How Invoice Automation Saves Finance Teams Hours Every Week

Key Takeaways

• Invoice automation frees finance teams from tedious tasks of invoice capture, data entry, validation, matching and approvals so they can focus on higher-value work. 

• Automating the manual tasks associated with invoices helps reduce the amount of time finance spends on data entry, approval follow-up, exception handling and reconciliation. 

• OCR and automated data extraction reduce the time spent on capturing invoice details and the amount of manual data entry. 

• Automated PO and GRN matching benefits include reduction of manual comparisons and faster identification of discrepancies by finance. 

• Automated approval workflows route invoices to the correct approvers and provide visibility into the status of your invoices, so you spend less time chasing them down. 

• When invoice automation is integrated into the wider P2P process, finance has a more complete view of the process – from the purchase request and purchase order, all the way through to the final stages of invoicing, payment and receiving.

Quick Answer

Invoice automation is the process of using software to capture, extract, validate, match and route invoices with little or no manual input. It can automate repetitive tasks like data entry, PO matching, approval routing, duplicate detection and status tracking.

Manual processing can pile up fast and create a backlog. For example, a A Deloitte case study states that before automation, it could take up to 30 minutes to process a single invoice. The introduction of AI-powered invoice processing allowed the company to cut its invoice processing time by 50%–75%. However, the case study result is not a universal benchmark for invoice processing.

The primary benefit of invoice automation is not just that invoices are processed faster. Automation reduces the number of manual steps finance teams need to take per invoice. This allows them to focus on more valuable activities like exception handling and analysis.

Automation increases your teams’ ability to handle hundreds or thousands of invoices by removing repetitive tasks related to data capture, validation, matching and approvals.

What Is Invoice Automation?

Invoice automation is the process of using software to automate repetitive tasks in the cycle of invoice processing. Such responsibilities may include obtaining invoice data, checking invoice details, matching invoices to POs and GRNs, routing invoices for approval and tracking payment status.

Finance often faces a manual process of collecting invoices, entering invoice data, validating tax information, matching POs and GRNs, following up with approvers and reviewing discrepancies. Automation of invoices puts these repetitive tasks into predefined workflows, while finance takes care of the exceptions and decision-making.

Invoice automation moves a large part of this workload to predefined workflows. Finance can then concentrate on activities that require judgment and exceptions.

What Does a Manual Invoice Process Look Like?

A typical manual invoice process can include many steps. Finance are the first to receive an invoice. It can be emailed, sent via vendor portal or any other means.

The journey typically follows this sequence:

• Invoice received 

• Invoice captured 

• Data entered 

• Validated 

• PO/GRN matched 

• Tax/compliance checked 

• Approval 

• Exception handling 

• ERP update 

• Payment 

• Reconciliation

Then it is collected and sorted by a person. The invoice details are entered into an ERP or accounting system. This includes the vendor’s name, invoice number, date, amount, tax details and line items. The invoice is then verified.
Finance may verify the vendor details, GST details and TDS applicability. They may also check the invoice against the PO and the GRN. Once these checks are complete, the invoice is passed on to the correct approver.

If approval is delayed, the finance department may need to follow up. In case of a discrepancy or mismatch, an investigation is required. They may have to check the goods received, contact the vendor or check the PO. The invoice is paid and recorded at last. 

The exact steps may differ depending on the type of invoice and the organisation but every manual hand-off creates work for finance.

Where Do Finance Teams Lose Time?

The manual processing of invoices is made up of a number of small, repetitive steps. These tasks can be very time consuming for finance, as they are spread across hundreds of invoices.

The following is the breakdown of the time spent and how automation reduces the effort on each stage.

• Downloading and Collecting Invoices

Invoices are often issued through many channels. Before a document is processed, finance may have had to download attachments, open vendor portals and sort through them. This is administrative work with limited strategic value.

Invoice automation helps you convert invoices into a structured digital workflow. This takes away a lot of the manual document collection and organisation that finance would have to do.

• Entering Invoice Data

Data entry is one of the most redundant aspects of invoice processing. Employees have to manually enter invoice numbers, dates, vendor details, amounts and tax information.

Automated data extraction and OCR can reduce this workload. Instead of manually entering each field of the invoice, the system extracts data from the invoice and turns them into structured data. This eliminates much of the repetitive field-by-field data entry.

• Validating Invoices

Each invoice should be verified before payment. Finance can verify the vendor, amount, tax information and other details. They may also need to ensure that the invoice meets their internal policies.

