Enterprise Invoice Processing: 4 Guidelines & 3 Solutions in 2024
Invoice processing can be a complex and time-consuming task for businesses. The average cost to process a single invoice ranges from $15 and $40 per invoice.1 This is not a surprise since an accounts payable clerk is expected to process ~1,000 invoices/month, assuming there are no errors in the process.2 These numbers points out to the necessity to invoice automation especially for enterprises processing hundreds of thousands of invoices per year.
Therefore, the accounts payable / invoice automation market is expected to grow strongly rising to $1.9B by 2025 with a CAGR of 17%. 3
However, processing invoices for an enterprise can be significantly more complex than processing them in small to mid-sized businesses (SMBs). There are differences in scale and scope that complicate enterprise invoice processes. This article will explore critical factors to consider in invoice processing at enterprises.
4 Guidelines for enterprise invoice processes
Invoice automation is required regardless of PO status or delivery channel
Invoices can take different amounts of effort depending on how they are shared or whether they have a corresponding PO. For example, invoices without purchase orders delivered as images over email require more effort since their data is not embedded in the document. Therefore, if there are issues in automatically extracting their data, humans would need to be involved.
While an SME can have hundreds of such documents, an enterprise can have hundreds of thousands of such documents. Therefore, automation of invoices regardless of channel or PO status is important.
Automation rates need not fall in specific countries
Document automation rates varied significantly before the rise of large language models. However, now different languages are easier to deal with for machines. Therefore, enterprises should expect consistent automation rates globally and investigate reasons for lower automation rates in different countries.
Automation is required in every step of the process
Steps like bookkeeping are easier to automate for SMEs that follow simple accounting conventions and can lump almost all suppliers under one or two cost types. This allows for rules-based automation and limited manual processing dealing with just a few exceptions.
This is drastically different for enterprises that have thousands of cost types and numerous cost centers. While this may seem like unnecessary complexity, it is not. This detailed classification enables detailed financial projections and cash flow visibility. The system also has limited error tolerance. For example, classifying a OpEx as an CapEx can lead to higher taxes and increased profits.
Encourage suppliers to use higher fidelity data exchange channels
Machine learning based document understanding approaches have limitations. Buyer-supplier e-invoicing networks can provide enterprises a solution for receiving electronic supplier invoices and automatically importing them into the enterprise’s accounting system. This way, enterprises can reduce invoices which machine learning techniques have trouble processing. However, this creates another task for suppliers and enterprises may prefer to set other priorities for their suppliers depending on their supplier management strategy.
This approach may not be necessary for small businesses processing tens of invoices as they can rely on manual data entry and processing for such low volumes.
Focus on your company’s specific challenges
Each enterprise can have different AP challenges due to their scale or industry. It is important to focus on your company’s specific challenges. For example, inter-company invoices between the legal entities of the same enterprise in different countries can produce a high volume of invoices that need to be carefully processed. For example;
- Tax implications in multiple jurisdictions need to be considered.
- Inter-company transactions require careful bookkeeping in all legal entities involved in the transaction to make sure that transactions are properly recorded and matched. This simplifies closing the books at the end of the month or quarter.
Enterprise invoice automation platforms
As enterprises struggle with the complexity of invoice processing, numerous AP automation solutions have emerged to facilitate the process. Here are some of the key categories:
Specialized end-to-end invoice automation platforms
Accounts Payable AI Platforms
AP AI platforms leverage artificial intelligence for an end-to-end accounts payable automation solution. These platforms can extract and validate data from invoices, match invoices to purchase orders and prepare bookkeeping entries.
You can also check out our comprehensive, data-driven list and research articles on the topic:
- Accounts Payable AI Platforms
- 10 AI Applications in Accounts Payable (AP) Processes for 2023
- 7 Vic.AI Alternatives to Automate Accounting in 2023
Specialized point solutions
Intelligent Document Processing (IDP) Platforms
Take a look at the list of IDP platforms and vendor analyses:
Buyer-supplier e-invoicing networks
E-Invoicing network platforms platforms allow companies to automate the sending and receiving of invoices along with their metadata which helps automate matching and approving invoices, tax compliance, and analytics. However, these networks’ reach is limited to their members and a significant number of enterprise suppliers are unlikely to be part of these networks.
Robotic Process Automation (RPA)
Robotic Process Automation (RPA) software, is designed to handle high-volume, repeatable tasks which were used to be done manually. Historically, RPA solutions provided rules-based automation which is not capable enough for end-to-end invoice processing. In addition, businesses need to build their own invoice workflow using RPA tools since most RPA solutions are generalist solutions and are not focused on the invoice process.
Integration-Platform-as-a-Service (IPaaS), is a cloud-based delivery model that aims to connect different local and cloud-based business tools, systems, and databases. The aim is to simplify linkinf systems, to share data across different platforms, and improve business processes. IPaaS helps build a unified and integrated IT environment, but it is not uniquely built for automating invoice processing business processes.
In enterprise automation, process mining serves as a tool that uses event log data to create a visual representation of business workflows. This helps analysts understand how real operational processes work. It also helps businesses find bottlenecks, extra steps, and tasks that consume time. Process mining solutions provide rules-based automation capabilities however they are unlikely to provide an automation level that is as high as specialized solutions.
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