Why Automated Invoice Processing Is Critical for Modern AP Teams

When done manually, invoice processing is one of the most time-consuming, error-prone, inefficient jobs for AP teams. With tasks like managing high invoice volumes, tracking down approvals, and confirming legitimate purchase orders, how can it not be?

Rather than continuing to struggle with a manual process, modern teams are leveraging automation and artificial intelligence (AI) in accounts payable to streamline workflows. Automated systems eliminate much of the monotony associated with invoice processing by allowing technology to take the lead, delivering increased accuracy and efficiency. Add in the newest AI technologies like computer vision, and moving to an automated invoice processing workflow becomes a no-brainer for any modern AP department.

What Is Automated Invoice Processing?

Modern automated invoice processing is achieved through AI-driven systems that capture and validate data faster and more accurately than traditional methods, regardless of volume or format. Essentially, all of the capturing, verifying, and approving of invoices can be put on autopilot and accomplished with improved levels of speed and precision.

AI-Powered Data Capture: Going Beyond OCR

In the earlier days of automation, optical character recognition (OCR) was the leading method for capturing and extracting text-based data from various types of documents. While traditional OCR has proven to be more efficient than manual data extraction, it still has a number of limitations. One major limitation is that it can only process documents in which a template has been previously provided. Beyond that, OCR also lacks the ability to gather information from non-text data like charts or images.

All of this is solved with the latest AI-driven intelligent document processing (IDP) technology, known as computer vision. By using trained algorithms, computer vision is able to process a much wider variety of unstructured data from documents. Beyond being more flexible in its ability to work with different data formats, computer vision has a number of benefits over OCR, such as:

• Capturing data regardless of whether the information is text-based, image-based, or any other variation of data presentation
• Discerning what is and isn’t relevant, useful information
• Leveraging machine-learning techniques to allow for self-learning, meaning the software can improve over time on its own, further reducing the level of necessary oversight

There’s a clear winner between IDP vs. OCR. IDP results in an even more efficient process that eliminates additional manual intervention previously required to parse out the information that you actually need.

Data Validation: Ensuring Accuracy

Once invoice data has been captured, AI is able to seamlessly move on to data validation. By comparing invoice data against client-specific information, AI can detect duplicate information, verify invoice balances, complete line-item pairing, and ensure all purchase order (PO) and supplier details are aligned. As for non-PO invoices, AI is able to use predictive coding, allowing for easier tracking of other existing expenses.

Invoice validation is one of the largest accounts payable challenges. Accuracy is the key to ensuring payments are being made in the correct amounts and on time. A lack of optimization in the validation process, generally attributable to manual data entry and processing, runs a far greater risk of delayed and error-filled data. However, with AP automation, nearly 85% of executives have reported improvements in accuracy, efficiency, and the streamlining of processes.

Business Rules vs. AI Decisions: Maintaining Control in AP Automation

Is data-driven decision-making a main focus for your AP department? If so, you’re not alone. According to a recent study by the Institute of Financial Operations and Leadership (IFOL), 80.7% of accounts payable leaders identified it as important for 2024.

Oftentimes, professionals fear they’ll lose control over the decision-making process when AI-powered automation technologies come into play. Fortunately, with the right technologies, AP departments don’t lose a level of control when it comes to making decisions. While AI is able to handle data capturing and validating on its own – and with increased performance, AP teams still maintain control through customizable business rules.

It’s true that AI is capable of a certain level of decision-making — a trait that makes it so intriguing — but how it makes those decisions is still greatly shaped by how it’s trained. In fact, training AI is essential in getting AI-driven systems to make correct decisions that align with your organization’s particular set of business rules. Every business is a little different, meaning a blanket system that operates the same way in every situation would inevitably end up in additional headaches.

Put simply, AI is capable of making decisions but does so under the guidance of company policies, and of course, leaves the critical decisions to your skilled team.

The Importance of AP Automation for Business Success

The benefits of AP automation are going to be greatly felt by any team previously stuck working with a manual process or even a subpar automation system. In this section, we’ll look at ways in which AP automation is important for business success, as well as some real-world examples from a veterinary health organization success story.

Increased Efficiency

One of the most common issues faced by AP departments is simply the amount of time manual processing takes. By automating the legwork, teams can avoid backlogs, leading to a more efficient system that allows them to focus on higher-value activities.

For a veterinary health organization, automating data capture, approval routing, and invoice queues based on particular business rules resulted in a substantial cutback on hours spent processing invoices. In fact, the AP team reported that after implementing an automated invoice processing system, they were able to reduce their weekly work hours from 70 hours a week all the way down to 40.

Reduced Errors

When faced with large volumes of tedious work, human error is inevitable. AI-driven data capture, on the other hand, is able to reach near-perfect accuracy – 99.95%, to be exact. And with less data to manually enter and then revise, employees can focus their time on more complex tasks.

The veterinary health organization certainly saw this benefit. They went from consistently struggling with errors, to having no incorrectly captured information in the months after integrating an automated AP solution.

Faster Processing

Another common issue that comes from manual work is the rate at which invoices are able to be processed. Logjams in the invoice approval process, whether it be from errors, duplicates, or lack of alerts, slow down entire business functions and inevitably lead to late payments and upset suppliers. Automating invoice processing accelerates the timeline, ensuring suppliers are paid on time while enhancing business relationships.

Once again, the veterinary health organization is a great example of this. Prior to automating their invoice processing, it was taking an average of 10 days to approve invoice payments. After adopting an automation solution that sends notifications when invoices are ready for approval and consolidates pending invoices into a single, easy-to-find location, approval times were cut down to no more than five days, with most being approved the same day.

An added benefit? Much happier suppliers.

Streamlined Cash Flow

It’s not news that manual AP processes are costly. Between the required labor, the time spent away from more valuable tasks, and all of the other operational costs, there is plenty of room for cost savings. In turn, cash flow can flourish based on 73% of executives who believe accounts payable automation helped improve their bottom line.

Improved Scalability

Ideally, businesses grow, and with that growth comes an increased volume of invoices that previously required hiring more employees. With automation, invoice volume isn’t a concern, as AI-powered systems can easily handle growing amounts of invoices without needing additional resources.

Let’s take a final look at the veterinary health organization. The AP team had been struggling with rapid growth, having to deal with up to 7,000 invoices a month. On top of the reduced working hours that resulted from automating their systems, the AP team was able to maintain those reductions even after a member of the AP staff left.

The Future of AP Is Automation

AI and automation are changing the AP landscape. No matter how big or small your business is, automated invoice processing systems are a sure way to enhance AP departments. With streamlined workflows, reduced error rates, faster processing times, reduced costs, easy scalability, enhanced vendor relationships, and ultimately more business success, AP automation solutions are the way into the future with a competitive edge.

According to the 2024 Gartner Finance Technology Bullseye Report, accounts payable invoice automation is among the top ten most adopted technologies and 53% of finance leaders plan to increase AI investment in the mid- and long-terms. If you want to keep up with these modern AP teams, you need to do the same.

If you’re ready to upgrade your AP department and take advantage of the latest technology, partnering with the right solution provider is the key to your success. With MetaSource, you’re getting not only the latest and greatest in automation technology, but also a partner with over 30 years of experience in helping businesses optimize and innovate their AP systems.