Automated invoices send e-copies of bills to the customers and eliminates the use of physical, manual or paper invoices. This process uses technology and software to gather the data, record it in the accounts payable software, and compute the data gathered.
Moving the process of invoicing online is an optimal solution for businesses. It offers various options for payment, like credit cards, debit cards, bank-to-bank transfers that make the process easy for the customers and vendors. This process includes managing the orders purchased, transfer of digital payments, price matching, entering the data, and much more by the automated system.
Automated invoicing schedules your invoices in a way that they can be sent at a specific date and time. They can be issued manually from your mobile phones as well, eliminating the necessity of a bookkeeper.
Documentation of invoice information in the system occurs, followed by the settlement of the payment.
Even though payment becomes easy and quick with automated invoicing, organizations have to check the invoices and take note of the data being fed into the system. Loopholes can be found, and action has to be taken to sort those mistakes out.
Features of invoice automation
- Keeping track of invoices
Invoices are rapidly arriving in businesses as standardized XML documents via Electronic Data Interchange (EDI), PDFs and image files via email, and hard copy documents. EDI software can automate the processing of structured XML documents, the completion of payments, and the development of accounting entries.
An RPA bot or a basic email automation application can flag documents with invoices and forward them for information collection for digital receipts. To make invoice tracking much easier, some businesses use a separate email address for invoices. Companies are using a single address to centralize invoice screening for hard-copy invoices.
- Capturing the invoice
Invoice capturing is the process of extracting specific information from an invoice (such as a bank account or an ordered item). If the program is unsure about the findings, it is forwarded to staff for a manual review.
- Comparing the invoice against order documents and guidelines
This is done to guarantee that the payment is appropriate. Cross-checking invoices against sales orders and examining invoices for duplicity are examples of evaluations. Working resource optimization plans are used to determine billing times, and restrictions are used to determine whether to process invoices manually.
Invoices that are unusually high compared to a supplier’s regular invoices need manual verification to ensure that no incorrect payments are made. Review the invoice against all the rules.
Invoice-related data is recorded in systems. Invoices without sales orders must be attached to an account in the general ledger, and receipts will be matched to accounts using machine learning solutions. Last but not least, make the necessary transaction to settle the payment.
Making invoicing hassle-free with automation
Most businesses prefer two categories of invoice capture. They are as given below:
Pattern OCR: This method of approach is useful where the same text format appears repeatedly. Any invoice that does not follow the standard format will fail. It’s the standard method of extracting information from invoices.
Artificial intelligence OCR: These cutting-edge applications use artificial intelligence to extract data from previously unknown invoices.
A normal process of invoicing has to go through the following steps:
- Generation of the invoice by the supplier
- Sending the invoice to the buyer
- Printing of the invoice by the buyer
- Reviewing the details by the buyer
- Approving the invoice and sending the payment to the supplier
If there is any inconsistency, then there is an alternating of the invoice between them. This makes the process very tardy and lengthy. As the number of payments and invoices increase, keeping track of them and timely sending out payment becomes labor intensive, and errors are bound to happen. With the help of automated software, however, invoicing becomes a hassle-free experience.
Benefits of automated invoicing
By 2022, the majority of businesses will be relying on AI-based invoice capture, which effectively extracts structured data from invoices. This shows that template-based solutions are gradually disappearing from the industry.
Most Fortune 500 businesses that use technology that was not built in the last few years have efficiency rates of 10-15%. Cutting-edge, deep learning-based invoice extraction technologies can increase these rates to over 80%.
1) Reduces the need to hire new employees
With the machines doing the work, there is a significant decrease in hiring employees for manual tasks. This helps to cut the labor costs. The help of an employee can be redirected to tasks such as manually inputting the data, scanning documents, keeping track of the invoices received, and many more.
Expansion of your team and hiring new employers is expensive. You need to look over your budget and additional expenses that hiring brings forth. Not only money, but you also need to invest your time to find the perfect fit. With automation, there is no pressure on hiring, and the machine handles multiple tasks.
