Invoice processing is one of the most common places to start with automation, and for good reason: it is high-volume, repetitive work that software handles well. Below we cover why it works so well, how to estimate your own savings, and the concerns people raise most often.
What Makes Invoice Automation So Effective?
1. High Volume, Low Complexity
Supplier invoices arrive every week, and each one goes through the same steps: it's received, the details are pulled out, it's matched to a purchase order, approved and posted to your accounting system. Because there are so many, the time saved adds up quickly, and because the steps rarely change, the automation is reliable.
2. Clear ROI Calculation
The time is easy to measure (invoices per month × minutes per invoice), and so is the cost (that time × the hourly rate). Set that against the cost of the project and the payback is clear, which makes the decision easier.
3. Mature Technology
Reading invoice details with OCR (optical character recognition) is proven technology, and connections to MYOB, Xero and QuickBooks are well established. None of this is experimental, which keeps the risk low.
4. Immediate Impact
Some automation takes months to show results; invoice automation saves time from the day it goes live. Invoices move through faster with fewer keying errors, and your staff notice the difference quickly.
What About Your Business?
Use this simple formula to estimate your own savings:
- Count monthly invoices: Supplier invoices you process monthly ____
- Time per invoice: Minutes from receiving an invoice to posting it in your accounting system ____
- Calculate monthly hours: (Invoices × Minutes) / 60 = ____ hours
- Annual hours: Monthly hours × 12 = ____ hours
- Annual cost: Annual hours × the hourly cost of the person doing it (including on-costs) = $____
- Potential savings: Annual cost × the share of that time you expect automation to remove = $____
Compare your potential annual savings with the implementation cost to see roughly how long payback would take for your volumes.
Implementation Success Factors
Successful projects tend to have these things in common:
- A written-down process: the current process is documented before it's automated
- Management backing: the owner or manager commits to the change and follows it through
- Realistic expectations: most invoices flow through automatically, not all of them; there will always be exceptions
- Proper training: hands-on training for everyone who uses it, not just a demo
- A short parallel run: the old and new processes run side by side for a week or two
- A firm cutover date: after that date, the manual process stops completely
- Before-and-after numbers: time and error rates are recorded before and after, so you can see the return
Common Concerns Addressed
"What about invoices that don't match the PO?"
Every automation needs a path for exceptions. Invoices that can't be matched go to a queue for someone to review, so the routine ones are handled automatically and your staff only deal with the ones that genuinely need a person.
"What if the OCR gets the numbers wrong?"
Modern OCR is very accurate on clean, typed invoices, and automatic checks catch most of what it misses: an amount that doesn't match the purchase order, a wrong supplier number, or a duplicate invoice.
"Will our accounting system integrate?"
Xero, MYOB, QuickBooks and most modern accounting systems have APIs (connection points) built for exactly this. If your system has an API or any way to import data, it can be connected.
"What happens when we change suppliers or processes?"
Adding a new supplier is quick: you add them to the system and set up their rules. Most process changes are a matter of adjusting settings rather than rebuilding anything.
Automate Your Invoice Processing
Let's work out the likely return and timeline for your invoice volumes.