Invoicing is the most important aspect of every industry that the accounts payable (AP) team must manage in order to maintain excellent relationships with their supplier. Invoice approval is crucial for ensuring it is processed correctly prior to processing payments. When handled manually, effectively tracking and processing each invoice received while adhering to all internal business rules can be a laborious effort for firms handling a significant number of transactions.
As a result, many organizations are turning to automated invoice approval workflows to streamline the process. 50% of companies surveyed reported that automating the invoice approval workflow improved their supplier relationships. This article will explain how Bautomate, an AI-powered automation solution, helps to automate your invoice approval workflow.
What is Invoice Approval Workflow?
Invoice approval workflow refers to the process of approving an invoice for processing payments in a business. The workflow typically involves a series of steps that ensure the completeness of invoices.
The process begins with reviewing the data manually, matching it with PO and other documents, and routing for approval. It can usually be challenging to track and manage as the invoice moves through various stages which result in delays in processing payments, late payment fees, and strained vendor relationships.
Challenges in Manual Invoice Approval Workflow
Manual invoice approval workflow can be incredibly daunting and require a great deal of manual labor, it also presents unique challenges in terms of ensuring accuracy and managing overlapping documents. A study reveals, the most common invoice processing challenge for businesses is manual data entry, which accounts for 33% of all invoice processing issues.
Despite the numerous challenges, companies must ensure their processes are as efficient as possible to avoid delays, miscommunications, and errors.
Automated Invoice Approval Workflow
An automated invoice approval workflow is a process in which the entire approval action is automated, from the receipt of an invoice through its approval and payment, instead of manually reviewing and approving.
Our solution enables businesses to accelerate the invoice approval process using OCR and AI technologies. Key steps involved in automating the invoice approval process,
- Data is captured from received invoices using OCR
- Once the data is captured, it is automatically matched against the purchase order and other receiving documents using 3-way matching to ensure validation
- Verified invoices are sent to the appropriate people for approval within the organization
- Once proper approvals and verifications are in place, the invoice is automatically released for payment
Businesses can set up custom workflows using the drag-and-drop feature for invoice approval which can be automatically routed to the appropriate approver based on predefined rules.
Bautomate provides real-time visibility into the approval process, enabling businesses to track invoice status and approvals in one centralized location. This visibility enables businesses to identify and address any issues or discrepancies more quickly.
Why is it Important to Automate Your Invoice Approval Workflow
The following are indicators that automating the invoice approval workflow is necessary for any business:
- Invoices are taking too long to be approved and processed: If it takes too long for invoices to be approved and processed, it can impact cash flow and supplier relationships. Invoices processed manually can roughly take up to 25 days, whereas automated invoice approvals can be completed in just three days. Automated workflows can reduce the time it takes to process invoices, allowing faster payments.
- High error rates in manual processing: Manual processing is prone to human error, such as data entry mistakes and incorrect calculations. Automated workflows can improve accuracy and reduce the risk of errors such as duplicate payments or incorrect calculations.
- Difficulty in tracking invoice status and approvals: Without a centralized system for tracking invoices, it can be challenging to know the status of an invoice, where it is in the approval process, and who needs to approve it next. Automated workflows provide greater visibility into the process, making it easier to track invoices and approvals.
- Growing volume of invoices to process: As a business grows, the volume of invoices also increases, making manual processing more time-consuming and prone to errors. Automated workflows can handle higher volumes more efficiently.
- Compliance issues: Manual processing can lead to non-compliance with internal policies or external regulations, resulting in financial penalties and reputational damage. Automated workflows can help ensure compliance by enforcing approval rules and providing a secure audit trail.
If you’re experiencing any of these signs, it might be time to consider automating your invoice approval workflow.
Automating the invoice approval workflow streamlines the accounts payable operations reducing the time and cost of manual processing. Businesses with automated invoice processing have a 92% faster approval cycle time than those with manual processes. Additionally, faster invoice processing leads to improved supplier relationships, increased cash flow, and reduced late payment fees.
Sign up for a free demo to explore Bautomate’s invoice processing capabilities.
