Managing invoices manually for a business can slow down the finance team, and there is a high chance of errors. If you misplace an invoice or a payment is delayed, your business suffers in terms of time, money, operations, and even vendor trust.
The good news is that you can overcome such hurdles with automated invoice processing. In this guide, you will explore how automated invoice processing works and how it can streamline your operations more effectively.
What is Automated Invoice Processing?
Automated invoice processing is a system-driven approach in which all invoices are captured digitally. So, you do not need manual data entry and invoice approval.
With the help of AI and machine learning, tools today automatically extract essential information and validate the data. They also match invoices against purchase orders and deliveries, and automatically flag any discrepancies.
Automated invoice processing helps your business monitor cash flow more accurately and maintain an auditable record of all transactions. So, what once took hours can now be done in just a few clicks with automated invoice processing.
How Automated Invoice Processing Works: 10 Steps
Here are some clear steps that show you how automated invoice processing works in business:
1. Capture Incoming Invoices
The first step in automated invoice processing is to capture all incoming invoices in a central system, ensuring no document is lost or overlooked. Invoices can arrive via email, supplier portals, or physical copies that are scanned digitally.
This centralisation minimises the risk of lost documents and sets the foundation for the rest of the automation process.
2. Extract Invoice Data
Once invoices are captured, automation tools use OCR and AI-powered technology to extract key details such as supplier names, invoice numbers, dates, and line items directly from the invoice document.
They also capture amounts, taxes, and other essential information, whether the invoice is a digital file, email attachment, or scanned copy.
This automated extraction is fast and accurate and eliminates the need for staff to enter details manually.
3. Validate and Code the Data
In the next step, the system validates each invoice against your preset business rules. This means it checks totals, tax amounts, and supplier information automatically.
At the same time, invoices are coded to the correct accounts or departments. For example, if an invoice is for milk supplies, the system can assign it directly to your dairy product account and save you time.
4. Match Against Orders and Deliveries
After invoices are validated and coded, the system matches them with purchase orders and delivery records. This is to confirm that your order has been received and billed correctly. If the system detects a discrepancy, it flags it for your review.
5. Handle Exceptions
Sometimes, invoices may contain discrepancies, which is a normal part of the processing workflow . The system will spot any issue automatically, like a missing item or incomplete details, and send it to the right person for review.
For example, if a supplier forgets to include an item code, you don’t have to hunt for it manually. Automation flags it for you, so you can fix it quickly without slowing down the rest of your invoice workflow.
6. Run Approval Workflows
The next step in automated invoice processing is running approval workflows for validated invoices and any resolved exceptions. You don’t have to chase signatures or remind managers yourself.
Businesses can set rules based on department or vendor. High-value invoices may require manager approval, whereas smaller ones can be approved automatically.
7. Schedule and Process Payments
Once invoices have been approved through the workflow, the system schedules payments according to your preferred cash flow. It can batch multiple payments and execute them securely.
For example, a distributor can align supplier payments with weekly cash inflows to avoid late fees.
8. Reconcile With Your Accounts
In this step, invoices and payments are automatically reconciled with accounting software such as Xero or MYOB. This step verifies that amounts match and updates your financial records without manual entry. It prevents double entry and keeps records up to date.
9. Store and Archive Invoices
After invoices are processed and payments are completed, automation systems digitally store and secure all records. Every invoice and payment action is logged with timestamps that create a complete audit trail. This is how your business can retrieve any document instantly when needed.
For example, if a supplier requests an invoice from three months ago, you can access it within seconds because of digital storage.
10. Review and Improve the Process
Today, automating invoice processing systems continuously monitors workflow patterns and exceptions. By analysing this data, the system identifies bottlenecks or inefficiencies and helps your team to address the issue proactively.
You can review reports to optimise payment schedules or supplier workflows. With continuous improvement, the automation becomes faster and more accurate over time.
EasyVend – A Smarter Way to Automate Invoice Processing
If you want to take the stress out of managing invoices, EasyVend makes it simple. This platform connects orders, deliveries, inventory, invoicing, and payments in one platform, so everything stays accurate and up to date.
It features the MiniVend driver app, which automatically handles delivery confirmations. This keeps your stock updated and ensures your invoices are accurate from the start.
EasyVend also integrates with Xero and MYOB, and simplifies reconciliation.
With local support and decades of industry experience, EasyVend offers reliability so your business can focus on growth rather than paperwork.
Conclusion
Automating your invoice processing can completely change how your business handles finance. From capturing invoices to extracting data, validating, approving, scheduling payments, reconciling, and storing records, automation reduces errors and improves cash flow visibility.
By utilising the discussed automated invoice process and a trusted platform like EasyVend, your business can streamline manual processing and enhance overall efficiency.