Each invoice can be checked for predetermined checks through automation. This reduces the need to manually review every field and allows teams to focus on invoices where an issue is identified.

• Matching POs and GRNs

Manual invoice matching can be a time-consuming process. Finance will review the invoice to determine what was purchased and received.

A three-way match of PO, GRN and invoice, and answers three questions:

• What was the demand?

• What was delivered?

• What was billed?

Automation can take a lot of the manual labour out of comparing these documents and can flag discrepancies for further review. That means finance doesn’t have to go through and compare every matching field unless they find a mismatch.

• Checking GST and TDS

Tax inspections may make the invoice validation more difficult. Finance may need to validate the applicability and compliance of GST for taxes. They may also have to learn the proper TDS treatment.

Automated checks mean finance can concentrate on invoices that need further investigation, instead of doing the same tax checks manually on every invoice.

• Routing Invoices for Approval

Invoices typically need approval from certain individuals or teams. The routing can be based on the invoice value, category or department. Finance should locate the correct approver for manual routing. After that they have to send the invoice and check on its status.

Automated workflows could implement pre-set approval rules. The invoice automatically routes to the right approver without the team having to manually track every step. This removes the need to manually determine and initiate each approval path.

• Following Up with Approvers

A further hidden workload is the delay in approval. Finance might spend some time confirming overdue invoices and issuing reminders. Automated notifications reduce the amount of follow-up work that is needed.

The status of an invoice in the approval process is also shown in a centralised dashboard of automated platforms. Finance can spot bottlenecks without having to maintain separate spreadsheets or trackers. This reduces the need to manually check outstanding invoices or maintain separate status trackers.

• Handling Exceptions

Automation does not mean all invoices will be handled without human intervention. Exceptions still need to be addressed. The invoice might not match the PO, the delivered quantity may differ from the ordered quantity or tax information may need a review.

Such exceptions can be automatically identified and directed to the correct person via automation, which changes how teams use their time. Instead of having to manually go over every single invoice, they can focus on transactions that need their attention.

• Updating ERP and Accounting Systems

If the information has to be entered into several systems, manual data entry is even more time-consuming. It also increases the chances of mistakes and duplication. Integration with ERP can help alleviate that. This reduces the need to enter the same invoice information into multiple systems.

• Reconciling Payments

Once approved, invoice processing continues. But finance still needs to track settlements and match payments. An integrated workflow can provide visibility into the status of invoices and settlement. This reduces the need to manually gather payment information from disconnected systems during reconciliation.

Automated systems integrate vendor-specific payment terms, advance payment adjustments, scheduled payments and invoice settlements. This reduces the need to track payment information across various disconnected systems.

How Does Invoice Automation Change the Process?

The advantages of the automated process are more obvious when compared with manual processes:

This influence is not limited to a single task. It does this by cutting down on repetitive tasks across stages, which reduces the amount of time finance spends manually moving and checking information.

What Can Finance Teams Do with the Time Saved?

The value of automation is not merely that employees fill in invoices more quickly. The bigger opportunity is to redirect that time. The capacity created can be redirected towards higher-value finance activities such as:

• Analysing organisational spending

• Identifying cost-saving opportunities

• Reviewing supplier performance

• Managing working capital

• Improving payment planning

• Investigating exceptions

• Strengthening compliance

• Supporting business decisions

• Improving vendor relationships

• Building financial forecasts

Automation also changes the type of work that employees are responsible for. Less time is spent on the transfer of information between systems and more time is spent on analysis of information and resolution of issues.

Why Invoice Automation Should Be Part of P2P Automation

Invoice processing is only one part of the Procure-to-Pay lifecycle. A typical transaction begins with a purchase request. This is done through the procurement and approval processes. Then, a PO is generated.

The goods or services are received, and the GRN or SES acknowledges that.

The vendor invoices. The invoice is then validated, matched and approved before it is paid.

The broader P2P journey is:

Procurement → Purchase Request → PO → GRN/SES → Invoice → Validation/Matching → Approval → Payment

Where these processes are performed in isolation, finance may still need to transfer information between systems. This limits the utility of automation. The stages are linked together in a connected Procure-to-Pay process.

Invoice automation is one component of P2P automation. It covers invoice capture, extraction, validation, matching, approvals and exceptions. These activities are linked to procurement, POs, receiving and settlement via a related P2P process. This provides finance with a more complete picture of the transaction that sits behind each invoice. It also simplifies tracking an invoice to the purchase.

