Paperless accounts payable systems are modern solutions that can help enterprises streamline their accounts payable (AP) processes and improve efficiency. With hundreds of thousands to millions of invoices to be processed every year, enterprises often employ dozens of accounts payable executives to do this job. However, even with partial automation in place, such as with OCR tools, a majority of the processing requires human intervention. With paperless invoicing, we refer to a transformational shift towards e-invoicing or electronic invoicing, with paper-based invoices gradually reduced in an enterprise.
The problem with traditional invoice processing is that it is time-consuming, prone to errors, and requires a significant amount of manual labor. This not only increases costs but also leads to delays in payment and a lack of visibility into the AP process. IOFM’s article on the painpoints in accounts payable in a good read for finance leaders to know on the different painpoints and challenges faced by AP teams across organizations.
The limitations of OCR tools
Optical character recognition (OCR) is a legacy software tool used for the digitization of paper-based information assets. OCR tools transform scanned documents or photos into editable and searchable text. Using OCR tools, organizations can quickly digitize massive amounts of documents, such as invoices and receipts. However, OCR tools have their shortcomings, including:
· Limited accuracy: OCR tools are not always able to accurately recognize and extract data from invoices. This can lead to errors in data entry and validation, which ultimately impact the accuracy of the data extraction in an AP process. Even with best quality documents, OCR tools often fail to deliver accuracy greater than 60%.
· Limited flexibility: OCR technology is often limited in its ability to adapt to different invoice formats and layouts. This can make it difficult to process invoices from a variety of vendors and suppliers.
· Time-consuming approach: OCR tools require manual intervention to correct any errors that may occur during data extraction. This can increase overall invoice processing time and costs.
· Lack of process automation: OCR tools do not provide a complete or end-to-end solution for invoice processing, which often requires additional manual data entry, validation, and approval.
· Limited security: OCR tools do not provide the same level of security as paperless invoice processing software, which can include encryption and access controls to protect sensitive financial information against unauthorized access.
Why is making accounts payable paperless a better approach?
There are various aspects to consider for understanding the benefits of a paperless invoicing approach, including:
Advanced data extraction:
Paperless invoice processing software uses advanced AI/ML models to extract data from invoices, which ensures a higher level of accuracy.
Greater flexibility:
Paperless invoice processing software can handle a wide variety of invoice formats and layouts using AI/ML capabilities, making it easier to process invoices from multiple vendors and suppliers.
Automated workflow:
Paperless invoice processing software can automate the entire invoice processing workflow, from data extraction to approval, which reduces the need for manual intervention and increases overall process efficiency. It is a process-centric approach to automation tailor made for AP processes.
Advanced security:
Paperless invoice processing software can include advanced security features such as encryption, access controls, and multi-factor authentication to protect sensitive financial information or personally identifiable information (PII).
Better collaboration:
Paperless invoice processing software allows multiple users to access and approve invoices concurrently, which drives better collaboration and speeds up the approval process.
Handling invoices in different languages and multiple country-specific formats is a difficult proposition
Another important challenge that enterprises face when processing invoices is the handling of invoices in different languages, including non-Roman scripts. This can be a significant challenge for companies that do business globally or with vendors and suppliers from different countries.
Handling invoices in different languages can be difficult for traditional OCR tools, which may not be able to accurately recognize and extract data from invoices presented in non-Roman scripts. This can lead to errors in data entry and validation, which can ultimately impact the accuracy of the AP process.
Furthermore, invoices from different vendors and different countries often have very different formats, which can make it difficult for companies to standardize invoice processing. This can lead to inefficiencies in the AP process and increase the risk of errors.
Paperless Invoice processing eliminates complex country-language barriers
To overcome these challenges, companies can turn to paperless invoice processing software with multilingual support. This type of software uses AI/ML capabilities to extract data from invoices and ensures a higher level of accuracy, even when processing invoices in languages other than English or in non-Roman scripts.