2) Saves time
One of the noteworthy benefits of automation for any company or business is saving time. As mentioned above, invoicing the traditional way is a very lengthy process that can take weeks. Automation successfully invoices at a faster rate and reduces the process to 3-4 days. This will also cut down on the time the employees spend on managing invoices every day. Most businesses can handle their invoices in between 3-5 days with invoice management automation tools, saving time by over 50%.
It also leads to faster cycle times. If the cycle is slow, it will generate a negative effect on the business. When the cash expenses become irregular and there is congestion of invoices, a backlog is created. This will impact the relationship between the vendor and the company.
By saving time, you will also save money through automated invoicing. You won’t need to hire more employees, and this will reduce labor costs. Along with this, your expenditures on printing, mailing, interest over late payments, and overhead charges would also be decreased. By going paperless, it would be helpful to the environment as well. And by timely payments, you will also get discounts.
Due to reduced expenditures, you can utilize this money to invest in other business areas like innovation, expanding the business, labor customer service and experience, and overall conduction of your business.
4) Efficiency improvement
When you save time by automating invoicing processes, you can direct the energy of your employees to check for errors and backlogs, if any. This will ensure that the payments are on time, resolving issues quickly, managing cash flow, and adhering to the budget.
Using automated invoices also enhances the accuracy and consistency of your invoice, transparency, and accountability. Your data would be well managed, and you will analyze it rapidly and easily in minutes. This allows your accounting or financing departments to focus more on other tasks as well. This is beneficial to boost employee productivity, generating greater revenue. The processing of numerous invoices will be done with accuracy and will contribute to your company’s growth.
Yet another one of the significant benefits of automated invoicing is accuracy. Errors in manual data entry are to be expected, but these errors can lead to significant delays due to rectification. However, when the process is automated and handled by a machine, it reduces the chances of inaccuracy.
5) Increases transparency
When an invoice is received, you can easily track it. Automated invoice makes it simple and easy for you to track any lost invoices. On your dashboard, you can find pending payments and payments that are done and received by the vendor.
You can send customers reminders and take follow-ups on pending invoices, as well. It also has a feature to differentiate customers who have a habit of settling late payments and punctual ones. It can also monitor your team’s efficiency and give you an in-depth analysis of the overall working of your business.
6) Smooth compliance
An invoice is an important document when it comes to filing for your tax. They serve as evidence of tax submission. There is a chance that your paper documents might get misplaced and create delays and errors. This will become a headache when the time for filing comes.
Another problem with keeping paper documentation is warehouse management. Having boxes filled with papers would make your work untidy and increase it by ten folds. You will need to rent a proper storage unit and organize your documents. To avoid this, automation is the best solution.
With an automated invoice, you can submit your original documents and all essential data electronically. Your orders can be sent directly to your suppliers, leading to improved quality of work and reduced risks of breaking any law.
7) Ensuring growth of your company
With many businesses going global with their products and services, the use of technology is mandatory. It will help you regulate your invoices and keep a close eye on your expenditure. You will be presented a whole view of your company’s growth, and you can make informed decisions for the sustainability of your company.
8) Removes error margins
Humans are vulnerable to make mistakes. Invoice errors caused by manual operations, such as data entry services, are fairly common and can cause a slew of problems for your company. It could indicate that you paid the incorrect amount or on the incorrect date.
Invoice mistakes can result in late payments or even missing invoices. Furthermore, you can increase consistency by incorporating machine learning services into your invoice workflow. This saves time spent correcting mistakes and reduces the number of checks that need to be reissued.
Automated invoicing can be very profitable for businesses. With these benefits, the expansion of the business is assured.
Disadvantages of automated invoicing
While automated invoicing has several benefits, the process comes with some downsides, as well. Let’s look into some of them.
If the company employs an automated invoice program, they will almost always have to pay fees, which may or may not be exorbitant. These charges will easily add up eventually and can be inconvenient for small businesses.
