Digitize Incoming Invoices: Our Step by Step Checklist
Published: July 9, 2024
Reading Time: 9 min
Contents
- From Manual to Digital Invoice Processing: the Advantages
- What Should be Considered Before?
- Step 1: Check and Digizite Analogue Incoming Invoices
- Step 2: Automate The Following Approval Process
- Step 3: Accounting of the Incoming Invoice
- Step 4: Archiving Incoming Invoices in an Audit-Proof System
- Invoice Processing Simply Digitized: with the Right Software
Inhalt
- From Manual to Digital Invoice Processing: the Advantages
- What Should be Considered Before?
- Step 1: Check and Digizite Analogue Incoming Invoices
- Step 2: Automate The Following Approval Process
- Step 3: Accounting of the Incoming Invoice
- Step 4: Archiving Incoming Invoices in an Audit-Proof System
- Invoice Processing Simply Digitized: with the Right Software
Digitize Incoming Invoices: Our Step by Step Checklist
Switching to digital business processes can sometimes seem complex and time-consuming. Solutions have to be compared with each other and checked for feasibility. Integrations into the existing infrastructure must be set up and financial, personnel and time resources must be invested. Last but not least, employees need appropriate training for the new system.
Too many companies therefore hold on to outdated processes for too long – and miss out on enormous savings and improvement potential as a result. For example, the digital processing of documents not only reduces the processing time and the costs incurred per document, but is also much more error-free and transparent for all employees.
Nowadays, implementing a digital solution for invoice receipt is straightforward and can be done relatively quickly. With the right solution, the automatically scanned invoices are posted seamlessly in the subsequent ERP or financial accounting system. Within just a few weeks, a company can benefit from the advantages of digitization and lay the foundation for further automation steps.
We explain how easily companies can digitize their incoming invoices and benefit from the numerous advantages.
From Manual to Digital Invoice Processing: the Advantages
A look at the advantages of digital invoice processing makes it clear in how many areas there are positive effects for the company:
More Benefits
Save Money
By reducing lead times, discount deadlines, for example, can be met much more effectively. This not only saves money but also promotes a positive relationship with the supplier. At the same time, you save on reminder fees due to invoices that have been outstanding for too long.
Transparency
The employees in charge have access to the document at all times and an insight into the status quo of the approval process. This means it is possible to see exactly which department/person is currently in charge of the next step. Even documents that have already been archived can be found much more quickly.
Mobile
Digital processes are location-independent. Neither the documents nor the people responsible need to be at a specific location to complete their task. Approvals, queries or archiving are possible on the desktop and on mobile devices. This saves additional time and provides flexibility and freedom at work.
What Should be Considered Before?
First of all, think about how incoming documents are received, checked, approved and archived in your company. Analyze the workflows and identify potential for optimization. Map the entire process as specifically as possible for your company and also think about the communication for the individual documents, special cases, signatures, work paths, etc.
Choosing the right software is crucial to the success of digitization. It is important that the software is user-friendly and can be seamlessly integrated into existing systems. It should have automatic data capture, error checking and process automation functions. It is also an advantage if the software is scalable so that it can grow with the company. We present such a solution here.
Last but not least, you should also think about data protection and the legal requirements. Your workflow must guarantee correct processing under data protection law – this includes secure processing and storage of personal data. In addition, the legal requirements for archiving invoices must be met, such as audit-proof archiving and documentation of the audit trail.
Step 1: Check and Digizite Analogue Incoming Invoices
Invoices in an unstructured data format can still be received on paper, as a fax or as a digital file, e.g. in a PDF format or as an image file. Paper invoices are first scanned or photographed and converted into an image file. The files are then read using OCR (Optical Character Recognition). Artificial intelligence and machine learning approaches can support and optimize this process. This allows all relevant invoice data to be automatically extracted and digitized without having to specifically train the system beforehand.
After digitization, all invoices must be checked for accuracy and completeness. The formal check verifies that the criteria for input tax deduction are met. With the right software, this can be automated. Compliance, consistency and validity of the amounts and, if available, the order reference of an invoice are also checked. Any discrepancies or errors are detected by the software and flagged for manual correction.
Digitizing your incoming invoices significantly reduces the amount of work involved and the susceptibility to errors. Incoming invoices are processed efficiently and reliably. For an optimal solution, you should also plan for structured data formats such as ZUGFeRD or XRechnung. These are also playing an increasingly important role in invoice exchange, regardless of company size, thanks to legal regulations (including EU regulations on electronic invoicing to authorities; B2B e-invoicing obligation in Germany). It is therefore best to use a solution that can process all these formats uniformly.
Step 2: Automate The Following Approval Process
With digitized invoice data, the subsequent approval process can also be implemented much more flexibly, independently of location and more quickly. Invoices must be fact-checked (i.e. their content must be checked for correctness) and approved by superiors before they are forwarded to the accounting department for payment.
The entire approval process usually involves several approval levels, departments and people. Whereas with analog invoice processing it is still necessary to physically take all invoices to the responsible persons and have them signed, this can be done completely digitally with the right software. This saves an enormous amount of time, invoices are no longer lost and every person involved can easily view the status of each invoice at any time. You also benefit from practical software functions such as mass and item approvals, mentions, automated reminders and an integrated chat option for a quick exchange in the event of queries or corrections.
Important: the entire approval process must be documented and archived together with the invoice so that it can be presented in the event of any audits by tax authorities, for example. These audit reports are created automatically during digital invoice processing and attached to the invoice.
We show here what such a workflow can look like.
Step 3: Accounting of the Incoming Invoice
Finally, the accounting department determines the accounts to which the documents should be posted. Smart software learns the rules applied and therefore provides account assignment suggestions, which makes this step even easier.
The electronic invoice workflow then enables seamless posting in the subsequent financial accounting or ERP system.
Step 4: Archiving Incoming Invoices in an Audit-Proof System
Finally, the invoices must be archived in an audit-proof manner, i.e. unalterable, traceable and complete. The duration of the statutory retention period can vary depending on the country; in Germany, for example, it is 10 years, in Austria 7 years. During this time, the invoices, together with the audit report, must be kept available for inspections by auditors or tax authorities, for example.
Special digital archiving systems meet the requirements of audit security and offer functions such as automated logging, access controls and encryption. They save space and storage costs and have the great advantage over physical storage in filing cabinets or folders that documents can be found in just a few clicks. With their help, the entire invoice processing procedure from receipt to archiving can be implemented digitally and therefore without media discontinuity. With the right add-on, Microsoft SharePoint, for example, can be used as an archiving system.
Invoice Processing Simply Digitized: with the Right Software
Digitizing incoming invoices offers considerable advantages and represents an important step towards optimizing operational processes. By reducing workload and time, employees can be relieved and resources can be used more efficiently. Automated processes minimize errors and ensure higher data quality and accuracy in accounting. By using a cloud solution, the solution can scale flexibly as the company grows and can be used efficiently even with a small number of invoices per day (10+).
Consider the following points when selecting the software:
Today, implementing a digital solution is straightforward and can be done quickly, allowing companies to reap the benefits quickly. With a cloud solution, a go-live can be implemented within a few weeks.
We are happy to answer any more questions you might have or to show you a live demo of our solution.