Accounting is a critical function for all business organizations, but there are many recurring and repeated tasks. Executing this work manually wastes time, introduces a potential for human error, and takes focus away from more strategic projects. The best way to execute accounting tasks, such as invoicing, is to embrace automation. Artificial intelligence (AI) allows for more sophisticated automation of accounting tasks. The use of AI to generate and process the invoices of businesses electronically is called e-invoicing. Together AI and e-invoicing simplify and speed one of the most critical business functions within the organization.
Different Software Solutions for Invoicing
To prepare digital invoices, you can use one of the following software solutions:
- Template-based optical character recognition (OCR) software: This form of software program makes use of the optical character recognition (OCR) software to convert images of invoices into text. Though proficient, it cannot work on its own. Someone has to tune the system to be zone aware and identify specific important strings like invoice numbers and account numbers. Even once perfected, the team must supervise the automation to ensure desired outcomes, handle exceptions, and configure new templates.
- Cognitive invoice capture software involving AI: This form of software program captures tables and key-value pairs. Other than capturing data, it is also capable of mimicking the human mind. The ability to handle new and varying invoices means less manual oversight of the ongoing process. The best part about it is that it can be used in the cloud. This feature makes it a valuable asset to a company.
Some common challenges in the processing of invoices
Most companies face some of the following common challenges in processing invoices.
- Errors due to several invoice data points: The majority of larger organizations deal with multiple suppliers with whom they exchange data in XML format. To bring this structured data into a unified system, companies need to rely on manual data entry. Oftentimes it leads to errors and delays.
- Errors due to data mismatch: Accounts payable team members need to match the data of an invoice with that of the purchase data multiple times. Not only does it increase the chances of inaccuracy but it also takes a lot of time. The likelihood of errors and the time lost in data matching grows as the invoice volume and business grow. .
- Higher costs for the processing of paper invoices: The traditional method of invoicing involves the use of paper. Sending, processing, and storing of paper invoices adds cost but also manual effort by dedicated accounting professionals. Keeping dedicated staff for processing paper invoices as well as the overall costs of handling paper results in significant spend simply due to the delivery mechanism.
AI and digitization can help companies overcome these challenges.
Transitioning from paper invoicing to AI-based invoicing is imperative
Today most businesses either use automatic or semi-automatic processes to generate invoices. While some automation helps speed repetitive tasks, e-invoicing revolves around the concept of AI. The latter helps in the preparation of invoices in two distinct ways. It digitizes underlying documents to produce invoices and it helps with data extraction and form completion. By using AI-powered automation, you can streamline invoicing without the need to allocate human resources.
For the best results, a step-by-step e-invoicing adoption strategy is recommended. Continue reading to walk through a best practice approach to replacing paper invoicing.
Steps to Transition to E-invoicing from Paper Invoicing
Transforming your paper invoice process into e-invoicing can be straightforward and incrementally achieved.
- Invoice OCR
You may receive an invoice either in paper or digital form. After receiving a paper invoice, scan, verify, and save the invoice to a secured system or share as an image or a PDF file. Regardless of your chosen format, you will need to rely on optical character recognition (OCR).
Every invoice involves some important fields. Given that invoices tend to differ from one another, you must use a software program that uses AI to identify the necessary fields with minimal human training. Some of the important aspects of an invoice to which you need to pay meticulous attention include tax, gross amounts, or net amounts, the invoice number, and its series.
Even with the use of AI technology in conjunction with OCR, there is a need to train the system by providing a collection of past invoices. It is best to provide a collection of the most varied invoices to make sure the system is as prepared as possible.
- Extract Data
The AI algorithm will review the scanned invoice and begin validating data fields. The precision of these processes will depend on the accuracy of your OCR. In Bookkeeping, there is no margin for error. So, you need to make sure the extraction and validation of data of an invoice are error-free. To ensure it, you can consider using a cross-checking tool.
Ideally, human review is reserved for exceptions and routine verification.
One of the best ways to enhance the accounting process of your business organization is to digitize the paper invoices as they are received. Even a semi-automated method for invoicing provides substantial savings in time, error reduction, and staffing.
- Generate Your Invoice
You can generate invoices easily with the help of AI if both your company and its vendors use integrated systems. In such a scenario, you can complete several fields with the use of AI, including amounts, tax codes, cost centers, the general info of companies, and other such fields.
No doubt, the use of AI presents exciting possibilities in accounting (especially invoicing). But even with it, you need a professional accountant to validate the invoices before sending them to your customers. This is an important step to ensure consistent good-faith business practices.
AI helps with cognitive invoice processing
AI can help with cognitive invoice processing in a systematic way involving a few steps. These include the ones given below.
- AI plays a key role in extracting data from a paper copy of the image of an invoice. The precision of AI in data extraction from images may or may not be accurate. To ensure accurate extraction of data from images or paper copies, one can employ an accountant professional for checking the invoices.
- AI helps with cross-checking data in the invoices. This can happen with the help of either two-way or three-way validation.
- AI assists in the classification of invoices based on different categories. These include business units, cost centers, and other such categories.
- AI makes use of advanced workflow conditions for generating automated approvals.
Advantages of Processing E-invoicing with the help of AI
Processing invoices with the help of AI brings some undeniable benefits to the table for a company. Processing invoices using AI leads to the following advantages:
- Quicker processing of invoices: extracting data manually takes a long time. On the other hand, data extraction by using AI leads to quicker extraction of data. This, in turn, leads to faster processing of invoices.
- Improved accuracy of data: when you employ AI for processing invoices, it works in conjunction with Machine Learning. Unlike humans, AI and Machine Learning do not make mistakes. As such, you can expect error-free invoices with accurate data.
- Higher productivity: processing invoices with the use of AI allows the accounts payable team to concentrate on activities related to value generation by providing a solution to conclude repetitive tasks. As a result, the accounts payable team can plan finances, track the spending of the company, and strengthen the relationship with vendors.
- Higher profit margins: the timely preparation of invoices leads to quicker approvals and payments from client companies which plays a key role in boosting the profit margins.
Going by the benefits of e-invoicing, as stated above, it stands out that it has clear advantages over invoicing with the help of paper. Automating repetitive manual tasks, saves time, reduces errors, and frees up resources to focus on other projects. This happens primarily due to the involvement of artificial intelligence (AI) and Machine learning (ML). With higher productivity, due to e-invoicing, your company can meet targeted goals due to timely payments. It’s time to switch to e-invoicing and take advantage of the above-mentioned benefits.