5 Steps to Automate Invoice Processing

When we think of manufacturing, we usually picture machines, assembly lines, and logistics. But behind all that, there’s a crucial process that often gets overlooked—invoice processing. It’s not the most exciting part of running a business, but it’s essential. Unfortunately, traditional, manual invoice processing is inefficient and inaccurate, resulting in payment delays. Businesses also find challenges with human errors in data entry, and a lack of transparency in the approval process. This is where automation steps in, offering a smoother, faster, and more efficient way to handle invoices.

As per a recent survey, by implementing AI-driven intelligent vendor invoice processing, businesses can reduce manual labor by up to 80%, significantly decrease the chances of errors and also speed up the payment process. In this blog, we’ll walk you through five steps to automate your invoice processing in manufacturing and show you how doing it can lead to higher efficiency, fewer errors, and cost savings. Let’s get started!

Automate Invoice Processing in 5 Steps

Step 1: Evaluate your Current Invoicing Processes

Before you even think about integrating technology, you need to understand how your current invoice process works. This might sound boring, but it’s necessary. You can’t fix what you don’t understand. So, start by breaking down your current workflow:

• Map it out: Write down each step involved in processing an invoice. How do invoices come in? Is someone manually entering data? How long does it take to approve an invoice? Who’s involved in the process? By doing this, you’ll start to see where the bottlenecks are, and which parts take the most time.
• Spot the mistakes: Take note of how often mistakes happen—whether it’s data entry errors, duplicate invoices, or lost paperwork. If you’re dealing with a lot of errors, that’s a sure sign that automation can help.
• Look at the tools you’re using: Are you still using paper-based systems? Does your accounting solution connect well with your other tools, like your ERP system? The more you know about the gaps in your process, the easier it will be to find the right automation solution.

Step 2: Pick the Right Automation Software

There’s no shortage of tools that streamline invoice processing but finding the one that fits your manufacturing business is key. Here’s what you should keep in mind when choosing automatic invoicing software:

• Can it connect with your existing systems? The last thing you want is a solution that doesn’t play well with your current ERP, accounting, or procurement systems. The more integrated everything is, the easier it will be to transition from manual to routinized processes.
• Is it scalable? If your business grows, your solution should grow with you. Make sure the solution you pick can handle an increase in invoice volume without requiring a complete overhaul.
• Is it user-friendly? It sounds obvious, but if the solution is too complex, your team may resist using it, or you might have to spend a lot of time training people. Look for a solution with a clean, intuitive interface that makes things easier, not harder.
• Does it have OCR technology? OCR (Optical Character Recognition) allows the solution to automatically scan and pull-out key details like invoice numbers, dates, and amounts from physical or digital invoices. No more manual data entry means fewer mistakes and faster processing.

Choosing the right solution sets the foundation for everything else, so take the time to compare options and think about your business's specific needs. This is where Cozentus can help, by creating customized solutions integrating with the latest intelligent document processing (IDP) technology.

Step 3: Automate Data Entry and Invoice Matching

Now that you’ve got the invoice processing software, it’s time to put it to work! One of the biggest time-consuming things in invoice processing is manually entering data and matching invoices with purchase orders (PO) and delivery receipts. By optimizing these tasks, you can save hours of work and drastically reduce errors.

• Automate Data Capture: This is where OCR technology comes in. The solution reads invoices and pulls out key data points like vendor name, invoice amount, and payment terms. You no longer have to worry about someone entering the wrong numbers into a spreadsheet. The solution does it for you in seconds.
• Automate Invoice Matching: Matching invoices to purchase orders and delivery receipts manually can be tedious. Facilitating this process speeds things up and helps catch discrepancies right away. If something doesn’t match—like if the quantity on the invoice doesn’t line up with the purchase order—the system flags it for review. No more spending hours sifting through paperwork trying to find the issue.

Step 4: Set Up Automated Approval Workflows

Approval bottlenecks can cause serious delays in invoice processing. In a manual process, an invoice might sit in someone’s inbox for days or even weeks before it gets approved. With our custom-built solution, this is a thing of the past.

• Create Smart Approval Rules: You can set up rules that automatically route invoices to the right person for approval. For example, invoices under a certain amount might get approved by default, while larger invoices go to a manager. This ensures that invoices don’t get stuck in someone’s inbox because they’re out of the office or too busy.
• Send Automatic Notifications: If an invoice does need approval, the system will send a notification to the right person, reminding them to review and approve it. If they don’t act on it in time, the system can send follow-up reminders to keep things moving.
• Increase Visibility: One of the big perks of such workflows is that you get real-time visibility into where each invoice is in the process. You’ll always know who’s holding things up and can intervene if necessary.

Step 5: Keep an Eye on Performance and Improve Over Time

Even though you’ve automated your invoice processing, you can’t just set it and forget it. To get the most out of it, you need to monitor how things are going and look for ways to improve.

• Track Key Metrics: Keep an eye on things like processing time, error rates, and the cost of handling each invoice. These metrics will tell you if your automation is working as intended or if there are still areas that need tweaking.
• Use Analytics: Most solutions that routinize operations come with built-in analytics tools that give insight into your workflow. If you notice that certain invoices are still taking too long to process or that errors are creeping in somewhere, you can adjust your rules or processes to fix the issue.
• Stay Up to Date with New Tech: New features and updates are released all the time, which could make your process even smoother. Keep an eye on what’s new and be ready to upgrade or adapt when it makes sense for your business.
• Get Feedback from your Team: Your team is the best resource for understanding how automation is working on the ground. Regularly check in with them to see if there are any hiccups or frustrations that need addressing. Their feedback will help you fine-tune the process.

Why Manufacturers Should Go for Intelligent Vendor Invoice Processing

Managing and regulating invoice processing isn’t just about saving time; it’s about setting your business up for long-term success. Here are some of the key benefits:

• Lower Costs: By cutting down on manual labor and reducing errors, you can reduce costs with AI-powered vendor invoice processing. Plus, automating ensures you don’t miss early payment discounts or end up paying late fees.
• Better Accuracy: Streamlined data capture and matching reduce human errors, which means fewer disputes and corrections down the line.
• Faster Processing Times: With this solution, you can go from receiving an invoice to approving it in a fraction of the time it used to take. This frees up your team for more important tasks and helps improve supplier relationships by paying on time.
• Improved Transparency: Intelligent processing systems give you real-time visibility into every invoice, making it easier to track, audit, and manage payments.
• Regulatory Compliance: This cutting-edge solution helps keep everything organized and easy to track, which is a big help if you need to provide an audit trial or ensure you’re meeting compliance standards.

Conclusion: Embrace Automated Invoice Processing for Efficient Business Operations

Automating your invoice processing is one of the smartest moves you can make if you’re looking to boost efficiency and cut unnecessary costs in your manufacturing operations. Along with manufacturers, automating invoice processes can also significantly help businesses in logistics, retailing, and supply chains.

With years of expertise in creating tailored AI-powered solutions, Cozentus can help industries of all sizes increase their productivity and reduce costs through intelligent vendor invoice processing. In the long run, our automation solutions help you stay competitive, save time, and let you focus on what really matters: running a successful business.

Take a step forward with us to make your invoice processing faster!