Invoice Processing: Best Practices

In today’s business environment, the Accounts Payable (AP) department serves as a linchpin in financial management. Among its myriad functions, invoice processing stands out as pivotal. This exhaustive guide will provide you with an in-depth understanding of both manual and automated invoice processing techniques, revealing how they can supercharge your business operations.

Understanding Invoice Processing

Invoice processing is a multi-step procedure undertaken by the AP department to manage supplier or vendor invoices. The core activities include:

• Collecting and categorising invoices to the general ledger.
• Routing invoices to appropriate personnel for approval or denial.
• Finalising the invoices for payment.
• Facilitating payments via standard mechanisms such as bank transfers, ACH, or cheques.
• Archiving all related invoice and payment data for audit and record-keeping purposes.

Comprehensive Invoice Processing Strategies

• Embrace Digitalization: Going paperless is pivotal for a streamlined AP function.
• Unify Your Systems: Integration of business processes is easier when everything is digitised.
• Employ Performance Metrics: Key Performance Indicators (KPIs) help gauge AP efficiency.
• Simplify Communications: Centralised platforms can keep all stakeholders in the loop.

What is Invoice Processing Automation?

Invoice processing automation is a subset of AP (Accounts Payable) Automation. This technology streamlines and automates the payment of bills and invoices. By utilizing advancements like AI and machine learning, invoice processing becomes a breeze, reducing errors and enhancing overall productivity.Some of the areas for automation are:

• Invoice receipt
• Data extraction and coding
• Verification and approval
• Payment submission

How Does Invoice Processing Automation Work?

1. Invoice Received
   Invoices are scanned, e-mail, uploaded via the supplier portal and routed to the correct cost centre in our system based on a unique identifier e.g postcode.
2. Dynamic Data Capture
   Best-in-class AI technology supported by our managed service.
3. Verification
   Supplier validation with business rules to mitigate fraud and duplicate payments.
4. Match, Code & Approve
   NON-PO Invoices are routed automatically and notify a manager via email to approve.PO Invoices are automatically matched against a PO & GRN from your Finance system.
5. Post to Finance System
   All invoices are posted to the correct entity in your Finance system and ready for payment automatically

Any captured data can be reported upon. Kefron AP comes with standard reports and pre-built AP Analytics dashboards. Furthermore, custom reports are easy to create. Full visibility of all activities is possible making it easier to comply with audit and legislation requirements.

Why Use AP Automation?

Now the reason you’re likely reading this post – why should your company use AP automation? How is it better than your current invoice process?

• Improves Productivity: Automation eliminates manual input and reduces the number of errors made. This serves to save your company time and increase efficiency. Additionally, automatic approval is sought by the Kefron system with regular reminders. Invoices can be approved from the relevant party’s phone for ease of use. This allows your team to focus on more engaging and value-added tasks. Employees are more motivated by less repetitive, tedious tasks, improving productivity.

• Better Control and Visibility: Moving to an automated system provides you with more control over your invoice processing. The system maintains an audit trail throughout. Many AP Automation solutions also provide analytical dashboards. Kefron AP offers 4: the Ageing Dashboard, Documents Received vs. Processed, User Productivity, and Automation at Verification and PO Matching. These allow you to get a clear insight into your AP processes. You can view document statuses, top-performing users and databanks, as well as values.

• Fraud Prevention: With increased control and visibility, audits are streamlined, and compliance is ensured. You can have peace of mind knowing that all documentation is easily retrievable. OCR is applied to each invoice that goes through the Kefron AP system. This means they are text searchable, making it even easier to find specific documents. You can create custom folders and indexing for better manageability. Your Company Admin must assign anyone on the system a role. This decides who has access to what, ensuring compliance and fraud prevention. Only those with the appropriate authority can view your invoice processing. The audit trail tracks all movement and changes, including who handles each. So, if something is amiss you know who to hold accountable.

• Improved Cash Flow: With automated processing and approvals, and the removal of errors suppliers paid on time. They are charged and paid the correct amount the first time. Reliable and consistent cash flow improves your business relationships. Your suppliers are then more enthusiastic about recommending and reviewing you.

• Savings: Reducing time and effort wasted on invoice processing saves your company money. Your team can focus their attention on more value-added tasks for the business. The elimination of human error and fraud reduces this even further.

Considering AP Automation? Download our comprehensive Buyer’s Guide, designed to walk you through the key points finance leaders should consider before investing in an Invoice Automation Solution or chat with an AP team member today.