Digitization and automation are becoming increasingly important for many companies. There are several opportunities to improve accounting processes. For example, the processing of purchase invoices includes a lot of time-consuming manual labor, the reduction of which would enable smart workers to create real value. Here are 6 key trends that will improve the purchase invoice process:
1. Automation and AI
The best practice in the purchase invoice process is the introduction of e-invoices, which significantly reduces the amount of meaningless data entry. In May 2023, for Telema eFlow customers more than 60% of all purchase invoices were e-invoices.
But what to do with the rest of the invoices? PDF and paper invoices can be made machine-readable, i.e. they can be digitized. Not long ago this was quite labor-intensive, today it is done by robots. In Telema eFlow, customers get assistance from a capable robot Robin, who not only converts PDF-documents digital, but also helps with many other important tasks. Robin automatically sends invoices to pre-set approval flows and is great at handling recurring invoices.
Recurring invoices make up the vast majority of all purchase invoices. It is estimated that over 90% of all invoices are received from the suppliers who deliver goods or services on a regular basis. This is the reason why it is possible to succeed with automation relatively easily. Artificial intelligence Robin, for example, can assign cost centers to separate invoice rows. AI works both based on the rules set by the user as well as the action history. Read more about the capability of Robin in Telema eFlow.
2. Easy-to-integrate special solutions
Prerequisite to automation is the use of software solutions. A key term increasingly encountered in the professional literature is integration. There is no longer a belief that a single software must be able to deal with all the business processes at the same time. It is rather considered that an application solving a specific problem is likely to be better than a megasolution trying to fix everything. At this point, however, the ability for the different solutions to cooperate, i.e. integration simplicity, becomes important.
Thus, the critical success factor of using a purchase invoice processing solution is its quick and reliable integration with the ERP. Simpler integrations allow the flow of the most essential information – invoice data. More complex integrated solutions also enable the synchronization of master data (chart of accounts, vendor information, cost centers, VAT codes). Some applications, e.g. Telema eFlow, also enable provisioning of expenses – as soon as the purchase invoice arrives, a record of the expense reserve is transferred to the accounting software, which significantly speeds up the period closing (read more).
3. AP and information automation
Once purchase invoices have been approved by all parties, they should automatically move on to the bank for payment. In Estonia, most ERPs have built-in bank interfaces.
However, the information about invoice payment should also conveniently reach the people dealing with suppliers. Smarter purchase invoice solutions, e.g. Telema eFlow, display the invoice payment date received from the financial software. This is helpful for those who cannot access the ERPs financial module, but need the information whether the invoice was paid or not for their daily work.
4. Transparent cash flow and overview
Cash flow management is one of the most important tasks of the finance department. It is vital to ensure enough money for timely payment of all the purchase invoices. Today’s purchase invoice solutions, such as Telema eFlow, give managers a good continuous overview of all purchase invoices from the moment they arrive.
At any time and for all purchase invoices, it is known how many approvers need to sign them, whose desktop they are currently on and how long they have already been waiting there. A good purchase invoice solution allows to “poke” approvers, sending them a kind reminder to process the invoices awaiting for approval.
When purchase invoices are displayed aligned by the approaching payment deadline, it adds further overview clarity. However, it must be possible to filter and sort invoices by other characteristics, e.g. by vendor or total amount. The introduction of the provisioning function ensures quick period closing and better cash flow management.
5. Scams are avoidable
In a survey conducted among American SMEs, 98% of respondents confirmed that they had experienced financial fraud, resulting in an average loss of 3.5% of revenue.
Also several Estonian companies have been touched by the most common purchase invoice fraud – forgery of bank account numbers (read more about invoice fraud here). In the scheme the scammers hijacked the foreign partner’s email account, for some time monitored the communication between the companies, changed the bank account numbers on the PDF invoices sent as email attachments, as a result earning six-figure sums.
In purchase invoice solutions, also in Telema eFlow, fraud is prevented by automated data check. If the system finds on invoice an unknown bank account, it sends a warning notification to the user. If in doubt, it is always a good idea to confirm the information about the bank account change with the supplier, using another channel (telephone, chat app).
6. Useful purchase orders and three-sided matching
The sixth rising trend is the increasing use of purchase orders and the automatic comparison of documents based on them. If the data of the purchase order, receiving documents and invoice match, there is no need to send the purchase invoice to the approval flow. After all, the decision about the purchase of the service/goods is made at the moment of ordering, and when the invoice arrives, it is often too late to withdraw the consent.
Purchase orders also provide input for cost planning and cash flow management. For example, a large purchase order made in January with a delivery date in June means expenses in June, for which one must plan financial resources.
Telema is the first in Estonia to offer a three-sided automatic document matching solution for orders, receiving confirmations and invoices. With the support of the EAS, an additional module was developed for Telema eFlow, which allows 80% of invoice approval to be delegated to AI. That’s how many invoices usually match with the order and receipt. Humans then only have to process those invoices where the robot detected differences with the order or receipt. Read more about Telema mFlow.
Adopting a modern purchase invoice processing solution helps to follow all six trends. The application should be convenient and easily understandable for users, while enabling overview and control. The reliability of the solution itself and the service provider are equally important. 77% of respondents to Telema eFlow’s annual customer satisfaction survey would highly recommend the application to a friend or acquaintance. Clients have especially praised the good UX, claiming the solution to be simple and well thought through. Take a closer look at how other Estonian companies have benefitted from purchase invoice automation solutions.