- Security concerns
Electronically sending invoices carries certain hazards that are not associated with physical copy invoices. For starters, it can be accessed by potentially harmful people, which is avoidable when invoicing is done manually. Secondly, digital invoices are easier to manipulate than physical copies, which can cause losses to both clients and the company itself.
- Filters with spam
If your customer only sees your electronic invoice, it could become a problem soon. In some cases, email service providers classify invoices as spam and assign them to a folder that most people never see. You will have no idea whether your invoices are being blocked by spam filters, and it can be confusing to explain to clients how to change their spam filters to allow your invoices to pass.
- Customers that are not online
Your clients or consumers may not have access to their computer from home or may not really have an email address, which is especially true of some categories of companies. Some consumers may choose to obtain an invoice on paper. This could be particularly valid for elderly consumers or those who live in rural areas.
- Issues in accounting
For your partners and consumers, electronic invoices can make financial reporting more difficult. Some may simply prefer physical invoices, as they are easy to make. The learning curve required for automated invoicing can be steep for some of your partners, clients, and customers.
How to automate invoices?
You must stay on top of your invoices for your company to succeed. Invoicing can be tedious and time-consuming. The fact of the matter is that technological advances have made optimizing your company is easier than ever before. Invoicing is a good example.
A few ways you can automate your invoices can be:
- Email alerts
When an invoice is due, you’ll get an email alert. Why give a reminder after an invoice has passed its due date? A customer will accept an invoice, set it aside for later payment, and then forget about it. You can schedule automatic invoice updates for 14, 7, or 3 days before the due date. This is an efficient way of reminding them of the upcoming deadline. It also has a less intrusive feel to it.
In addition, you can set the invoicing tool to remind your clients when their invoices are due. These automatic emails inform clients that their payment is due today, allowing them to quickly click through and make their payment on time.
Even if you’ve followed the steps above, late payments are still unavoidable. Since following up on late payments isn’t the most efficient use of the resources, an automatic email reminder of past-due invoices is a perfect way to keep on track of outstanding invoices without devoting time to it.
- Recurring invoices
In most instances, you can waste a significant amount of time manually entering the same data multiple times. Worst of all, there’s no promise that a customer can reimburse the invoice on time until you’ve produced and delivered it to them. Invoices are automatically generated and submitted to the client on a normal, pre-defined basis for recurring invoicing.
To put it another way, you just have to set up the invoicing protocol once, including the customer’s name, invoice frequency, number, and payment form. You’ll get consistent cash flow if you simplify the invoicing with periodic invoices. You’ll be able to avoid late or missed payments as well. Recurring purchases will, in addition, help you save money on things like paper, ink, and shipping.
- Archiving of digital data
You must hold invoices for at least seven years, as you are aware. The main issue with keeping this data for such a long time is that manually sorting these files is difficult and time-consuming. That’s not even taking into account the expense of filing cabinets. Worse, these records are easily lost due to fire or water damage.
Another job that becomes easier with automation is this. A digital copy can be saved in the cloud instantly. This way, you’ll never miss an invoice and will always be able to find it.
- Pursue unpaid bills
Late payments are never a positive thing for a business. It depletes the cash flow and could also put your company at risk. Although there are many methods for influencing prompt payments, technology can simplify things. You should, for example, submit payment notifications and ping the client to clear the dues.
This not only removes the confusion of asking for money but additionally increases the cash flow and saves you time from having to call the customer regularly. Do not, however, focus entirely on technology to track down late payments.
Automations are changing the way we conduct business, empowering SMBs to build a virtual “crew” to assist them in running their operations. Different companies have different requirements, so the one you think is right for you may not be the one for anyone else. Customers will appreciate it if you make it easy for them to obtain, comprehend, and pay their invoices. Automated invoicing helps you communicate with your customers where it’s most convenient for them, and they’ll be able to pay you much quicker.