Future Trends in Invoice Automation: What to Expect

Invoicing automation is a fast-growing trend rapidly changing the way organisations manage their finances. According to Forrester's research, this innovative approach can reduce the time and cost of manual invoice processing by a staggering 80%. PwC reports that invoice processing errors are reduced by 90%, and Deloitte highlights that 87% of suppliers see invoice automation as a catalyst for improving customer relationships.

So, it's already clear that invoice automation is shaping the future of business efficiency. By adopting artificial intelligence and machine learning technologies, companies today have the opportunity to significantly reduce invoicing processing costs and relieve their teams of routine tasks. In this article, we take a look at the evolution, current state and future trends of invoice automation and learn how this disruptive technology is changing the financial landscape.

The Evolution of Invoice Automation

An article published by Business Insider in 2013 cited a study by the Federal Reserve Bank of Philadelphia that said paper checks would completely disappear by 2026. While this goal doesn't seem that close, we have made meaningful strides through payment automation by implementing technology to streamline invoice processing. By doing so, businesses can automate a multitude of tasks including data entry, invoice reconciliation and approval. 

In the early days, invoice automation was primarily used by large enterprises, but it has evolved significantly in recent years. Becoming increasingly affordable, invoice software solutions have been adopted by businesses of all sizes. Below we've provided a brief overview of the evolution of invoice automation to understand how the technology has developed over time:

·    In the 1980s and 1990s, invoice automation technology first emerged, and due to its high cost and the complexity of hardware and software, it was for a long time only available to large players in the financial market.

·    In the 2000s, thanks to the development of the internet and computing technology, digital invoicing solutions became more accessible. However, the technology faced many challenges, including those related to scalability and data security, which hindered rapid diffusion and adoption.

·    In the 2010s, with the rise of cloud computing, automation applications became more affordable as businesses no longer needed to invest in expensive hardware and software. In addition, these years saw the emergence of new features such as machine learning and artificial intelligence with which the accuracy and efficiency of invoice processing improved dramatically.

Today, as artificial intelligence has become mainstream, invoice automation is reaching a whole new level, with the addition of a host of new features including intelligent analysis and optical character recognition. All this drives efficiencies, reduces costs, increases accuracy and improves visibility for businesses of all sizes.

Digitalization of invoice processing has matured considerably, and it is now more accessible and affordable than ever before. According to a study by Ardent Partners, about 80% of organizations have already implemented the technology or plan to do so in 2023. Let's take a look at a few important advancements in invoice processing automation that are moving this technology forward at a rapid pace:

·    The use of machine learning (ML) technology to optimize invoice processing and improve overall data quality. The ability to adapt to specific tasks and requirements is a key feature and advantage of machine learning technology. With the ability to process and analyze huge data sets, it effectively identifies patterns and trends. ML-based systems are also capable of identifying standard information such as account numbers, transfer amounts and vendor names, as well as adapting their algorithms to the specifics of a particular business. Another important advantage of the technology is its ability to detect abnormal activity and prevent illegal financial transactions.

·    Implementation of optical character recognition (OCR) technology to automate the process of data extraction from invoices. The main task of OCR is to recognize and interpret information contained in invoices of various formats (including handwritten ones) and languages. The use of OCR allows to overcome language barriers and also eliminates the need for unification of invoices, as it is able to work with any documents including scanned copies and handwritten invoices. Such a breakthrough in OCR technology was achieved through the introduction of the above-mentioned ML, which allows training models to work with different document formats and styles.

·    Integration with Enterprise Resource Planning (ERP) systems to speed up data processing, improve financial control and significantly reduce manual handling. By tightly interfacing the invoice processing system with the ERP, accurate and reliable information is available in real-time, which is important for financial control and informed decision-making. With this seamless integration of the two systems, businesses are able to significantly improve operational efficiency and free up resources for performing non-trivial tasks.

Providing scalable and flexible solutions, modern invoice automation systems enable businesses to save time and money, improve the accuracy and consistency of information, as well as enhance decision-making.

Automation technology in invoice processing continues to evolve rapidly, and several trends are already emerging for the near future:

·    The rise of AI-powered solutions and the even stronger use of machine learning in finance. From error detection and intelligent data extraction to predictive analytics and more accurate and efficient processing, there is still room for improvement in invoice automation systems. As AI and ML technologies rapidly evolve, we will see even more automation systems powered by them in the future.

