Automated invoice processing: What businesses need to know

Invoicing
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Stripe Invoicing is a global invoicing software platform built to save you time and get you paid faster. Create an invoice and send it to your customers in minutes – no code required.

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  1. Introduction
  2. How does automated invoice processing work?
  3. What are the main benefits of automating invoice processing?
    1. Speed
    2. Accuracy
    3. Fraud prevention
  4. How to choose the right software for automated invoice processing

There are a few steps involved in processing an invoice for payment. Automated invoice processing uses technology to make this process faster and less labor-intensive for businesses. Systems equipped with features such as optical character recognition (OCR) and AI can verify invoice details, route the invoice for approval, and schedule payments with limited manual intervention. A 2023 report found that accounts payable (AP) departments with end-to-end automation and consistent workflows can process more than twice as many invoices as those without them.

Below, we’ll explain how automated invoice processing works, how to choose the right software, and how automation can improve accuracy and minimize fraud.

What’s in this article?

  • How does automated invoice processing work?
  • What are the main benefits of automating invoice processing?
  • How to choose the right software for automated invoice processing

How does automated invoice processing work?

Automated invoice processing covers all the same steps as manual invoice processing but uses technology instead of manual work. Here’s how it works:

  • Invoice capture: When the system receives an invoice, it reads the invoice and pulls out the relevant details using tools such as OCR.

  • Data checking: The system double-checks invoice details against purchase orders or vendor contracts.

  • Approval: The invoice is sent to the right people or departments for approval.

  • Payment: The system works with accounting software to schedule or process the payment.

  • Record storage: The invoice and payment details are saved in a centralized system for financial records and potential audits.

What are the main benefits of automating invoice processing?

Automating invoice processing is faster, more accurate, and more scalable than manual processing. It provides the following benefits for businesses.

Speed

Automation accelerates payment processing and minimizes manual work for a business’s team. This frees them up to focus on important tasks and lowers costs associated with manual labor. The faster processing strengthens relationships with vendors. Automation makes scaling easier by handling increased invoice volumes and updating records in real time rather than waiting for manual updates to accounting books.

Accuracy

Automated invoice processing tends to be more accurate than manual processing. It can eliminate data entry mistakes by pulling data straight from documents, which prevents common errors such as typos and mismatched purchase orders. The system double-checks the invoice details against purchase orders or contracts to find discrepancies. Automated processing ensures consistency in approvals and payment reviews, eliminating the chance of human error. The increased accuracy can help businesses avoid penalties and improve the customer experience.

Fraud prevention

Automated invoice processing also reduces the chance of fraud by removing some risk from the process and catching errors automatically. Built-in AI can catch unusual activity, such as duplicate invoices or payments made outside normal business hours. And automation ensures that every invoice follows built-in rules (e.g., company policies, legal requirements) before approval.

Automation platforms have strict access controls that make it harder for someone to tamper with sensitive information. But if anyone does make changes, the system can keep them accountable by creating a digital trail that shows who handled each step of the invoice process. The system also creates a clear audit trail and provides real-time insight into each invoice’s status, improving financial visibility in the process.

How to choose the right software for automated invoice processing

The right invoice processing software depends on your business needs, budget, and existing technology. Here are some important factors to consider when selecting the best software for your business:

  • Invoice workload: Look at how many invoices you handle and any specific requirements your business might have. For example, do you need recurring invoices, multicurrency support, or custom templates?

  • Integration: Note the tools you’re already using, such as your accounting system and payment processor, and look for software that can integrate with these systems. Stripe Invoicing, for example, integrates directly with popular software such as QuickBooks and Xero and connects with ecommerce platforms such as Shopify and WooCommerce.

  • Ease of use: Look for a system with a clean, user-friendly interface. This will save time and make it easier for your team to adopt the software. With Stripe Invoicing, you can create and send an invoice in minutes simply by logging in to the Stripe Dashboard, filling out the customer’s details, adding line items with pricing, and hitting “send.”

  • Flexibility: Find software that lets you customize invoices to reflect your brand and can handle growth as your business scales. Stripe Invoicing lets you design invoices with your company logo, custom color schemes, and specific item descriptions. It also scales easily and can process thousands of invoices monthly without any noticeable slowdown or additional setup.

  • Security: Your invoicing software should protect your data and meet industry standards for security and compliance. Stripe Invoicing protects your data using encryption and compliance measures such as Payment Card Industry Data Security Standard (PCI DSS) certification. This means it handles your customer payment information with the same level of security as major banks.

  • Cost: Ensure the pricing works for your budget and offers value for the features you need. Stripe Invoicing charges a small percentage per paid invoice—with no hidden fees or extra costs.

  • Support: Research what customer support is available. This can be invaluable when you encounter problems. Stripe provides detailed guides, video tutorials, and an active help center to troubleshoot common issues. It also has a support team that’s available via email and live chat.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.

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