How to Evaluate Invoice Automation Software

Not all invoice automation solutions have the same features. Finance should consider factors beyond the fundamentals of OCR when assessing a solution.

- Check Data Extraction Capabilities

The software should be able to automatically extract relevant data from the invoice. This should include both header and line-item information. It reduces manual data entry and gives downstream workflows structured information to work with.

- Look for Automated Matching

PO and GRN matching can reduce the amount of manual validation. Ensure that the solution is compatible with your organisation's different matching requirements. This is important because finance can concentrate on discrepancies rather than manually comparing each invoice.

- Review Approval Workflows

Search for workflows that are customisable. The system should be able to route invoices based on your approval policies. This reduces manual routing and helps prevent invoices from sitting with the wrong approver.

- Check Compliance Controls

The solution should help with relevant tax and compliance assessments. Validation of GST and TDS can contribute to reducing repetitive manual reviews. This allows finance to focus on invoices that need additional scrutiny.

- Check Duplicate Detection

Duplicate invoice detection can help identify potentially duplicate invoices before they are paid. This adds a preventive control without requiring finance to manually search for duplicate records.

- Evaluate Exception Management

Automation should not be limited to approving invoices. It needs to be able to identify exceptions and pass them to employees for review. Otherwise, automation can simply create another manual queue for invoices that fail validation.

- Review ERP Integration

Ensure that the solution integrates with your ERP and finance systems. This can reduce duplicate data entry and keep invoice information connected to financial systems.

- Look for Real-Time Visibility

Finance should be able to track the status of invoices without extra trackers. Viewing pending, approved and settled invoices from a centralised dashboard can avoid having to go through multiple trackers. This helps finance identify approval bottlenecks without relying on spreadsheets or manual status checks.

- Consider the Wider P2P Process

Finally, think about how you can incorporate invoice automation into your full procurement process. A standalone invoice processing tool gives less visibility than a more comprehensive solution that includes purchase requests, approvals, sourcing, POs, receiving, invoices and payments. Moreover, linking these stages can alleviate the need to manually copy information between separate workflows.

Conclusion

Invoice automation can liberate finance teams from repetitive processing to focus on higher value activities such as analysis and decision making. The value is not just in removing data entry, but in removing repetitive tasks at multiple steps in the invoice process.

When invoice automation is part of the broader P2P process, finance can also track invoices back to purchases, approvals and receiving. This makes for a more transparent and managed workflow, from purchase to payment.

Zaggle is used by organisations like Subway, SHRM East and Blinkit to gain better financial visibility and streamline their processes. The results show the potential of linking financial processes to increase control and to make it easier to reduce complexity.

With the Procure-to-Pay platform from Zaggle, enterprises can cut down invoice validation and approvals time by over 60%, as there is lesser manual effort involved. Book a demo today to see how Zaggle’s solution can help your organisation automate invoice processing and build a more connected P2P workflow.

Frequently Asked Questions

What is invoice automation?

Invoice automation automates repetitive invoice processing tasks using software. These include data extraction, validation, matching, approval routing and status tracking.

How does invoice automation save finance teams time?

It reduces the number of repetitive tasks like data entry, invoice matching, approval follow-ups and system updates. Finance can then focus on exceptions and higher-value activities.

How does OCR help with invoice processing?

OCR pulls data from invoice documents. This can include invoice numbers, dates, amounts, vendor information and line-item data. The information can then be used in the automated processing pipeline.

Can invoice automation match invoices with purchase orders?

Yes. Invoice automation can match invoices to POs. It can also use GRN data for 3-way matching.

Can invoice automation detect duplicate invoices?

Yes. Duplicate invoice detection helps find invoices that might be duplicated prior to the invoice being paid.

Does invoice automation eliminate human involvement?

Invoice automation automates repetitive tasks. Decisions and exceptions for transactions still need to be reviewed manually.

What should finance teams look for in invoice automation software?

When selecting automation software, finance should look for:

• Automated data extraction

• PO and GRN matching

• Approval workflows

• Compliance checks

• Duplicate detection

• Exception management

• ERP integration 

• Real-time invoice visibility

What is the difference between invoice automation and P2P automation?

Invoice automation focuses on the following: invoice capture, extraction, validation, matching, approvals, and exceptions. P2P automation connects procurement, purchase requests, purchase orders, receiving and payments.

Is invoice automation minimizing invoice processing errors?

Indeed. Automated data extraction, validation, matching and duplicate detection can help identify discrepancies before invoices are paid and can reduce manual errors.