·    Adoption of blockchain technology. According to experts, blockchain will be increasingly utilized to ensure the security, immutability, and transparency of invoice data, thereby helping to reduce the risk of unauthorized access and fraudulent activities. Many existing and emerging software solutions are already leveraging the power of the blockchain distributed ledger.

·    Mobile invoice approval. As more people interact with online services via mobile devices, we will see the growth of mobile applications that facilitate on-the-go invoice approvals, allowing managers and stakeholders to review, approve, or reject invoices directly from their smartphones, enhancing workflow efficiency.

·Enhanced supplier portals. These portals will become more user-friendly, offering self-service capabilities for invoice submission, status tracking and query resolution. So, they will facilitate better interaction and collaboration between enterprises and their suppliers.

·    Localization and global compliance. Invoice automation developers will adapt their solutions to diverse global tax regulations and compliance requirements, ensuring that invoices are accurately processed according to specific country-level tax laws and regulations.

In addition, automation will reduce the need for paper invoices, which is in line with environmental protection initiatives. All of the above trends will mark a transformational shift ensuring greater efficiency, accuracy, and adaptability to the evolving needs of businesses worldwide.

From sci-fi dream to current reality, AI-based invoice processing has come quite a long way in its evolution and is now reshaping the way businesses manage accounts payable and invoicing. According to a study by PwC, the contribution of artificial intelligence to the global economy will be around $16 trillion by 2030, increasingly removing barriers and opening up new opportunities for businesses.

AI-based systems, thanks to their ability to learn and adapt, enable automation of the entire invoice processing cycle. They are able to automatically extract information from invoices of various formats, validate the data and put it into enterprise applications, thus minimizing manual work and freeing up human resources. Such systems are typically a combination of machine learning, OCR and natural language processing.

Using invoice software to automate process execution solves the following common challenges:

·    Time-consuming manual data entry. By integrating ERP with invoice software, time spent scanning and recognizing invoices is reduced.

·    High probability of errors when entering information manually. Automation systems virtually eliminate human error, thereby preventing more serious concerns. ·    Delays in invoice approval. Occurring due to human error (wrong recipient, busy approver, lost invoice, and others), delays can result in potential late payment penalties. AI-based solutions map every level of approval ensuring invoices are delivered to the right people at the right time.

·    Low transparency and control. Both paper and digital documents can easily get lost among piles of files, making it very difficult to maintain an audit trail and implement two- to three-way data matching. Automation systems use a centralized database simplifying control and fraud detection.

·    Complexity of processing invoices in different formats. From paper documents to PDFs and digital images, invoices continue to arrive in a variety of types and formats. Thanks to ML-based systems' ability to learn and adapt, they are able to quickly and accurately extract information from a variety of sources, which is especially important when working with international suppliers.

In addition, AI and ML-based systems help address the challenges of interoperability and scalability, as well as the complexities of tracking and managing financial flows.

Streamlined Billing and Enhanced Efficiency

One of the most important advantages of invoice automation, which benefits both large and small businesses, is the optimization of billing processes. As a result, the accuracy of previously manual operations can be improved. In addition, automated systems allow for the integration of purchase orders and receipts, creating a seamless end-to-end process.

With this integration, businesses benefit from a faster billing cycle, increased transparency, and the ability to track invoice statuses in real time around the clock. With automatic reminders and notifications, the automated system ensures that invoices are promptly reviewed, approved, and paid, eliminating delays and enhancing cash flow management. Thus, businesses can minimize the time and effort spent on billing tasks and redirect resources to higher-priority tasks.

Thanks to recent significant leaps in machine learning and artificial intelligence technologies, the future is now, and AI/ML-based invoicing solutions are empowering businesses around the world. While the initial cost of implementing automation systems may seem high (especially for smaller businesses), the operational efficiency and long-term savings make them a worthwhile investment.

There are many different AI-based solutions available today, and the success of their implementation depends on making the right choice to match the goals and needs of a particular business. Despite the ability of such systems to adapt to specific tasks, different solutions should be considered to understand their strengths and weaknesses. As AI evolves, its invoice processing capabilities will continue to expand, and in the future, we will see even more efficient and accurate systems that provide seamless integration and intuitive automation.