In addition, paperless invoice processing software can also handle a wide variety of invoice formats and layouts, making it easier for companies to process invoices from multiple vendors and suppliers, regardless of their location or the format of their invoices. Such software products offer a template-agnostic approach to invoice processing. This can help companies automate their invoice processing workflow with AI/ML and improve process efficiency.
Handling invoices in different languages and different formats can be a significant challenge for companies that have a global business. However, paperless invoice processing software with multilingual support and flexibility to handle different invoice formats can help companies overcome these challenges and improve the accuracy, efficiency and security of their AP process.
Traditional invoice processing has a negative environmental impact
In addition to the operational efficiencies and cost savings that paperless invoice processing can deliver, it has important ecological and economic benefits. The cost of handling, storing, retrieving and archiving paper-based invoices can be significant for enterprises.
One of the main ecological benefits of paperless invoice processing is that it helps reduce the use of paper and ink. This can have a significant impact on the environment, as the production of paper and ink consumes a large amount of energy and natural resources. Additionally, the transportation and storage of paper-based invoices can also lead to increased carbon emissions. By switching to paperless invoice processing, companies can significantly reduce their environmental footprint.
In economic terms, paperless invoice processing can deliver significant savings. The cost of paper and ink can be high, especially for enterprises that process a large number of invoices. Additionally, the cost of storing and retrieving paper-based invoices can also be significant, as it requires physical space and staff to manage the process. By switching to paperless invoice processing, companies can save on these costs and redirect those savings to other areas of their business.
Paperless invoice processing is a futuristic solution
Paperless Invoice processing software allows enterprises to digitize their invoices and automate the process of data entry, validation, and approval. This eliminates the need for manual data entry and reduces the risk of errors. The key benefits of paperless invoice processing include:
Increased efficiency:
By automating the process of data entry, validation, and approval, paperless invoice processing software can help enterprises process invoices faster and with fewer errors. This can lead to significant time and cost savings.
Improved accuracy:
With paperless invoice processing, data is automatically extracted from invoices and validated against the organization’s records. This reduces the risk of errors and improves the accuracy of the AP process.
Greater visibility:
With paperless invoice processing, enterprises have real-time access to their AP data. This allows them to monitor the status of invoices, identify bottlenecks, and make better-informed decisions.
Increased security:
Paperless invoice processing software can include security features, such as encryption and access controls to protect sensitive financial information.
Reduced environmental impact:
Going paperless can help lower the organization’s environmental footprint by reducing the use of paper and ink. For more on how to plan and successfully transform your AP, read: Secret ingredients for a successful AP transformation
Choosing the right paperless accounts payable systems for your enterprise
Below are a few points that should be considered while selecting a paperless invoice processing software product. But before you start looking at successful AP Automation strategies and advantages , The Institute of Finance and Management (IOFM) suggests financial leaders understand some nuances before you or your organization is in the process of proposing or implementing an automated solution
Functionality:
The software product should be able to handle a wide variety of invoice formats and layouts and should include advanced data extraction and validation capabilities. It should support multiple languages and scripts.
Integration:
The product should be able to integrate with the company’s existing systems, such as accounting and ERP systems, to ensure a seamless workflow.
Security:
It should include advanced security features, such as encryption, access controls, and multi-factor authentication to protect sensitive financial information.
User-friendliness:
It should be easy to use for business users and should offer a compelling user experience (UX).
Scalability:
The product should be able to handle the organization’s current and future needs and scale up as per organization’s growth.
Support:
The product should be offered with comprehensive support and training to ensure that the organization’s staff can effectively use and maintain the system.
To know more on what are the top challenges to keep in mind while designing a paperless AP system, read: Top 3 AP automation implementation challenges
Conclusion
Choosing the right paperless invoice processing software product is an important decision and it’s essential to evaluate the various products based on several key criteria. AI-led AP automation can transform the AP function of an enterprise while delivering paperless invoicing.Explore and discover the benefits of Zycus’ AI-led AP Automation in your organization with a free solutions exploration call.
