Invoice Automation is Evolving. Is Your Business Ready?

Let’s talk about invoice management. Here are the facts. 

From 2021 to 2023, Stampli conducted three surveys of CFOs and other finance leaders on their invoice management challenges. In the first survey, The How, the Why, and the ROI of AP Automation, we asked leaders to name their biggest challenges.

The results are unlikely to surprise anyone who works in AP.

According to the survey, more than one-third of the leaders stated that their teams were overwhelmed by paper-based processes. Another third mentioned workflow bottlenecks, while just under 40 percent of the respondents said their teams spend too much time on low-value tasks, such as manual data entry. (Some respondents selected more than one answer).

Why businesses invest in AP automation

In our second survey, AP in 2022: Expectations, Technology, Opportunity, we surveyed finance leaders on what they saw as the future role of accounts payable. Again, no surprise to anyone in AP: just over three-quarters of respondents said they expected the responsibilities of their AP teams to increase, and 41% said they expected the increase would include an expansion of AP’s strategic role.

Finally, in our most recent survey, AP in 2023: Expectations, Technology, Opportunity, we asked leaders about the evolving role of AP and their expectations for 2023-2024. Just under three-quarters (71%) of respondents expected an increase in the number of invoices their AP teams would need to manage, with 27% saying the increase would be “significant.” And just over half (55%) of the respondents said they expected invoice complexity to grow, with one-quarter saying invoices would be significantly more complex.

Not to understate a point, but the writing is on the wall.

CFOs face an opportunity when it comes to accounts payable automation. Accounts payable is rapidly evolving and growing, and invoice management is central to the changes. Most CFOs already know the business case for end-to-end invoice processing automation software: cost savings, efficiency gains, and improved cash flow. 

But there’s another side to AP automation – its ability to provide accurate and actionable real-time data and business insights that turn accounts payable into a driver for business strategy. The challenge is striking the right balance between the two.

The AP challenge: efficiency vs. evolution

In this podcast episode, Ben Murray, Founder of The SaaS CFO, is joined by Nick Gerostathos, SVP, Chief Accounting Officer, and Corporate Controller at Talkdesk. They discuss how learning to adapt to new environments can help CFOs initiate and manage evolutionary change in their organizations. 

AP is changing, and so are the challenges facing CFOs. Investing in the right invoice management automation solution can be evolutionary for your business. Get it right, and you’ll transform your AP department into a significant contributor to your bottom line

The key to getting it right is understanding invoice management automation: what it is, what it does, and how to choose the right Accounts Payable Solution partner. Read on to get the facts.

How invoice automation works

In a nutshell, invoice workflow automation lets me streamline and optimize manual invoice processes. Automated invoice processing has two main goals:

  • Improve invoice processing time and efficiency to reduce processing costs and prevent errors and fraud
  • Provide accurate real-time transaction data and share it with ERPs and accounting systems

I’m looking for an automation solution that is suitable for my business and allows me to achieve my goals without having to change my existing AP processes. That means I need to understand how automation works at each step of the invoice management lifecycle.

The invoice management lifecycle

I own a biotech company that creates orthopedic appliances and prosthetics, such as knee braces and artificial limbs. Our products are highly intricate and made from advanced materials, requiring exact specifications for each customer. We have an extensive supply chain that includes textile producers, material suppliers, fabricators and manufacturers, healthcare professionals, engineering and design firms, and others. 

Since each device we create is custom-made and unique, we often order highly customized products and services from our suppliers, resulting in complex invoices that list each component and its price. We have no room for error. We are very precise in our costing because each of our products is unique and has its own price. 

To maintain our profitability, we need to accurately determine the input costs for each individual product. As a result, reconciling these invoices with our manufacturing process and purchase orders takes up a significant amount of time (and requires a lot of spreadsheets) for my AP team.

Like most businesses, our invoice lifecycle has four main steps. Let’s break out how automation can streamline each step. We’ll start at Capture, Code, & Send, which is when the vendor invoice arrives at my AP department. 

Step 1: Document capture and coding

Step 1: Document capture and coding

My invoice lifecycle starts when one of my vendors delivers the goods or services we ordered. Our project managers inspect the delivery to make sure everything is included, meets our specs, and has the right pricing. If everything is ok, they accept the receipt. If there’s a problem, they return the receipt to the supplier and ask for corrections.

After the shipment or service delivery is complete, the vendor sends us a paper or electronic invoice. Our AP team manually enters the invoice into our ERP accounting software and then checks the line items against the shipping receipt and purchase order (PO).

How automation helps us manage documents

Inspecting, keying in, and comparing long and detailed shipping receipts, paper invoices, and other documents is time-consuming and error-prone. Plus, although my team is meticulous, docs can get destroyed or lost in the shuffle.

Invoice automation uses optical character recognition (OCR) and machine learning (ML) to scan and digitize paper documents or PDFs and share them with our ERP, so our project teams can easily access shipping information and compare it to our manufacturing requirements.

Automating data extraction saves us a lot of time, but there’s another benefit to our business. Having real-time access to accurate line item data and costs means we can correctly allocate our supplier costs to the right product and ensure we’re turning a profit.

