Glossary

Automated Invoice Processing and Its Benefits

Two of the most important aspects to keeping your business running are accounts receivable (AR) and accounts payable (AP). The accounts receivable cycle is the management of pending invoices your clients or customers pay you for the goods or services you provided, while the AP process is the tracking of money you owe to creditors. In order to keep cash flow running throughout your business, you’ll need to track which invoices have been paid and which have not. Read on to learn what you need to know about automated invoice processing and how it can make managing your accounting processes easier.

What is Automated Invoice Processing?

The cash flow that comes in and out of your business can be broken down into accounts receivable (AR) and accounts payable (AP). While the AR process is centered around the funds your customers must pay you for your business, the AP process is focused on the money you pay other organizations for goods and services such as rent and office equipment. The AP process can be complex as creditors may have different methods of billing as well as particularities on how you pay.

This is where automated invoice processing can come in handy. Automated invoice processing simplifies the mechanics of pulling data from invoices, storing it, and making sure the invoice gets paid. This can be done with accounting software that automates the entire process to help ensure everything is done consistently.

What is an Automated Invoice Processing System?

An automated invoice processing system is a function that can be performed through accounting software, such as the type of programs that BILL offers. This software allows you to use the program for data entry so that you may track the status and details of your invoices. Manually tracking your AP process can not only create internal efficiencies within your organization, but make room for error as the accounting process, specifically with AP, can be sensitive to mistakes.

An automated invoice processing system can move an invoice or other accounting documents (such as purchase orders or receipts) through a workflow much faster than you would manually. While there may still be instances where you have to enter data or manage on a workflow manually, typically, with an automated invoice processing system, you can be more hands-off and free up your time (or your employee’s time) to work on other projects and tasks.

How to Build an Automated Invoice Processing Workflow

Automated invoice processing works like it sounds — it’s an automated system that processes your AP invoices, manages your workflow, sends payments, and stores your information in case you need it for later use.

  1. Typically, a vendor will send you a digital copy of your purchase order and invoice in the form of a PDF, JPEG, or other type of document.

  2. Once you’ve received your purchase order and invoice, you’ll need to scan or enter the details into your accounting software. Your system will then extract that information, organize it, and store it.

  3. From there, that information will need to undergo three-way matching. This means it will need to be validated by using a purchase order, the invoice, and receipt, matching the creditor’s invoice before it can be approved for payment. During this process, your automated invoice processing system will also check for errors and the possibility of invoice duplication. This will help to ensure all your recordkeeping is accurate and you’re not paying invoices twice.

  4. Once approved via three-way matching, the system can then forward the payment to the vendor, putting the invoice to bed.

What are the Benefits of Automated Invoice Processing?

By automating your invoice process, you may not only free up your employees' time, but your time as well. This may lead to overall better productivity as well as more time to spend on more revenue-driving tasks. Using an automated invoice process also can centralize all your accounting information so it’s not only easy to pull if your business is being audited, but you can pull analytics on your accounting processes to find out where you can improve. Automated invoice processing can also help you better manage your invoices by reducing human errors that could negatively impact your financial statements with inaccurate information.

Make Your Life Easier with Automated Invoice Processing

Manually processing your invoices can be both cumbersome but convoluted as well. It can be easy to make errors like paying a bill twice or writing down an incorrect amount in your ledger. Automated invoice processing can help make accounting a much more streamlined experience. Save yourself the headache and find out how BILL can help you make accounts payable and accounts receivable process steps much more manageable. BILL products can even make your life easier by integrating with programs such as QuickBooks and Xero, even offering a self-guided demo of its products.


The content found here is for informational purposes only, and not for the purpose of providing advice, including but not limited to, financial, legal, or tax advice. Any opinion found here does not necessarily represent those of BILL.

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