Automating supplier invoice entry

At first sight, the subject of automated supplier invoice capture may seem to be confined to an audience of accounts payable or IT experts.
 
However, Olivier Herlet, Associate Director at Focustribes, explained to us on 20 June that initiatives or projects aimed at implementing supplier invoice automation require the involvement of many players in the Procure to Pay chain.

SOMMAIRE 

1. What is supplier invoice automation ?

2. The main obstacles to be removed

3. Benefits of supplier invoice automation

4. Steps for implementing supllier invoice automation

5. How Focustribes can help you with your projects

Olivier HERLET - FocusTribes Associate Director and Business Transformation Project Manager is a consultant specializing in P2P processes for transformation projects. 

Indeed, the success of such projects depends on the collaboration of various stakeholders, including purchasing, accounting, finance and IT departments, as well as the suppliers themselves. Each plays a crucial role in ensuring smooth and efficient integration of automated processes, improving data accuracy, reducing manual errors, and optimizing workflows.

Automating supplier invoices is a major challenge for companies wishing to optimize their financial processes. In this article, we'll explore this concept in detail, its benefits, the obstacles to be overcome and the importance of a cross-functional approach. Our aim is to inspire you and provide you with the information you need to make informed decisions about automation.

I- What is supplier invoice automation ?

Automating supplier invoices involves using software to manage invoice processing automatically, thus reducing manual intervention. Unlike manual processing, which is often slow and error-prone, automation enables invoices to be processed quickly and accurately, from the moment they are received through to payment.
The traditional stages of manual invoice processing include receipt of paper or electronic invoices, data entry, invoice verification and approval, and finally payment. Each stage is prone to delays and errors. Automation, on the other hand, simplifies these processes by integrating advanced technologies such as optical character recognition (OCR) and artificial intelligence to extract data from invoices, automatically validate them and route them for approval and payment without human intervention.

But be careful, because definitions can vary from company to company.

They all agree on the absence of human intervention, but is the end-to-end flow taken into account, or just part of the organisation?
- Invoice reconciled with an order
- Invoice reconciled AND booked
- Invoice 'parked' automatically?

To avoid misunderstandings and get the right reading, Olivier recommends that you take the following precautions right from the start of the project:
1. Agree a clear common definition internally.
2. In the case of benchmarking, give priority to comparisons between companies in the same group or business sector.

II- The main obstacles to be removed

There are a number of obstacles to overcome:

1. The technical dimension
   
   Choose the software that best meets your needs, taking objective criteria into account:

1.  

2. 1- Features :

Make sure the software offers all the features your business needs, such as invoice scanning, optical character recognition (OCR) and integration with your ERP. If your organisation already uses an ERP, then you need to carry out a diagnostic to find out what it can do. 
For example, advanced features such as automatic data extraction, purchase order matching and invoice validation can significantly improve efficiency.

1. 2- Cost :

Compare the costs of different solutions, taking into account licence, maintenance and training fees. It is important to calculate the potential return on investment (ROI), taking into account cost savings and productivity gains.

3- Customer Support

Choose a supplier that offers reliable and responsive customer support, to help you with any problems or questions you may have. Good support can make a significant difference to the implementation and day-to-day use of the software. For a company looking to automate its invoicing processes, a careful assessment of these criteria is crucial. For example, a professional services company might prioritise tight integration with its existing ERP systems, while a manufacturing company might focus on specific purchase order processing functionality.

Purchase order and VAT management

This process of automating the entry of supplier invoices first requires the use of purchase orders. All purchases made without an upstream purchase order, such as transport services, cannot be included in this process.
Furthermore, purchase orders must be received prior to invoicing. In some sectors, however, there can be a time lag between the date on which goods are received and the date on which invoices are issued.
To ensure a smooth flow, the purchase orders must appear on the invoices.
Finally, VAT can be a complicated issue in some countries. It is necessary to anticipate this difficulty by setting up a review of VAT codes with the finance and IT departments and asking suppliers to indicate them on invoices. Taking these factors into account can save time and reduce data entry errors.

III- Benefits of supplier invoice automation

1. Productivity improvement :

2. Employees can process more invoices (POs) in less time, increasing the overall productivity of the finance team by reducing the amount of interaction between accountants and procurement staff. A 2018 Levvel Research survey found that accounting departments that adopted automation saw a 75% increase in productivity. 

3.  

1. Time saving :

   Automated processes reduce the time needed to process each invoice, allowing employees to concentrate on higher value-added tasks. According to a 2018 study by the Institute of Finance & Management (IOFM), companies that have automated their invoice management processes have reduced invoice processing time by 60-80%.

2.  

3. Error Reduction :

4. By eliminating the need for manual data entry, automation reduces data errors, ensuring greater accuracy and reliability. A 2018 study by the American Productivity & Quality Center (APQC) found that automation can reduce data entry errors by 90%.

5.  

6. Cost optimization :

7. Less time spent on administrative tasks translates into cost savings and better resource allocation. According to a 2023 report by Ardent Partners, companies save an average of 80% on invoice processing costs through automation.

IV- Steps for implementing supplier invoice automation

1. Needs Assessment :

2. Analyze your current processes and identify areas for improvement through automation. It's important to understand invoice volumes processed, invoice sources (paper, PDF, EDI), and specific pain points in the current process.

3.  

4. Software selection :

5. Choose the software that best meets your needs, taking into account the criteria mentioned above. A pilot phase with several suppliers may be useful to assess the actual performance of the proposed solutions.

6.  

7. Employee training :

8. Train your team to use the new software to ensure a smooth transition. Training should cover not only how to use the software, but also new procedures and best practices to maximize the benefits of automation.

9.  

10. Integration with existing systems :

11. Ensure smooth integration with your existing systems to avoid disruption. Working closely with your IT department and software supplier is essential for successful integration.

12.  

13. Process Monitoring and Optimization :

14. Monitor performance and adjust processes to maximize the benefits of automation. Use key performance indicators (KPIs) such as invoice processing time, error reduction rate and cost savings to assess the effectiveness of the automated solution.
    
    By implementing these steps methodically, you can ensure a successful transition to supplier invoice automation, with tangible benefits in terms of time, accuracy and cost.

V- How Focustribes can help you with your projects

At FocusTribes, we support our customers in their supplier invoice capture automation projects by offering in-depth expertise and a personalized approach. We help companies assess their needs, select and integrate the best software solutions, while ensuring efficient data management and ongoing support. Our methodology also includes proactive change management to ensure smooth adoption by internal teams. By working closely with our customers, we ensure that every stage of automation is optimized to maximize productivity gains and cost savings. If you are considering automating your invoicing processes, please contact us to discuss your requirements and find out how we can help you achieve your goals.

If you unfortunately missed our last webinar on supplier invoice automation, don't worry! You can now access the replay of our experts' presentation by following the link below. Take the time to watch this informative session to discover practical tips and valuable advice that will help you optimize your invoicing processes and improve your company's financial management.