Step 2: Three-way matching and verification

Step 2: Three-way matching and verification

Once the invoice has been received, keyed in, and GL coded, we’ll compare it to the shipping receipt and purchase order to verify that the invoice contains the correct information. If the invoice matches the receipt and PO, we’ll forward it for approval and payment.

Better three-way matching with automation

Our vendor invoices and receipts are complicated, manual invoice validation takes a long time, and errors are common. Invoice automation software simplifies the process by automatically GL coding line items and comparing them against the PO and receipt. The system detects and flags any discrepancies it finds. It can also work with partial shipments, invoices, and POs, which makes a big difference in our ability to handle complex orders.

Step 3: Invoice approval

Step 3: Invoice approval

After our AP team matches the invoice, they forward it to the appropriate managers for approval. At our company, we have several different approval workflows. For invoices that are associated with a specific product, our operations team checks that the invoice matches the actual materials and components used in the product to confirm they match. Next, our finance and revenue assurance team reviews the pricing to ensure it’s correct and the product is priced correctly. 

For general business purchases, invoices are routed directly to our finance team for approval. After the invoice is approved, our team forwards it for payment.

Streamlining approval routing and workflows with automation

Because our approval process is so complex, invoices are often rejected because they contain errors or the approver needs more information. This slows down the payment process and often results in suppliers charging late payment fees. Also, if our product team can’t verify the costs for a specific product, they can’t easily confirm if we’re making a profit. Plus, emails sometimes get lost or stuck when someone is on vacation.

Invoice automation automatically routes the invoice to the correct approver with all the relevant information attached. Our approvers can easily review the invoice and make sure everything is good before they approve it. And if someone forgets to approve the invoice, the system will remind them. We can also easily modify our approval routing if one of our approvers is on vacation or out of the office. The more streamlined process saves our busy approvers a lot of time – and a lot of headaches.

Step 4: Payment

Step 4: Payment

After approval, the invoice goes to our finance team for payment. Payment follows the contract terms with each supplier and is usually by check or ACH. Because we work so closely with our suppliers, many of whom are small businesses or individuals, our payment processes are a bit unstructured. For example, it’s not unusual for one of our managers to pay a vendor by credit card and submit a statement to the finance team for reimbursement.

How invoice automation improves vendor payments

Although we have good relationships with our suppliers, our challenges paying vendors on time can strain those relationships, particularly when we need to catch up on payments to small vendors. We also have limited oversight over erroneous payments, so we’re not even sure how much money we might be losing to mistakes.

By ensuring invoice accuracy and fast approvals, invoice automation provides our finance team with the right information to make payments on time. And by incorporating a payment automation solution, we can unify our scattered payment methods into a single system, eliminating ad-hoc payments. A payment solution can also synchronize payment data with our ERP, making it easier to track costs, manage cash flow, and ensure that we stay profitable.

Turn invoice management into a driver for business strategy

My business has benefited greatly from implementing an invoice automation solution. Automation has made a big improvement in our process efficiency and accuracy, resulting in cost savings and reduced frustration for both employees and vendors. Plus, by providing accurate and detailed transaction data, invoice automation helps us verify our costs and ensure our products are profitable. 

Armed with this costing information, we can forecast and manage our profitability and make informed strategic decisions about R&D, supplier management, and product marketing.

Read the case study on how CTI Increases AP Productivity by 40% with Paperless Invoice Processing

Striking a balance between efficiency gains and strategic transformation means looking at invoice automation in an evolutionary way – going beyond process optimization to see the deeper value an AP automation solution can bring my business. That meant I needed to find an AP solution provider that was easy to work with, had the flexibility to meet my unique business needs, and could deliver proven results.

We chose Stampli. With a proven track record of helping companies enhance their accounts payable processes, obtain valuable business metrics and analytics through user-friendly dashboards, and transform accounts payable into a powerful strategic driver, Stampli’s Accounts Payable Automation solution met our needs and more.

It begins with Billy the Bot, Stampli’s industry-leading advanced AI.

Billy the Bot

Billy the Bot is a valuable tool for AP teams looking to streamline their workload. Billy quickly learns the ins and outs of your invoice management processes and adapts to your unique business structure, taking on time-consuming manual tasks like invoice capture, coding, approvals, fraud detection, and syncing invoice data to your ERP. 

Billy uses machine learning to capture and code transaction data from paper or electronic receipts and can understand all line types, including general ledger, charges, fixed asset lines, and resources. He can handle partial payment workflows and multiple POs and support invoice management for multiple subsidiaries, locations, currencies, and tax structures. Billy can also identify errors and signs of fraud that are often easily missed, such as slight changes to invoice details or inflated line items.

Billy The Bot

By centralizing all invoice communications on the top of the invoice, Billy facilitates smooth communication and collaboration across the invoice workflow. Plus, Stampli features seamless integration with over 70 ERPs and accounting systems to provide a single source of truth for transaction data across the whole organization.

Stampli: invoice automation evolved

Stampli is the only Accounts Payable Automation solution specifically designed to meet the unique needs of AP. It streamlines invoice management, eliminating the need for external communication, ad-hoc workarounds, and manual AP tasks. Stampli provides complete visibility into every transaction, making audits and month-end close easy and informing strategic business decisions.

The case studies speak for themselves. Stampli delivers real results by helping businesses optimize invoice processing workflows without changing their business processes or reworking their ERP system. Contact us today to set up a free demo.

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