What is automated invoice (e-invoice) processing?

Your organization needs to process and verify its invoices. This process can be automated and, for cost-effectiveness, it should be. But what does automated invoice processing look like, exactly?

Invoice verification refers to the examination of inbound (i.e. vendor) invoices by the accounts department. This process is broken down into formal and substantive components, and can be carried out electronically using the document and workflow management (DMS) functions of an enterprise content management (ECM) system.

Automated invoice processing features a range of scanning scenarios, from a single centralized scanning process to scanning documents at various locations. The invoice data required for verification can be extracted automatically using optical character recognition (OCR), making it easy to validate the substantive and formal correctness of the invoice.

Ideally, automated invoice processing also puts the invoices in the correct context ("to which customer, offer or delivery note does this bill belong?"). Just as if it were paper-based, each invoice can be given annotations, comments and notes without having to modify the original document.

In parallel to the invoice processing, you want your invoices to be archived in an audit-proof way with the corresponding posting data and documents. With the seamless documentation of all processing steps, the entire process can be fully traceable.

In 69 percent of companies, inbound e-invoices are printed out for verification and processing, as a study of the ibi research at the University of Regensburg revealed. So much for paperless invoice processing! And in order to facilitate electronic invoice processing, they are usually copied multiple times before they are passed on to departments. The long transportation routes between individual departments — especially in companies spread across many locations — often mean that cash discount deadlines are missed and employees are unaware of invoice statuses. 

Delays in payment caused by such processes permanently damage the supplier relationship. In addition, the liquidity planning suffers because volumes and invoice amounts plus the exact number of invoices in circulation cannot be determined precisely. Reliable liquidity planning is therefore impossible. A problem, but an entirely avoidable one. This is where automated invoice processing comes in.

You may be on board with electronic invoices, but might be wondering how to process an e-invoice. We'd like to walk you through it. When automating your invoice processing, these are the invoice processing steps to follow:

Substantive verification

This step is to check for the existence of a payment obligation. Often, the invoice will be reconciled with context-related documents, such as the delivery note or original bid. Where an obligation is found to exist, the next step is to examine the contents of the invoice. The volume and type of items listed — i.e. goods delivered and services rendered — as well as the gross and net amounts are checked.

Formal verification

A formal verification of invoices checks whether the invoice contains all necessary data according to eInvoicing standards. According to many eInvoicing standards, an invoice must include the full name and address of the biller and recipient, the date of issue, an invoice number and date, plus the type and quantity of the services provided.

As soon as the form and content of the invoices are verified and found to be error-free, the invoices can be posted in the next step.