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A Guide to Accounts Payable Invoice Scanning For Your Business

Why automation?

In the current business climate, Accounts Payable automation is on the agenda for the majority of organisations in Australia. This focus is driven by a need to better serve suppliers, ensure timely payments and drive cost efficiencies in back office operations. Automation has well known benefits, but what does it really mean? And more importantly, how do you get there? What is the foundation, the number one area in your AP automation project you need to get right?

Why use automation

The purpose of Accounts Payable automation, using invoice scanning software and optical character recognition (OCR), is to increase the number of "straight through" transactions, rather than requiring staff to engage in manual data entry for paper invoices.

It is no longer customary to have your AP team spend their time fighting through a variety of supplier payment inquiries, getting to the bottom of duplicate payments, chasing up unapproved invoices, or dealing with other implications associated with manual invoice processing.

By enabling your AP staff to concentrate on proactive work and continuous process automation, using an invoice processing software solution, you can unlock some very attractive cost benefits.

In the ideal world of AP automation, at least 90% of invoices are processed automatically, with data captured from PDF files, but very few businesses have reached that magic number. It is possible to achieve 90% automation; however, firstly, you need to understand your existing process end to end and identify the parts that present the greatest obstacles.

The strategy here is to concentrate on relevant parts and continuously remind yourself of the objective. The quality of invoice data from your suppliers, extracted using invoice scanning solutions, typically stands out the most.

You can only truly achieve the goal of automation if invoices from your suppliers are 100% accurate. Businesses that don't achieve this tend to work on the wrong process components in an attempt to increase their automation rate.

Data entry errors are a significant concern, which can be mitigated through the use of invoice management software and OCR technology. Data quality is the foundation for achieving higher levels of automation in your accounts payable scanning software.

Unlock the Efficiency through AP Automation

"Best practice in AP Automation typically involves aiming for an increased number of spend categories to be procured, i.e., mandated purchase orders (POs) integrated with your accounting system."

Best practice in AP automation typically involves aiming for an increased number of spend categories to be procured, i.e., mandated purchase orders (POs) integrated with your accounting system. Ideally, the first objective of an AP automation project is to drive spend through the POs, while maintaining identification of spend categories that are not suitable for all spend.

Once the PO spend categories have been identified and the business procures, through the use of mandated processes, the next step is to look at recurring spend. In a typical organisation, more than 30% of spend is repeated on a monthly, bi-monthly, or fortnightly basis.

This number usually surprises people, but when you look beyond your typical recurring expenses, including categories such as rentals and cleaning, a lot more than we would expect belongs under the umbrella of recurring spend. All of the recurring invoices can be automated using the right technology, such as accounts payable scanning software.

Automation of contract-based invoices requires the definition of procurement contracts, where the criteria for matching are determined by the pattern, invoice amounts, vendor, and tolerances for dates and amount.

For example, specific information such as supplier name, contract or account number, an expected invoice date, and expected invoice amount (with tolerances if applicable), can be used in combination to match and identify an invoice against the parameters of the contract.
If any of the parameters fail, the system can automatically pass on the invoice to the contract owner in your business, in order for the exception to be handled appropriately.

Challenging the convention

We already highlighted the importance of quality and its impact to the downstream payables process, but let’s take a step back and re-think where document to data conversion processes are coming from. In order to automate financial systems, one fundamental issue should be addressed.

For nearly three thousand years we have been exchanging information in self contained packages called documents. Further to this, in the world of electronic billing, AP and Enterprise Resource Planning (ERP) systems, we are sending and creating documents to drive the financial processes. We receive POs which then need to be keyed into financial systems; paper or email invoices are received and require to be keyed into the financial systems (whether emailed or posted). The fundamental problem here is the creation of the document (such as: invoices, POs, shipping notices etc.). In the world of computerised financial systems, every time a document is created we immediately generate a problem to the next person in line that tries to use that data effectively.
“The fundamental problem is the creation of the document”
When we create a PO and either email or mail it to our supplier, their challenge is to ensure the same information is created in their system. Every time a supplier creates an invoice sent by mail or email the buyer is faced with the issue of trying to capture as much relevant information as possible to support the approval and matching related AP processes. Why? Because our thinking is constrained around having to create a document in the first place!

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A SMARTer Network

This is where the concept of SMART networks comes into consideration. What is important when multiple businesses begin exchanging data with each other, is that systems are fully inter-operable to “talk” to each other as they are unlikely to be the same.

A SMART network between businesses (for example between a buyer and their supply chain) translates the information between the financial systems so that they work in an inter-operable manner, in real-time, with 100% accuracy.

To some, this may sound similar to standardised Electronic Data Interchange (EDI). However, implementing EDI traditionally requires resource heavy data mapping, translation mechanics and implementation project management of each of the trading partners.

