Functions of Automated Invoice Processing

From invoicing to the payment of incoming invoices – financial processes are part of every company. With increasing digitalization, the automation of invoice processes is becoming a clear competitive advantage – and may soon be a necessity. It is crucial that these processes function quickly, accurately and without errors. Automated invoice processing supports precisely this: it accelerates processes, reduces sources of error and creates transparent structures – thanks to smart functions that significantly reduce manual effort.

Incoming Invoices

The first step in automated invoice processing begins with the incoming invoice. With modern solutions, this works regardless of the format in which the invoice reaches the company, i.e. a physical paper invoice received by post can be processed in the same way as an electronic invoice.

• Electronic invoices: These are imported directly from email attachments or portals and processed immediately. In Germany, ZUGFeRD (Zentraler User Guide des Forums elektronische Rechnung Deutschland) and XRechnung are standard formats for electronic invoices. ZUGFeRD is a hybrid solution that combines both structured XML data and a readable PDF invoice. XRechnung is the standard format in the German public sector and is also based on XML.
  In Austria, ebInterface is the standard for exchanging invoices with public authorities.

• Digital invoices: Invoices that are available in common digital formats such as PDF can also be easily captured and read.

• Paper invoices as a photo or scan: Paper invoices can simply be scanned or photographed and read. The automated solution uses optical character recognition (OCR) to convert the content into machine-readable text.

This flexibility in invoice formats forms the basis for the automation of invoice processes. It ensures precise and efficient processing and saves time and resources.

Extract Invoice Data From the Incoming Invoice

All relevant data is extracted from the invoice. This includes the following information:

• Invoice number
• Invoice date
• Amount and tax rate
• Supplier data (name, address, contact)
• Terms of payment and other details

Detailed item data, such as article numbers, quantities and prices, are also extracted. This function ensures high data quality and significantly reduces manual intervention. With a flexible extraction solution, it is irrelevant whether simple or complex invoice formats are involved – multi-page or international invoices are also supported.

Approval Workflows During Automated Invoice Processing

Usually there are different departments and employees  involved in a company’s financial processes. From purchasing to accounting to management, different teams work together to correctly register, check and approve invoices.

This workflow is precisely mapped and digitally supported in an automated invoice processing system. Incoming invoices can be automatically registered, validated and forwarded to the relevant departments. The approval workflows are therefore a central component of automated invoice processing and ensure that each invoice goes through the relevant checking and approval steps before final booking. These workflows improve efficiency and ensure that invoices are processed correctly. An approval workflow consists of various functions:

Preliminary account assignment

In preliminary account assignment, the invoice is automatically assigned the correct booking accounts and tax information. This saves time and reduces human errors during posting.

Substantive review

The substantive review checks whether the invoice content is correct. This includes matching the invoice with the order and delivery documents as well as checking the actual delivery or service.

Approval

Every invoice goes through an approval process. The release is carried out by authorized persons who approve the invoice after a successful check. These steps are transparent so that the status of each invoice is visible at all times and with each step.

Final account assignment

After approval, final account assignment follows, in which all accounting details are finalized to prepare the invoice correctly for posting.

Booking: Integration into ERP systems

The invoice is now integrated into the ERP system and finally booked. This ensures that the invoice data is correctly transferred to financial accounting.

Digital archiving

After posting, the invoice is archived digitally, securely and in compliance with the law. This supports fast and efficient retrieval of the invoice in the event of subsequent audits or checks.

Further Benefits of Automated Invoice Processing

Automated invoice processing not only increases efficiency in a company, but also accuracy. Modern systems can be adapted to different company sizes and needs.

For smaller invoice volumes, a cloud solution can be particularly useful as it is cost-effective and easy to implement. As the business grows and for large companies, the solution can be easily scaled and expanded to meet new requirements. The high level of flexibility and scalability is therefore another important function of automated invoicing.

Automated systems make companies’ financial processes more error-free, transparent, simple and efficient. This not only makes things much easier for large companies, but is also a practical and economical solution for businesses of all sizes.