Introduction to
Invoice Processing Automation
Technology has transformed the way people process invoices. Ten years ago,
companies received paper invoices, sent them to the field for approval, coded
and entered the invoices, and called department heads and key suppliers to
calculate monthly accruals. Today, companies are looking to eliminate invoice
data entry, speed approvals, increase visibility into spending and capture early
pay discounts.
To accomplish these goals, companies are embracing a variety of invoice
processing technologies*:
Capture:
Approval:
Communication:
Data Entry
OCR
Approval Workflow
PO Flip
EDI/cXML Supplier Network Supplier Portal
Helpful Definitions – Invoice Processing Technologies
1. Key From Image – Capturing invoice information for data entry using scanned images of invoices rather than keying invoices from paper.
2. OCR – Optical character recognition technology that extracts specific data from invoices such as invoice number, vendor name, or amount payable.
3. Approval Workflow – Automatically routing a document such as an invoice to a designated group of people for approval.
4. PO Flip – Sending an approved purchase order electronically to a vendor who then “flips” the PO into an electronic invoice back to the buyer.
5. EDI – Electronic data interchange between computer systems used to transmit invoices electronically.
6. cXML – A machine readable messaging standard similar to XML that is used to electronically communicate invoice information.
7. Supplier Network – A buyer sponsored network leveraging 3rd party technology exclusively for invoice processing communication with preferred suppliers.
Part I: Paper vs. Electronic
A. The Internet has changed the way we communicate. Rather than relying on paper‐ based interactions that can take days or even weeks, we can now collaborate much more quickly in real time using email and other Web‐based tools. B. Paper‐based invoice processing contributes to poor visibility. Think about it. AP waits for invoices to arrive, approvers wait for invoices to be coded, clerks wait for approvals to return, and vendors wait for payment. Paper‐based cycle times can take forever. It’s no wonder monthly accruals are hard to accurately calculate. C. Manual data entry is expensive. Based on your monthly invoice volume, high staff overhead for manual data entry drives the cost of invoice processing through the roof. D. Electronic invoices can remedy these problems. Organizations that shift to electronic invoices can improve visibility, reduce data entry, and trim costs.Paper Invoice Cost:
$10.00-$15.00
Electronic Invoice Cost:
Part V: Educational Resources
Verian Blog (www.verian.com/blog) – Useful articles and commentary on ways to
increase efficiency using automated purchasing and invoice processing systems.
Institute of Finance Management – IOFM (www.iofm.com) – Valuable tools, best
practices, benchmarks, research and resources that will improve your Accounts Payable process.
The Accounts Payable Network – TAPN (www.theaccountspayablenetwork.com) – A