As with most processes that meet this description, you can use automation to save your people from a world of monotony and redeploy them to be far more productive and valuable elsewhere.
What is invoice automation and how does automated invoicing work?
As is often the case with tech, the answer is in the question, so we will get straight into the detail.
There are two strands to invoice automation:
- Outgoing invoice automation. This is where the relevant apps in your tech stack populate the invoices you send to your customers, send them on your behalf, track when payments are received, and send payment reminders where necessary. Thanks to integrations, you will also be able to trigger account cancelations or removal of systems access for delinquent payments should you need to.
- Incoming automated invoice processing uses software to read invoices you receive from vendors and populate your outgoing payment systems with all the relevant data. Your finance team can then quickly approve these. For repeat payments, you can set up your systems to recognize invoices from relevant vendors and automate the payments themselves. This saves you time and enabling you only to review new purchase orders and other accounts payable documentation.
Both processes work similarly. However, due to the nature of dealing with incoming invoices, this processing relies on things like artificial intelligence (AI) to a greater degree than outgoing invoices. However, as we will see now, it is perfectly possible for AI to play a part in those processes, too.
What are the benefits of invoice automation?
You can take advantage of a wealth of benefits when dealing with both outgoing and incoming invoicing processes.
1. Save time
You might think your process of using an Excel template to populate invoices and sending them as PDFs is efficient enough. We are here to tell you it 100% is not! Aside from the disadvantages of using PDFs, which you can read more about via the link in the last sentence, this wastes a colossal amount of time. Sure, it takes a minute or two here and there, so great! But multiply that by how many invoices you send and how often you do it, and suddenly you have a productivity hole.
However, the most significant impact on your time will be in dealing with incoming invoices. For example, suppose you work with 100 vendors who all have different invoice formats. You are looking for purchase order numbers, details, billing information, and everything else you need to know for each invoice you receive. Using automated invoice processing means AI can do all of this for you, reducing your involvement in the invoice payment process to the click of a button to approve or decline.
2. Working with standardized formats
You probably already send out the same invoice format to all your customers, so the opportunity here is in dealing with incoming invoices.
Using an AI tool lets you identify and export all the relevant data from an invoice – even if it comes in the terrible PDF format! – and populate your internal systems with the data. This gives you a standardized format for every invoice, making them easier to approve and automate payments where necessary. Best of all, because your data is integrated, you can subsequently use your invoices to populate your accounting software and produce data dashboards tracking your expenditure.
3. Reduce customer churn
Customers do not like inefficient processes. An easy way to annoy customers is to send them invoices intermittently and not on the same day each month. If a customer cannot rely on you to help them keep their accounting processes in check, they are likely to take their business elsewhere.
However, remember that using automated invoice software also tracks when payments are made. As such, you can integrate your invoice software with your CRM platform and use AI functions to identify trends. For example, if you know that X% of customers who start paying late unsubscribe within three months, you can take steps to deal with dissatisfaction and reduce churn proactively.
4. Increase profitability (and all finance metrics)
As a business, your natural focus is on the bottom line. Still, there might be various other metrics that act as performance indicators for your business. Taking advantage of invoice automation will increase your profitability purely on the basis that you will have more time to spend on other tasks and make your invoicing process slicker.
However, you should think about the underlying metrics that might drive your profitability. For example, an automated invoicing platform can show you things like monthly recurring revenue and customer lifetime value in real-time. With this data, you can then make fast decisions that will keep your business growing.
5. Easily use tailored and personalized pricing
Depending on your pricing model, whether you use pricing tiers, and how you sell your services, different customers may pay different prices for your services. By using automated invoicing, you can introduce a self-service element to whatever you sell and leave the tech to generate the correct invoice, of the right value, for each customer.
This benefit also has some merit for incoming invoice processing. For example, if you are using AI to identify what you owe a vendor, you do not necessarily need to have a fixed-price contract. Say you are using a pay-as-you-go style service. You can rely on the AI to identify the relevant monthly payment and not worry about setting up a regular payment amount. Of course, the AI can also identify anomalies in payment amounts, ensuring you do not get caught out!
6. Reduce human error
This is a staple benefit of using automation in any context. When it comes to automating your invoice processing, it has the added benefit of avoiding the embarrassment attached to sending the incorrect invoice to someone (which may also have data security implications) or not making the correct payment to a long-time vendor.
7. Integrations with other finance and business processes
In today's world, if you can automate a process, you can usually integrate it with other elements of your tech stack. In many ways, this is the key to making the most of invoice automation; do not just enhance one or two processes but use integrations to transform operations throughout your entire business!
With Contractbook, you can even integrate your contracts with your invoice software, ensuring you invoice your clients correctly from day one, while also receiving notifications when it is time to review or update the terms of your agreement.
Using invoice automation in your business
If you are not already using an invoice automation solution, how much time could you save if you were?
Start looking into invoice automation solutions today and start reaping the rewards!