Handling invoices manually is time-consuming and tedious. And we all know how those repetitive, simple tasks are the ones more subject to errors. AI invoice processing can solve these challenges in one move: streamlining invoice management, reducing human errors, and freeing up valuable time that professionals can dedicate to other high-priority tasks.
In this article, we’re exploring what is AI invoice processing, how it works, and what advantages it can bring to your business.
What is AI Invoice Processing
AI-powered invoice processing is an automated system that manages all tasks related to invoices and payments more accurately, securely, and cost-effectively than a human accountant. But how does AI for invoice processing work? We can sum it up as follows.
1. Invoice Data Acquisition
As a first step, AI invoice processing tools read through your invoices to acquire data. How does it do so?
It uses OCR (Optical Character Recognition) technology which converts text into a machine-readable text format. Next, it goes through headers and lines to capture relevant data such as supplier name, date, number of orders, name, and quantity of items purchased, and so on.
2. Data Elaboration
Once the tool has data at its disposal, it can be categorized according to your needs. For example, it can:
- Separate supplier invoices from clients’ invoices
- Match invoices with their order
- Spot discrepancies and flag them
- Make automated payments
3. Integration with your ERP System
AI invoice processing tools can integrate with your ERP system to unlock additional features and benefits.
For example, it can automate accounts payable workflows, provide insights for business expenses analysis, and become an important tool for informed decision-making and cost reduction.
As you can see AI for invoice processing can be considered as a sort of virtual accountant that not only can put your invoices in order, but also provides useful insights to help you manage your business in the most efficient and profitable way.
The Benefits of AI Invoice Processing
1. Timesaving
The first benefit is straightforward: relying on AI for invoice processing reduces the time spent on invoice management.
While a human accountant would spend about 3 minutes on every single invoice, an AI tool will require 3 seconds each. The time would be even reduced when the invoice is received digitally.
2. Accuracy
We’ve all experienced how it’s easy to make mistakes when dealing with tedious, simple, and repetitive tasks. Invoice management is one of them. This is why automation in this field leads to more accurate results.
With machine learning, AI can also correct itself and improve its performance over time. The more invoices it processes, the more accurate the technology becomes.
3. Cost Reduction
With AI for invoice processing, the overall labor and operational costs related to invoice management and accounting decrease significantly. This is because:
- AI invoice processing replaces a professional accountant, and you won’t need to hire one.
- It reduces errors and shortens the time you need to spend on invoicing.
- There is no need to configure rules and templates and, therefore, implementation costs are low.
4. Increased Productivity
When invoice management can be done better and in a shorter time, you can have more time to engage with higher-priority tasks.
AI for Invoice Processing: Use Cases
The artificial intelligence has many applications in finance and invoice management. These are the most common use cases.
- Data capture from analog invoices. Invoice formats and layouts can vary a lot for each supplier. Traditional invoice management software always struggles with data capture because of that. Thanks to machine learning and OCR technology, AI technology has become extremely efficient in capturing data from multiple sources.
- Invoice identification. AI for invoice processing is often applied to separate supplier invoices from clients’ ones. It can label them and organize them accordingly.
- Discrepancies detection. AI can identify and notify when there is a discrepancy between an order and its invoice.
- Automate payment. When properly integrated with payment methods, AI can automatically make the necessary payments according to the relative invoices.
- Avoid double payments. When AI handles payments automatically, the chances of paying twice for the same invoice are close to zero.
- Expenses/revenue analysis. AI can be utilized to analyze the business’ expenses and revenue. With the integration of ChatGPT language models, it can also be possible to ask AI questions and get recommendations about, for example, how to reduce costs by 10% in the next 6 months.
- Automating general ledger updates. The integration with ChatGPT language models also allows the AI to automatically write and update the business’ general ledger.
All these use cases can be considered as features of the same software tool. You can, that is, exploit them all within your business and automate a lot of tasks related to invoicing.
Conclusion
AI is transforming the way businesses manage invoices and payments, providing a more efficient, accurate, and cost-effective solution. By automating tedious tasks such as data capture, discrepancy detection, and payment processing, AI frees up time for employees to focus on higher-value work. Moreover, AI invoice processing can enhance decision-making through expense analysis and general ledger updates, ultimately driving productivity and profitability.
