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Automated Invoice Processing: Choosing the Right Automation Software
In our previous article “Streamline accounts payable with automated document processing“, we discussed the importance of an automated accounts payable (AP) cycle for businesses aiming to streamline their accounting activities and establish a transparent, efficient financial supply chain. If you recall, the invoice, being the central document in the AP cycle, plays a pivotal role in this process. As such, selecting the appropriate automation software for invoice processing becomes essential for finance teams. In this follow-up article, we’ll delve deeper into this topic, outlining the features businesses should consider in their quest for the right automation software.
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Unraveling the Complications in Invoice Processing
Invoice processing begins as soon as the accounts payable department receives an invoice. The steps involved, whether they’re paper-based or semi-digitised (mainly PDF invoices), tend to be slow and often lead to inaccuracies. The primary hurdles in processing paper or PDF invoices include excessive manual work, high costs, and the need to navigate multiple systems.
Various automation software tools on the market aim to address these issues, aiming to digitally connect business partners and automate the AP processes.
Understanding the Role of EDI in Invoicing
EDI is commonly used for automating B2B communication, including invoice processing. However, many users find that EDI invoices do not provide the level of automation they initially expected. While EDI offers benefits such as faster, more efficient processes that are less prone to errors, it also comes with several drawbacks.
Limitations and Challenges of EDI Invoicing
- Restrictive nature
Businesses opting for EDI invoicing must agree on a specific EDI standard and version, which tend to be highly rigid.
2. Varied interpretations of standards
Different businesses interpret EDI standards differently, leading to potential discrepancies in invoices. This can result in the need to maintain multiple EDI connections using various standards and formats.
3. High cost and complexity
EDI can be prohibitively expensive and complicated for many suppliers.
4. Additional burden on IT
EDI projects often require the internal IT team’s involvement, adding to their existing responsibilities.
5. Limited supplier connectivity
Some vendors may be too small for EDI, and it isn’t compatible with all ERP systems.
6. Long and costly implementation
EDI projects can be time-consuming and expensive to set up, with initial capital investment needed for various software and specialists. The return on investment (ROI) for EDI projects is typically slow.
Spotlight on the Right Automation Software
When considering automation software for invoice processing, certain features should be prioritized:
Flexibility
To truly benefit from automated invoice processing and automated accounts payable workflows, all incoming invoices must be automated irrespective of the format or standard.
Automation software like the Netfira Platform automates incoming invoices by extracting relevant data, processing it intelligently based on defined workflows and exporting it into the downstream system. The platform provides fully automated processing of electronic invoices from PDF, ZUGFeRD, XRechnung and other formats making restrictions of standards and versions a thing of the past.
Integration
Businesses should look for automation software which provides easy integration in a variety of systems.
While EDI solutions cannot be used with all ERP systems, other automation tools can easily be integrated with all SAP and non-SAP systems. The Netfira Platform, for example, integrates into any downstream ERP, accounting or other IT system.
Efficiency
Improving operational efficiency is key for every automation project in AP. Automated invoice processing means reducing manual tasks like manual data entry to a minimum and to noticeably relieving teams of slow and error-prone activities. Businesses should choose software solutions based on the degree of efficiency they provide.
When processing invoices, Netfira automatically assigns invoices and shipping notices to orders or order items thus facilitating the comparison of these B2B documents. Moreover, the platform enables intelligent invoice data processing because it provides internal enrichment of invoice data before exporting it to subsequent customer systems. For example, indicators which are not on the document can be transferred and addresses can be checked. The automation solution reaches a high efficiency as it not only captures data but also understands and compares data to ultimately process it intelligently.
Supplier connection
Digitally connecting suppliers and other business partners is a central goal of process automation in accounts payable. However, despite advancements in technology such as EDI solutions, many business partners are still not connected.
Unlike EDI, Netfira can connect all important business partners easily, quickly and cost-effectively. With the Netfira Onboarding App buyers can connect suppliers in three simple steps without having to burden the internal IT. Moreover, there are no barriers for suppliers. Suppliers do not occur any costs and they do no have to change their processes. In contrast to classic EDI technology, the Netfira Platform can be used with both SAP and non-SAP systems.
Data accuracy
Accuracy is a vital feature organisations should focus on to ensure high data quality.
Artificial Intelligence supports the connection of suppliers and thus enables Netfira to achieve highest data accuracy when extracting data. Moreover, it provides the foundation for processing invoice data fully automatically and intelligently. With Netfira’s AI, unstructured data in free texts or in documents such as order confirmations and customer orders can be harmonised and automatically processed. Deviating terms in supplier documents, ambiguous units of measurement or different languages are no longer a problem as AI is constantly learning.
Implementation
Software-as-a-Service (SaaS) solutions provide AP with future-proof technology which enables the automation of operational activities and document processing. Accounts payable software needs to be efficient, reliable and flexible, which are distinct advantages of cloud-based SaaS solutions.
As a SaaS solution operated in the cloud, the Netfira Platform comes with many advantages for the accounts payable department. Unlike traditional EDI solutions, the Netfira Platform is implemented very quickly – often in weeks. The internal IT department is not burdened with additional work because there are only five quick tasks which need to completed. SaaS means low costs for companies as they do not require an internal server infrastructure or need to install and run the application on their systems and thus do not need to invest in hardware and licences. As a web-based solution, users and IT benefit from Netfira automatically updating the software on a regular basis.
Customisation
It is advisable to choose automation software for automated invoice processing which can be easily customised. Unlike off-the-shelf software, custom software is tailor-made, easy to modify and scale.
As a SaaS solution hosted in the cloud, the Netfira Platform can be customised for individual business needs. Teams can work within their familiar environment. There is no need to make disruptive changes to processes or systems as the system can adapt to the relevant requirements of the business. On top of that, the software is designed to scale as the business requires.
Security
SaaS solutions relieve the internal IT because the software provider is responsible for the maintenance and all security-related aspects of the software.
Netfira has made data security a top priority. The Netfira Platform is compliant with the GDPR. Netfira adheres to ISO guidelines 27001, 27017 and 27018 and is certified accordingly. The data centre and support are located in Germany.
Automating Invoice Processing with Future-Proof Technology
To meet the ever-evolving demands of accounts payable and to successfully automate invoices, businesses should opt for technology that’s future-proof, reliable, and agile. Key factors to consider when evaluating automation software are flexibility, integration, efficiency, supplier connectivity, data accuracy, implementation, customisation, and security.
By using the Netfira Platform to automate invoices, accounting teams can enjoy a scalable and easy-to-implement solution that delivers quick ROI. With Netfira, manual work in the accounts payable process is significantly reduced, thus empowering employees to focus on more strategic tasks. This intelligent document automation software streamlines the approval, payment, and reconciliation of invoices, making accounting processes more efficient, transparent, and reliable. As a result, compliance and quality management are enhanced.
Furthermore, the Netfira Platform provides benefits beyond those of traditional EDI invoicing solutions. As a flexible SaaS solution, it adapts to business needs, alleviates the workload of the internal IT team, and connects suppliers quickly, easily, and cost-effectively. This advanced platform solution enhances supplier relations and optimises processes across departments and businesses through automation. By unlocking the full potential of automated invoice processing, businesses can gain a significant competitive edge.
Pfleiderer Case Study
Learn how Pfleiderer successfully digitised its procurement through process automation.