In comparison, a SMART network can support the supplier and buyer connecting to it via the file formats already existing in their financial systems, rather than introducing new ones. This is a particularly attractive proposition from the suppliers' perspective as the there are no changes to the suppliers.

Getting suppliers' support is easy and implementation time reduced to only hours per trading partner, making the return on investment highly appealing.

Revolutionising Accounts Payable with SMART Networks

“The SMART network connects the supplier to their customer enabling them to submit their invoice fully electronically, in real time and with 100% accuracy”

The SMART network revolutionises the accounts payable process by eliminating the need for manual document creation and paper-to-data conversion. With the adoption of advanced invoice scanning software solutions, businesses can streamline their accounts payable workflow. This modern approach ensures that data entry errors become a thing of the past, as it allows for the efficient scanning of invoices in digital format.

Technological advancements in supplier onboarding have significantly reduced the time required for integration. Unlike traditional methods like EDI that took days or even weeks, the SMART network now accomplishes this task in a matter of hours, sometimes minutes. This eliminates concerns about emailed or mailed invoices, liberating businesses from constraints related to capturing invoice details from documents and ensuring top-notch scanned image quality.

The SMART network serves as a seamless bridge connecting suppliers to their customers, enabling the submission of invoices through completely electronic means in real-time with 100% accuracy. Unlike traditional approaches that limit data capture to a few key fields, this innovative solution offers comprehensive mapping of all data within supplier invoices. It's this commitment to data quality and completeness, along with the remarkable speed of invoicing, that drives efficiency throughout the accounts payable process.

Furthermore, embracing the SMART network creates a compelling business case for both suppliers and buyers. Suppliers no longer bear the costs associated with printing, mailing, or implementing new systems for invoicing. Instead, they enjoy improved chances of receiving timely payments, as their customers can now automate the approval, matching, reconciliation, and payment of each invoice effortlessly. This modern approach ensures smoother accounts payable operations and greater satisfaction for all parties involved.

What is then a realistic aspiration for straight through processing?

As the buyer no longer struggles to convert paper or emailed documents to data suited to their ERP or AP system (but instead receives invoice data from the suppliers with 100% accuracy), a true AP automation process can be employed where invoices can be matched against POs on a line level. Matching recurring invoices against contracts and a full financial approval workflow automation is now achieved for any spend that is not PO or contract based. This in itself does not give you 90% automation, but is the best possible starting point.
This establishes a solid foundation for the identification of the next bottleneck process where further automation can be implemented; whether it is how the business procures the goods or services in the first place, or perhaps identifying further spend categories for POs. In short, once the foundation is right, the automation options are limitless.

While scanning invoices won't give your business 100% automation, it will reduce the stress and workload, allowing your employees to focus on important tasks. With over 25 years experience in BPO, we're a trusted service provider with the skills your business needs to improve efficiency and accuracy. Reach out to Canon Business Services today to see how your business can implement electronic invoicing today.

Frequently asked questions

What is accounts payable invoice scanning, and how can it benefit my business's financial processes?

Accounts payable invoice scanning is a process where specialised software solutions are employed to extract data from paper invoices or scanned documents. It eliminates the need for manual data entry, reducing errors and streamlining payable processing. One of the best invoice scanning software solutions uses machine learning and data capture technology to process invoices efficiently.

What are the key features to consider when choosing invoice scanning software for accounts payable automation?

When selecting invoice scanning software solutions for accounts payable, consider those with advanced data capture capabilities. These solutions can efficiently extract data from paper invoices or scanned documents, reducing the reliance on manual processing and minimizing errors. Look for software that offers seamless integration with your accounting software.

How does optical character recognition (OCR) technology play a crucial role in AP invoice scanning?

Optical character recognition (OCR) technology is a fundamental component of AP invoice scanning solutions. It allows the software to recognise and extract data from scanned invoices, enabling efficient data capture. The best invoice scanning software solutions leverage OCR and machine learning to enhance accuracy and automation in processing invoices.

What steps should businesses take to implement an effective AP invoice scanning system?

Implementing an effective AP invoice scanning system involves several key steps. First, select the best invoice scanning software solution for your business needs. Next, scan paper invoices or upload scanned documents into the system. The software will then extract data from these invoices, reducing the need for manual data entry. Finally, integrate the software with your accounting system for seamless payable processing.

Can you explain the potential cost savings and efficiency improvements associated with adopting invoice scanning solutions in accounts payable management?

Adopting invoice scanning solutions in accounts payable management can result in significant cost savings and efficiency improvements. These solutions eliminate the manual processing of paper invoices, reducing errors and processing time. The best invoice scanning software solutions use advanced data capture technology to optimise payable processing and enhance overall financial efficiency.

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