How to Automate Accounts Receivables?
We've accumulated the list of questions you should be asking before automating accounts receivable process in your company. This article helps you filter out the solutions for your consideration list.
Accounts payable teams are constantly on the lookout for technology that reduces the manual work of digitizing physical and digital invoices, reduce the time-consuming, error-prone, and resource intensive processing of physical invoices, and streamline the entire process to make it more efficient.
According to a survey, nearly 57% of all invoice data is still entered manually from documents and electronic invoicing is yet to get widely adopted. In other words, automation in the back office for accounting teams has grown at a slower rate compared to their counterpart departments.
Intelligent document processing (IDP) uses a wide range of technologies including Artificial Intelligence(AI), Machine Learning (ML), and Optical Character Recognition(OCR) to process information from structured, semi-, and unstructured documents and sends it to downstream systems for further processing.
For accounting teams, IDP automates processing of invoices and documents and feeds the structured data to downstream processes for further processing and automation.
With IDP, accounting departments can achieve automation by almost eliminating human intervention. Let’s take an in-depth look at the 7 ways IDP helps the accounting teams automate and digitize manual and repetitive processes.
So, let's jump right into it:-
Eliminating manual labor, processing invoices with varied layouts, and ensuring compliance and seamless integration are all essential features of a fully functioning IDP.
Let’s have a closer look at some of these features.
It’s challenging to replicate a human’s ability to adapt to changing working conditions and invoice formats with early accounts payable automation tools. IDP, on the other hand, extracts information from documents spanning multiple formats and sources.
Almost 60% of the invoices are created in the EDI format which is the structured invoice format. The other 40% consists of semi-structured invoices, like PDF, and unstructured formats, like JPG. IDP excels in extracting data from all three formats: unstructured, semistructured, and structured documents invoices. After extracting the data, the AP software converts the semi-structured and unstructured invoices into structured formats.
Through its machine learning models, IDP automatically identifies and classifies documents, and sorts them accordingly. For instance, if a service provider sends a bill, the IDP identifies it as a utility bill and redirects it to the relevant accounting team.
What’s even better is that IDP data capture models gradually improve as the volume of invoices increases. The ML model keeps on learning the different keywords and associating them with the different invoice formats and non-invoice bills.
Any compromise in the data validation process leaves the company vulnerable to fraud. The lack of transparency in the entire process makes it difficult for the management to make viable financial strategies.
IDP instantly compares and validates the data captured from the invoice. The AI conducts two-way, three-way, or four-way matching depending on the requirements of the company. It automatically flags mistakes, raises exceptions, and sends approvals for the transactions.
Advanced intelligent document processing platforms introduce a touchless validation process that eliminates human-prone errors. The smart validation process compares the data from the invoices with the vendor contract, PO number, shipment address, and payment details. Naturally, automating the majority of the redundant tasks boosts the productivity of the AP team.
IDP software extracts data with 99% accuracy and conducts two/three/four-way verification depending on the needs of the accounting department. The AI-powered platform keeps your organization audit ready by archiving the approved invoices along with relevant documents, like PO, GNR, shipment details, and more.
The flexibility and customizability of an IDP platform makes it an attractive option for the accounting department. The self-learning capability automatically adapts to handle unique accounting challenges and workflows, making the software extremely flexible.
Modifying the software to suit the accounting needs of your finance department is also easy. The document processing software can also be customized to handle complex calculations, perform data analytics and generate reports after the data extraction process.
Reconciling bank statements, invoice processing, payroll management, and employee remuneration can be effortlessly monitored from the IDP dashboard. As a result, the accounting department gains control and visibility over its outgoing and incoming cash flows.
Advanced intelligent document processing software allows third-party integrations for seamless transfer of data after processing to downstream apps.
The IDPs integrations with CRM, accounting systems, and other systems through APIs save time that would otherwise go into data consolidation and prevent data transfer errors. Integrating customer support software with intelligent document processing enhances service efficiency by automating document retrieval and resolution processes.
With these integrations, large data imports can happen seamlessly and it reduces the dependencies on heavy IT infrastructure.
IDP software platforms are a life-saving tool for fast-scaling businesses. Automating the process and setting up rule-based AI mechanisms eliminates the majority of the time-consuming and repetitive tasks. Once the IDP is calibrated, it can process thousands of invoices and bills every month without any fatigue.
Consequently, the company does not need to constantly hire more labor to take up the increasing workload.
In addition, it frees up existing finance professionals to focus on business development and other crucial strategic planning. Re-allocating the employees enables the company to improve human resource management. The employee can invest their time in improving customer, vendor, and stakeholder relationships.
Although the data extraction process is the primary function of IDP it is not the only function. The true potential of the IDP platform comes from its pre-processing and post-processing prowess. Ensuring the end-to-end integration of IDP in your accounting process helps finance professionals optimize the processes and capitalize on opportunities.
Intelligent document processing platforms pre-process the documents and identify the format of the invoice (PDF, EDI, JPG, and so on), and queues them accordingly to reduce invoice processing time to 30-60 seconds.
IDP platforms are capable of real-time data extraction. Banking, lending, and financial institutions rely heavily on this feature to sift through large volumes of customer documents. The real-time data extraction is coupled with a central repository that stores and maintains the extracted data.
The centralized approach offers the customer support department with all the necessary client information to help them address their concerns.
Accounting departments of product-based companies use real-time data tracking to always have the latest financial data at their fingertips. Setting budgets, managing working capital performances, and establishing financial goals become easier for finance professionals.
Thanks to advanced AI tech and ML models, IDP can also identify handwritten characters in unstructured documents. With Docsumo’s 95% STP rate and real-time data extraction, the accounting department can dispatch invoices within a few days.
Another benefit of real-time data extraction and tracking is the ability to recognize spending patterns. Live financial trackers powered by rapid intelligent document processing generate interactive reports for the C-suite managers, FP&A, accounting departments, and finance teams.
The platform’s integration with third-party applications makes significant improvements to the decision-making processes.
Docsumo is a user-friendly IDP platform that processes invoices within 30-60 seconds with an accuracy rate of 99% and an STP rate of 95%. The standalone figures are impressive, but how does the software fare in real life?
Here’s a small glimpse of Docsumo in action through a case study.
Valtatech, an Australian managed services provider, was operating with archaic workflows.
Docsumo identified the root causes of these problems and offered the following document processing solutions.
If you’re looking for a reliable and intuitive IDP software to scale your business, sign up for a 14-day free trial.