All You Need to Know About Batch Invoice Processing
Batch invoice processing is a method that is used to process multiple invoices at the same time. Batches may include hundreds, if not thousands of invoices, or they can consist of just five or ten. It all depends on your business and accounts payable department.
Companies often choose to implement automated batch processing. It allows them to save time and increase efficiency in the account payable and account receivable departments.
What Is Batch Invoice Processing?
Batch invoice processing means managing many invoices all at the same time as opposed to processing them one by one. During this process, a group of invoices is compiled and entered into an invoice processing system, which then automatically processes them.
The system extracts data from each invoice and uses it to populate the fields in the accounting system. The information can include details such as the vendor name, invoice number, date, and amount. The system may also perform tasks like:
- matching invoices with purchase orders or receipts
- checking for errors
- sending approvals to the appropriate people
- and more.
Batch Invoice Processing Methods
Accounts payable batch processing can be done in two ways:
- Manually – When batches of invoices are entered manually, a staff member must enter the data from each invoice, one by one, into the accounting system. This option takes a lot of time to complete, and it is also prone to human error.
- Automatically – Automated invoice processing utilises software to avoid manual processing. Automated batch invoice processing allows for faster and more accurate processing. This eliminates the need for manual data entry and reducing the risk of errors. It can also save time and resources, as multiple invoices can be processed simultaneously.
Automated batch payment processing is commonly used in accounts payable departments in businesses and organisations to streamline the payment process and improve efficiency.
How Does Automated Batch Invoice Processing Work?
Batch processing can be done through specialised accounts payable software. This can automate the entire process from data entry through to payment processing. This can help to reduce errors, save time, and improve overall efficiency.
The way batches of invoices are typically processed usually involves the following steps:
- Invoice Collection – First, invoices are collected from vendors and suppliers. This is usually done electronically these days, although physical copies may be sent through the mail instead.
- Data Entry – Next, the invoice data is entered into the automated system. It can automatically extract key information such as vendor name, invoice date, and amount due.
- Information Flows to Accounting System – Now, the invoice data flows through to the business's accounting system.
- Validation – The invoice data is validated to ensure that it meets the necessary criteria for payment. For example, the system may check that the invoice has not already been paid, that the vendor is in good standing, and that the invoice total is within budget.
- Approval – If necessary, the invoice is sent to the appropriate person or department for approval. This can be done through an automated approval workflow.
- Payment – Once the invoice has been approved, the system schedules or processes the payment automatically. The system can also generate payment records and reports for accounting purposes.
Benefits of Automated Batch Processing
There are many reasons that so many businesses use automatic batch processing, including:
Time Saving
Processing invoices one by one is an incredibly time-consuming task. Suppose it takes your employee 10 minutes per invoice to enter into the accounting software. If they had 100 invoices to enter, this would take well over 16 hours to complete.
With batch processing, you can process multiple invoices simultaneously. Processing the same 100 invoices could take automated software a matter of seconds. Plus, no one has to do the manual labour required to process invoices one at a time.
Error Reduction
Processing invoices manually can be prone to errors. Unfortunately, when people manually type out data, it's nearly impossible to do this completely correctly for every invoice. Automated batch invoice processing increases the accuracy of the data, as it follows a standard process that doesn't rely on humans not making mistakes. Automating invoice processing reduces the likelihood of errors such as typos or duplicate payments.
Improved Cash Flow Management
Accounts payable batch processing helps businesses to manage their cash flow better, as it allows them to process invoices and payments more quickly. Payments are more likely to go out on time when invoices are processed and paid faster.
Customisation
Automation tools can be customised to fit the specific needs of a business. This may include setting up workflows, automation rules, and approval processes. Some software solutions can even be tailored to include the specific details found on invoices. It is possible to train invoice processing tools to read them even if those are unique to your business.
Improved Efficiency
Operations managers are always focused on ways to improve efficiency without cutting corners. Luckily, the automation of invoice processing is not only more efficient but also retains the accuracy of the data. This makes it an excellent way for businesses to streamline their accounts payable processes and increase efficiency.
Cost savings
Processing batch invoices can reduce the costs associated with manual processing. Two major causes of such costs being labour costs and errors that lead to additional expenses. After all, just one extra number at the start of a price can wreak havoc in your accounting system.
Overall, batch processing can help businesses save time, reduce errors, improve cash flow management, increase efficiency, and save costs.
What to Keep in Mind About Batch Invoice Processing
While there are numerous benefits to batch processing, there are also a few pitfalls you should be aware of. It’s important to keep these in mind as you begin your search for a good automated invoice extractor.
Batch processing requires good data management
To successfully process invoices in batches, you need to have good data management practices in place. This includes having accurate and up-to-date information on vendors, products, and prices. All of the correct categories must be set up in your accounts payable system. These need to match what will be found on the invoices.
Automated invoice processing systems must be reliable
It's paramount that you find a reliable invoice parser to handle your accounts payable batch processing. The software should be set up to handle large volumes of invoices. Look for one that already automates the processing of data for enterprise-level businesses.
Batch invoice processing solutions should be customized
Off-the-shelf batch processing options are unlikely to meet your needs. Look for one that can be customised to meet your specific business requirements. This includes unique fields and an API that can be used to push data through to your accounting system.
Be ready to support and train your employees as you transition from manual data entry
If you select a complicated batch processing system, you need to train your employees to use it effectively. This will ensure that the system is used correctly and that the benefits of batch processing are realised.
How to Efficiently Complete Batch Invoice Processing
Choose quality software
The main way that you can make your batch processing more efficient is by tracking down the best automation option. Automation is the only way to significantly speed up invoice processing without compromising on data quality and accuracy. Take the time to test your selected tool before you commit to its procurement of it. Run a few hundred invoices through it first, so you can check the accuracy for yourself.
Integrate the tool with your accounting system
Once you’ve selected the best software for your company, you will need a developer to integrate it with your existing accounting system. That way, the information will automatically be extracted from your invoices and then sent directly through to populate your AP software.
What’s the Best Invoice Automation Software?
Affinda's invoice extractor is an automation software tool designed to automate the process of extracting data from bulk batches of invoices. Our technology uses machine learning algorithms to analyse and extract critical data from invoices. These can include basics, such as the invoice number, vendor name, date, and line item details.
The software is designed to work with various invoice formats, including PDFs, Word docs, and even scanned images. This allows businesses like yours to process invoices from a variety of sources and in a variety of formats. Also, it eliminates the need for manual data entry.
Overall, our invoice extractor helps businesses save time and reduce the administrative burden of manually processing batch invoices. By using Affinda's invoice processor to automate the process of data extraction, businesses can expect to:
- improve accuracy
- reduce errors
- focus their resources on more strategic tasks
If you're interested in learning more about how automated batch payment processing can streamline your workflows, contact us today.
