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Today, the finance function has more responsibilities than ever. In high-growth businesses, every operation—both front and back-office—is inexplicably tied to investment versus reward. To survive the uncharted road ahead, the modern, forward-thinking finance team has to future-proof their organization for success. Download the guide to discover: – The untamed wilderness of finance – How to forge an accounts payable path – How to strategize your next move – The ultimate accounts payable survival tool – How real-life survivalists scaled their businesses
Still stuck in a manual invoice workflow with paper-based invoices, emails, PDFs, and customer portals?
It’s time to get your business to the next level with state-of-the-art automated invoice processing software, using AI and OCR to save your company costs and increase compliance.
Key Takeaways
- Automating invoice processing can reduce the manual workload by up to 80 percent, enabling finance teams to shift their focus to more strategic initiatives rather than getting bogged down by data entry and paper management.
- Automated systems significantly reduce processing time and cost per invoice, while platforms like Tipalti support EU compliance with built-in VAT validation, Peppol e-invoicing, and GDPR tools.
- Additional benefits of automation include improved financial control through real-time visibility into invoice statuses, accelerated cash flow forecasting, and faster month-end close.
- Automating the process also strengthens supplier relationships by enabling faster, more accurate payments and providing self-service portals that create a transparent and reliable experience for valued suppliers.
What is Automated Invoice Processing?
Putting it simply, it is taking any manual work out of the invoice and accounts payable workflow.
Specialised software such as Tipalti helps replace manual tasks with an automated, intelligent system that captures invoice data, validates it, routes it for approval, and schedules payment using a company’s ERP or bookkeeping and accounting system.
Unlike basic digital invoicing, true invoice processing automation uses comprehensive tech and workflows to redefine the entire process from arrival to settlement. By removing manual tasks like data entry, purchase order matching, and physical routing, a smart automation solution speeds up the payables cycle, reduces errors, and provides visibility.
How Does Automated Invoicing Work?
The traditional manual invoice process involves numerous steps, starting when an invoice arrives, by snail mail, email, or via a software portal. Then the lengthy manual workflow of matching, approvals queues, data entry, and payment and reconciliation kicks off. All of it not only slows things down but also lacks transparency on an invoice’s status.
Automated invoicing transforms the workflow into an efficient digital journey.
- Invoice Capture: When an invoice arrives, it’s automatically ingested. So-called OCR or Optical Character Recognition scans the document and automatically extracts headers and line-level data, such as company details, invoice amount, and goods or services. The software then converts this information into searchable text, mapping it to the right fields and remembering layouts so it can be stored in a system like a database.
- Data Validation: The software subsequently validates extracted data against purchase orders and receipts to check for discrepancies. In case there are any exceptions or anomalies, a notice is sent to the team for human reviews to correct the data, training the AI over time to become more accurate.
- Approval Workflows: Once validated, invoices are automatically routed to the right approvers based on custom rules like department or amount. Approvers are emailed and can approve, reject or comment directly from their inbox, reducing bottlenecks.
- Payment and Reconciliation: After final approval, the invoice is scheduled for payment, which can also be automated. The transaction history syncs with the ERP in real-time, creating an audit trail and simplifying reconciliation.
See How Tipalti’s Invoice Automation System Works
Tipalti automates the entire invoice workflow with a supplier portal, AI OCR, automated coding, and advanced approvals. This frees finance from repetitive, error-prone tasks. For intelligent, automated invoice processing, Tipalti provides an invoice management solution.
Automate payables with control, visibility and scale
Cut 80% of manual AP work and simplify VAT, Peppol, and GDPR compliance. Tipalti centralises invoices and global payments for full visibility and faster close.
Essential Features of Invoice Automation Software
When evaluating invoice automation tools, businesses should look for comprehensive features that improve efficiency and compliance.
End-to-End AP Automation: Look for a unified platform capable of handling the entire AP lifecycle including supplier onboarding, invoice processing, global payments, and real-time reconciliation, all from one console.
Multi-Entity and Global Capabilities: Multi-entity and global capabilities are important for businesses operating in many jurisdictions across Europe or abroad, as they support subsidiaries with different currencies, taxes and approvals from a centralised dashboard.
AI and machine learning: State-of-the-art AI features provide the engine for modern automation. AI-powered OCR ensures accurate data capture that improves over time. AI also suggests accounts for coding based on historical data and detects anomalies or duplicates, reducing fraud risk.
E-invoicing and Peppol Support: Your software should support e-invoicing and Peppol networks, as e-invoicing is increasingly becoming mandatory across the EU. This ensures compliance and streamlines data capture.
ERP Integration: A comprehensive automation solution should integrate with major ERPs such as Oracle NetSuite, Sage, Xero, SAP, and Microsoft Dynamics. This enables seamless, two-way sync of all invoice and payment data, eliminating manual reconciliation.
Benefits of Automated Invoice Processing
Automating invoice processing unlocks significant advantages across the organisation, streamlining procure-to-pay workflows and enabling teams to scale without increasing headcount.
Additional benefits include:
1. Reduced Errors and Risk: Less manual entry reduces costly mistakes and lowers the risk of paying duplicate or fraudulent invoices.
2. Faster Processing and Approvals: Automating workflows slashes invoice cycle times. This ensures suppliers are paid on time, capturing early-payment discounts.
3. Lower Operational Costs: Automating slashes the hard costs of manual processing, including paper, printing and postage.
4. Improved Supplier Relationships: Automating invoice processing frees up employees from tedious tasks. It also gives suppliers transparency through a self-service portal to track invoice status. This improves supplier relationships.
