, “…automation is good for rules-based, repetitive tasks with well-structured activities, clearly defined rules taken from well-structured data sources, and systems that result in visible and measurable outcomes.” This is the very definition of touchless invoicing, built from the experience and knowledge of the past.
About the Author:
Megha Gupta is a lead systems analyst who has worked with companies such as Oracle, IBM, Amazon, and Starbucks. She has 13+ years of IT experience in Oracle ERP, SAP, Payment Platforms, and Indirect Procurement Systems. For more information, email firstname.lastname@example.org