Supplier invoice management and reconciliation: go for automation!
Published on 17 August 2021
Although invoice management is based on simple tasks, the number and repetition of these tasks require a lot of time, energy, and resources, with financial impacts in case of data entry or management mistakes. To save time and make collection and processing more reliable, automation tools are very useful.
Today, the digitalization of processes has multiple repercussions. Companies that have not yet made the transition have every interest in speeding up their digitalization efforts, especially to reduce time-consuming manual processes or to ensure that critical processes are carried out correctly: supplier invoice processing is a perfect example.
Why supplier invoice automation?
A study conducted by Eway in 2018 delivers several interesting figures: it indicates that an accountant dedicated to invoice reconciliation can process 6,000 paper invoices annually versus 90,000 if assisted by a digital solution. According to the same study, the invoice processing cycle goes from 15 days on average with manual processing to 3 days with a digital solution. The processing cost is also impacted, since a paper invoice between 7 and 15 euros is less than 1 euro via e-invoicing. Finally, this type of tool reduces the number of staff dedicated to processing by almost 46%, allowing staff to concentrate on tasks with real added value.
A direct impact on the company's margin
Better productivity, cost and time savings... These are all benefits that are immediately noticeable by the company. But these are not the only benefits: companies that have not digitized their supplier invoice processing risk delays in payment due to the lengthy processing time, with a potential deterioration in supplier relations and the payment of penalties. Finally, manual processing often generates more processing errors, with invoices being paid several times or with an inaccurate amount... Here again, the financial consequences can be heavy.
To offer payment solutions
The move to automated supplier invoice processing has a direct impact on the company's margin, by reducing the cost of processing while reducing management errors. And that's not all: when the time to reconcile invoices is reduced from 3-4 weeks to 5-6 days, the supplier can be offered an early payment discount (e.g. 99% of the amount). This system, called "early payment discount", will interest suppliers who need cash.
How does invoice automation work?
Once the invoices have been retrieved in a usable digital format, the digital processing tool proposes to check the data. It will check the compulsory mentions present in an invoice, make anti-fraud controls (does the supplier exist, is the company not in bankruptcy...) and business controls (indication of the order number, charge number, respect of the given article code...), to then create a digital original which will be archived for 10 years.
Invoice reconciliation: the circuit of a specific solution
The controlled data will then be integrated into an automatic reconciliation system. In concrete terms, this means comparing all the data on the invoice with the data on the order and the goods receipt, in order to detect, for example, differences between prices and quantities. Sometimes this process is complicated: there may be multi-order invoices, invoices that correspond to partial deliveries, or even invoices without orders. The automatic reconciliation engine will then detect errors. In these cases, the digital tools trigger approval workflows by invoice type. For each workflow, tasks and actors are authorized to intervene to analyze the situation. Either the invoice is rejected and will not be paid, or it is accepted and will be recorded in the accounts, with payment initiated.
Savings that can finance a digital tool
On average in companies, 22.6% of invoices are the subject of a dispute and are not reconciled. They are therefore costly to process. When using automatic reconciliation software, some companies can achieve up to 90% reconciliation without human intervention. It is then interesting to calculate how much the company could save per invoice with a digital solution, because this gain can easily finance an automatic reconciliation tool.
Be careful, the implementation of this type of tool must be planned to be sure that it is adjusted as closely as possible to your needs. Don't wait until the last moment or the next tedious collection to equip yourself with a solution adapted to your needs: an invoice collection and distribution tool such as Generix Invoice Services integrates automation modules that can be customized according to your needs.