Manual purchase invoice handling is one of the most time consuming processes in financial management due to the fact that most of it is still done manually. Yes, there are some systems that have basic rule-based automation workflows, but they don’t really save that much time either. At least not as much for it to have significant time and headache savings. This problem does not only affect financial management. The pain is also felt in business units as they have to review and approve invoices.
No more. Artificial intelligence can solve all that. Let’s start by looking at what exactly makes the process time-consuming.
The biggest time-consuming tasks are the manual routing of purchase invoices to the invoice reviewer and approver, as well as the manual posting of purchase invoices for different dimensions. The more purchase invoices a company has, the more there are reviewers and approvers. Without automation, manually routing a single purchase invoice can take up to two minutes.
Typically accounts payable team recieves all the purchase invoices and send them to people working in the business. When an invoice arrives to the business, a reviewer of the invoice manually adds the dimensions used to allocate the invoice, such as GL account, cost center, project and VAT code, and other allocations depending on company policies. This step takes several minutes per invoice.
As we all know, the reviewers and approvers in the business are usually professionals working as managers or directors. In other words: they are the highest paid employees in the company. They also tend to be the busiest. As a result, the time spent in business units processing manual purchase invoices is a costly work. This expense is often not recognized. Most companies are used to processing purchase invoices and have accepted it as a very manual process. It is what it is.
Let’s look at exactly how much it costs.
Let's look at an example. A company receives 100,000 purchase invoices every year. Their purchase invoices are pre-processed in the account payable, from where they are routed to the business to be reviewed and approved. Someone if the business reviews, posts and approves, after which the invoices are returned to the accounts payable for payment and to be booked.
In this example every step of the process is done manually, which makes the level of automation at 0 %.
Now every invoice takes about 2 minutes to be routed for reviewal manually. In a company that has 100,000 purchase invoices a year, that makes it 200,000 minutes. Changed to the monthly working time, this means that the company spends about 275 hours in the accounts payable to route purchase invoices by hand.
Wasted minutes do not end here.
The invoice then moves to a business, which spends an average of 5 minutes in reviewing and posting a single invoice. Let’s say that the salary of a business director or a manager with side costs is about 15,000 € / month. Here’s the breakdown of the costs:
→ The monthly cost for posting invoices to the company is approximately € 925 per month per business manager.
With dozens or even hundreds of managers accounting for invoices in companies, the cost of manual work is unreasonable to say the least.
In addition to this, the time spent processing purchase invoices is directly out of the work that creates value for the business. The same time could be spent on meeting and talking to customers and prospects.
So, let artificial intelligence do the work for you.
In processing purchase invoices, artificial intelligence is a self-learning and constantly evolving probability calculation engine. Initially, it is trained for its task by giving it purchase invoice and billing history data from a few months up to a year.
Based on the historical data, the artificial intelligence builds rules for the posting and routing of purchase invoices in its own model. With the help of historical data, the artificial intelligence can predict the accounting dimensions and the reviewers and approvers completely automatically.
Obviously there are different solutions for this kind of automation on the market. The way our solution works is that it connects to the existing purchase invoice processing system with ready-made interfaces. From that point on the purchase invoice system’s own automation and automation by artificial intelligence work together. The purchase invoice system identifies those invoices for which there is no automation rule and only those invoices will be processed by the artificial intelligence. Working together this way, rule-based automation and artificial intelligence achieve a really high level of automation.
Can you imagine how happy your business units would be if they had AI do the process for them?
The Snowfox.AI service can route and post your purchase invoices automatically with artificial intelligence. You no longer have to worry about manual tasks.