What is automated invoice processing?

The Benefits of Automated Invoice Processing

Let’s break down the opportunities to see where you could get the biggest wins. One huge mistake that some people make when considering AP automation is to view the system in a dichotomy—100% automated or 0% automated. It doesn’t have to be all or nothing. Just start with 10% of your invoices and add more each week! In this article we dig into the benefits and savings! Happy 2025!

First Off… What is automated invoice processing?

Invoice processing is a business function performed by the accounts payable team that consists of a series of steps for managing supplier invoices from receipt to payment and recording them in the general ledger. Invoice processing is often performed with software and is commonly referred to as automated invoice processing or invoice automation for short.

Here are the steps for invoice processing:

1. Capture the invoice document
2. Verify that the invoice matches supporting documents such as a purchase order and/or delivery receipt.
3. Send invoices to authorized approvers to approve or reject invoices. Sometimes involves General Ledger account number assignments
4. Enter (or “Post”) the invoice to your ERP system and General Ledger
5. Process invoices for payment.
6. Archive invoices for audit purposes

Your Invoice Processing Guide 

In this guide, we discuss how invoice processing automation tools are enabling Accounts Payable (AP) departments to keep their current workflows and how AP technology is streamlining their existing invoice processes. If you’re looking to streamline your Accounts Payable department and save time and money for both your organization and your AP team, here’s your detailed invoice processing guide.

3 Benefits of Automated Invoice Processing

The accounts payable department uses automated invoice processing software to streamline invoice processes, add more control over internal processing functions with tracking functionality, and improve the speed at which supplier invoices are processed. Automated invoice processing software such as DASH AP Robot™ will help accounts payable teams automate the capture, coding, and posting of invoices. We have found 3 goals for automating AP across businesses of all sizes. Let’s walk through these 3.

1. Digitize Everything

Manual invoice processes are typically paper-based, with AP teams sorting through and entering paper invoices by hand. Paper-based processing is slow and error-prone and often leads to late or missed payments to suppliers.

Paperless invoice processing replaces these manual processes with automated workflows. It begins with converting paper invoices to digital formats and encouraging vendors to send digital invoices via email or a vendor portal. From there, the invoice processing software automatically scans the invoices, enters the invoice data into the software, codes the invoice details, and matches the invoices to purchase orders. Once the invoices are entered and verified, the system forwards them for payment.

One DASH customer says that after eliminating the manual steps they have already saved so much time. “The time savings already using the AP Robot™ is crazy, why we did not do this before now is insane.” —Doug, Controller, Electronics Manufacturer

“DASH AP Robot™ does the 3-way matching for me. I used to do everything manually, even filing. It was a lot. Now with DASH, it does all the entering, matching, and filing for me. Even our purchasing team can just go in and look up invoices in the archive in seconds. We now automate and successfully match 90% of all our invoices.” —Xia, Accounts Payable, Packaging Solutions

2. Centralized Data and Processes

One of the drawbacks of manual invoice processing is that it makes it difficult for finance teams to access and use invoice data. Often, this data is buried in a spreadsheet or accounting system and can’t easily be accessed and analyzed. Even using a more advanced system like an ERP can be challenging. Many ERPs have complicated navigation, complex organizational structures, and strictly controlled user roles that can make it difficult for AP teams to find useful information.

The beauty of paperless invoice processing (besides saving trees) is that it turns invoices into actionable data that AP teams can use to process invoices faster and more accurately. AP platforms like DASH AP Robot™ are easy to navigate and make it simple for AP teams to find the resources they need. One DASH customer compares AP Robot’s ease of use, saying

“I used to have to enter information 3 times to get it to all match up, now I just have to check the information and it’s done! It’s just a few clicks to check that all the invoices are posted for the day, and then I can move on to other important tasks for the day that require my time.” —Cheryl, Book Keeper, Plastics Engineering

3. Enabling Collaboration

It’s hard for AP teams to collaborate with other business units and stakeholders when they are saddled with manual processes. Digging through emails, paper files, and voicemails is time-consuming and frustrating, especially for AP employees who are already working at capacity.

Best-in-class AP automation platforms like DASH AP Robot™ are designed for how AP teams work. They prioritize collaboration. For example, DASH unifies all communications, documents, and tasks on top of each invoice so users can access the information they need and communicate with stakeholders from one screen.

A CFO describes how DASH AP Robot™ has enabled collaboration at their organization:

“It was important for our company to find a cost-effective and trusted ERP partner to automate payables. After assessing multiple solutions, meeting the DASH team, and connecting with DASH references, we felt confident that DASH was the right solution for us. During the implementation process, the DASH implementation and technical team were able to assist with questions, integration, and training effectively. After six months of utilization, this solution has met our expectations, and we would recommend it to others who would like to automate their payables.” —Khoua, CFO, Packaging Solutions

A question you might be asking yourself…

“How Can I Save Time and Money by Automating Invoice Processing?”

Great question. Let’s break down the opportunities to see where you could get the biggest wins. One huge mistake that some people make when considering AP automation is to view the system in a dichotomy—100% automated or 0% automated.

