Managing vendor invoices is a crucial yet time-consuming task for companies. Invoices come in various formats, typically paper or PDF, requiring a dedicated team to manually enter them into a financial system, route them to the relevant managers for approval, and handle revisions if needed. This repetitive, manual process can be inefficient, especially when adjustments are required, resulting in unnecessary delays.
With the help of AI, this process can be automated and streamlined. The key stages of automation include invoice delivery, automated OCR (Optical Character Recognition), AI-assisted coding, and an approval workflow system. Let’s explore each of these steps in detail:
Invoice Delivery
Vendors typically submit their invoices via email or an SFTP (Secure File Transfer Protocol) site. The system is designed to monitor a designated email inbox or SFTP site and automatically retrieve invoices as soon as they are received. Emails or files that don’t pertain to invoices are filtered out, ensuring the system only processes valid invoices.
Once an invoice is picked up from the designated source, an invoice instance is created in the system, and the invoice document is attached to it for further processing.
Automated OCR
The first step in processing an invoice is to run OCR on the attached document. The system submits the invoice to a built-in OCR engine, which extracts the relevant text and numerical data. This extracted information is then stored within the invoice instance, preparing it for AI-assisted coding.
AI-Assisted Coding
AI-assisted coding involves extracting and categorizing specific information from the OCR-processed invoice. The AI engine identifies key fields, such as:
– Invoice date
– Vendor invoice number
– Invoice subject
– Related project, work order, or purchase order ID
– Sender’s name
– Line items, descriptions, and associated costs
The AI engine can be trained to recognize variations in these fields and extract additional details as needed. This flexibility allows the system to adapt to different invoice formats and vendor-specific information.
Once the AI extracts the relevant details, the information is populated into the appropriate fields within the invoice object. The invoice is then ready for review before moving to the next stage.
System Approval Workflow
After the initial review, the invoice is routed through a system workflow to the appropriate manager, who is responsible for approving related projects, work orders, or purchase orders.
If any discrepancies are identified, such as incorrect charges, the system can notify the vendor, requesting revisions before resubmission. After final approval, the invoice is forwarded to the accounting team for payment processing.
Summary
The traditional approach to vendor invoice processing is labor-intensive and error-prone, especially when handling numerous vendors and complex projects. AI-assisted automation significantly streamlines this process, reducing manual input and errors while improving overall efficiency.
While AI may not guarantee 100% accuracy in every instance, the process transforms into one of oversight and exception handling, allowing the AI to manage most of the workload. Over time, the AI engine can be continuously trained to improve its accuracy and deliver even better results.