It doesn’t have to be all or nothing. Just start with 10% of your invoices and add more each week!

In reality, invoice processing is made up of several smaller processes, some of which will require the human touch such as approving a cost or verifying for accuracy. While others are suitable for automation like data capture.

With that said, let’s break out some of the AP processes that are perfect for automation and provide some details about how and why. An invoice processing flowchart [picture all the way at the top!] can also help you to identify and remove inefficiencies.

Top 6 Ways to Save Money via Automated AP:

#1 = Receiving Invoices Electronically

If you haven’t implemented AP automation for invoice processing yet, there’s a good chance you have invoices coming from all over the place from different departments and mediums—snail mail, faxed, email image attachments, and electronically.

We likely don’t have to tell you how much time your staff uses to gather, organize, and scan invoices and how tedious the process is, so we’ll say this instead:

If you can receive your invoices electronically, you can place them in the analyze folder for instant analysis.

#2 = Data Capture and Extraction

If you have your invoices coming in electronically — great! AP automation software is uniquely suited to help capture and extract that data with no human intervention. That’s right; your staff doesn’t have to manually key in data anymore.

Manual data entry is not only tedious for your team, but it’s also time-consuming and prone to typos and human errors. On the other hand, software that’s designed to read and understand the data on an invoice is highly accurate and nearly instantaneous after learning your processes.

With DASH AP Robot™, you can also capture and extract invoice data below the header, including individual or custom line items. And if for some reason your vendors aren’t sending electronic invoices yet, you can still scan your documents and DASH will extract the data via OCR with incredible accuracy.

#3 = General Ledger Coding

Since you’re already using software to extract data from your invoices, why not have it code it as well? With our integration, your AP automation platform will be synchronized with your ERP system to categorize your invoices and automatically code them with your default general ledger accounts.

#4 = Three-way Matching

Invoice verification is a huge responsibility for the AP department—this is how we avoid duplicate and fraudulent payments. However, when approving invoices manually, verifications become time intensive, and three-way matching can be nearly impossible for invoices missing information such as PO numbers.

With AP automation, software can automatically read data on invoices and search its central database for corresponding data in POs.

#5 = Routing and Approvals Invoice Processing Software

If the invoice is now in your system, it’s properly coded, why not just send it to the person who needs to approve it? Think about the alternative:

After coding, one of your AP team members has to type out an email to a coworker in a different department, attach the invoice, and then send the email… with their hands. It’s practically barbaric.

With an AP automation platform, the system aligns with your invoice processing approval workflows and all AP has to do is review any suggestions and verify. Moreover, in the case someone leaves the company or is on family leave, it’s extremely easy to add/remove approvers. Once routed for approval by AP, the invoice is sent to the appropriate approver(s) and in the correct order. Using automation for routing approvals can dramatically reduce the amount of time it takes to get an invoice approved.

With DASH software, invoice processing is centralized where all approvals and communications happen ‘on top’ of the actual invoice, so if there’s an issue that needs to be addressed, the processor or approver can write notes within the context of the actual invoice—no more digging through separate emails to find out why something hasn’t been approved yet.

#6 = Submitting for Payment

The whole reason we do what we do in AP is to ensure invoices are both valid and suppliers receive payment. This takes no small amount of effort, given the number of steps, accounts payable fraud prevention controls in place, and number of people involved throughout the invoice processing lifecycle.

So by the time you’ve gotten all the way through the long lists of tasks and everything is perfect with your invoice processes, why not send that information right to your ERP system?

Upon successfully completing the verification and approval steps, along with the accounts payable internal controls your business has in place, your AP automation solution should automatically be able to send the approved invoice to your ERP.

Again, the choice to automate many of these tasks is a no-brainer—the computers are simply more accurate and more diligent when it comes to data extraction, etc., and not to mention your team usually loathes those types of busywork anyway!

The Quest to Improve AP Invoice Processing Efficiency

In today’s current business environment, it’s not just sales, marketing, or operations that are looking for the best option when it comes to their technology stack. Financial departments are also among business departments searching for the best-automated invoice processing software that integrates with their ERP. In addition to streamlining invoice capture and coding, financial leaders consider functionality such as an auto-posting feature that captures the data, matches everything up within set tolerance levels, and posts it directly to your ERP for you.

Since accounts payable isn’t a profit center, departments look at other ways to deliver value and the key to adding value is to become more efficient, which means saving time and reducing operating expenses.

AP automation is a great way to save both time and money. But for AP teams, efficiency means something different — and that’s cutting down on the backlog of invoices for real-time visibility into cash flow, reducing errors, and eliminating repetitive manual tasks via technology.

AP automation is the key to streamlining your invoice workflows while increasing the accuracy of your work. Take a look at how DASH’s AP Robot™ allows you to take control of invoice processing.

Schedule a Demo with DASH Here. We look forward to it!

About the Author:

Stephanie is the marketing guru at DASH. For over 20 years, DASH has been authoring, delivering, and supporting DASH DDX™ and DASH AP Robot™, its ERP-integrated software to small and mid-sized manufacturing and distribution companies throughout the USA and beyond.

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