5. Enhanced EU and Cross-Border Compliance: For European businesses, a key benefit is simplified compliance. Advanced systems provide automated VAT and tax handling to support regulations like Making Tax Digital. They also optimise cross-border payments with features like currency conversion. This enhances EU and cross-border compliance.
6. Quicker Month-End Close and Better Forecasting: With accurate, real-time data and faster processing, the month-end close is accelerated significantly. This visibility into spending leads to more accurate cash flow forecasting.
7. Stronger Audit Trails for GDPR: Automating invoice processing creates a complete digital audit trail for every invoice. This strengthens audit trails for compliance with regulations like GDPR.
Customer Spotlight: How Dragoman Achieved 8x Profit Growth
Dragoman works with a global network of freelance translators across 100+ countries. Managing payments in multiple currencies was inefficient, and payment delays were starting to strain relationships with their vital network of linguists. They needed a way to scale their operations without hiring more staff.
The Transformation with Tipalti: By automating their accounts payable, Dragoman transformed their operations. The results were dramatic: the company achieved 4x revenue growth and an incredible 8x net profit growth—all without adding needless complexity to processes.
Tipalti integrates seamlessly with our systems, giving us the efficiency we needed to grow without increasing headcount.
Umit Ozaydin, CEO, Dragoman
Comparing Basic Automation vs. AI-Powered Invoice Processing
When looking at basic invoice processing compared with AI-powered automation, there are a number of business impacts that underline the value of investing in a modern, AI-based solution:
Invoice data capture
- Basic automation (the old way): Uses simple OCR with fixed templates; struggles with new layouts and needs manual fixes.
- AI-powered automation (the modern way): Uses self-learning AI to understand any invoice format, capturing data with high accuracy that improves over time.
- Business Impact: Reduces manual entry, speeds up processing, and improves data accuracy.
Invoice coding (GL)
- Basic automation (the old way): Needs manual code selection or uses rigid rules that can’t handle exceptions.
- AI-powered automation (the modern way): Suggests codes based on history, vendor info, and invoice details, flagging unusual items.
- Business impact: Speeds up coding, reduces errors, and ensures consistent financial reporting.
Approval workflows
- Basic automation (the old way): Uses static approval chains that create bottlenecks.
- AI-powered automation (the modern way): Uses smart routing to suggest correct approvers and automatically escalates based on risk or urgency.
- Business impact: Eliminates bottlenecks, speeds up the cycle, and improves controls without rigid rules.
Fraud and error detection
- Basic automation (the old way): Only checks for exact duplicate invoice numbers.
- AI-powered Automation (the modern way): Uses advanced algorithms to spot suspicious activity, potential duplicates, and unusual vendor behaviour.
- Business impact: Strengthens financial controls, reduces risk of loss, and protects against fraud.
These AI capabilities define true end-to-end automation and are essential for building efficient, scalable finance operations.
Tools to Automate Invoice Processing
The market for invoice processing solutions has grown rapidly, with four distinct categories. Understanding these differences is crucial for choosing a solution that meets your business needs.
| Tool Category | Primary Focus and Scope | Key Strengths | Key Limitations | Best For |
|---|---|---|---|---|
| Basic OCR Software | Data Extraction Only: Converts invoice images or PDFs into digital text data. | • Inexpensive starting point • Digitises paper invoices | • No workflow automation • High error rate requiring manual correction • Creates more work downstream | Micro-businesses or teams looking to eliminate manual typing from paper invoices |
| AP Automation “Point Solutions” | Solving One Specific Problem: Specialises in one part of the AP lifecycle | • Very good at its specific function • Faster to implement than full systems | • Creates data silos with fragmented systems • Lacks visibility across the AP process • Requires multiple logins | Companies with one overwhelming pain point not yet ready for a full platform overhaul |
| Built-in ERP AP Modules | Basic AP Within the ERP: Native AP functionality in an ERP suite | • Data already in one system • No extra integration cost | • Often clunky with poor user interface • Weak AI & OCR capabilities • Limited global capabilities | Businesses with simple, low-volume, domestic AP needs who want to keep functions within their ERP |
| End-to-End AP Automation | The Entire Invoice-to-Pay Lifecycle: Manages everything from supplier onboarding to reconciliation | • Unified platform for the entire process • Deep AI/ML integration with high accuracy • Full visibility and control • Built for scale with global capabilities | • n/a (most comprehensive solution) | Mid-market to enterprise businesses, especially those operating globally or planning to scale |
While simpler tools offer temporary relief for specific issues, only an end-to-end platform addresses the entire accounts payable challenge holistically, eliminating inefficiencies and allowing finance teams to scale operations without increasing headcount.
How to Choose the Right Solution for Your Needs
Choosing the right invoice automation software is critical. When evaluating solutions, key criteria include:
Scalability is critical: The solution should readily grow as your business expands into new geographies and your invoice volumes increase. It should seamlessly scale to support more complex entity structures as well.
Deep integration capabilities with your existing ERP and accounting systems are important to enable real-time syncing of invoice and payment data across systems. Pre-built connectors to major platforms can accelerate implementation.
Compliance is a must: Any chosen software should address relevant regulations like EU e-invoicing standards and GDPR. Features for VAT management, audit trails, access controls, and data encryption are table stakes.
Global readiness is key if you have international suppliers. You’ll want built-in support for cross-border, multi-currency payments and competitive foreign exchange rates.
An intuitive user experience for both finance teams and suppliers directly influences adoption and satisfaction. Supplier self-service portals reduce invoice processing costs and empower vendors.
Evaluating solutions on these dimensions will help you select the right platform to optimise and automate your invoice-to-pay process.
How to Start Your Implementation Journey
To improve your workflow, you first need to understand it fully. Document every single step of your current invoice management process, identifying any bottlenecks, pain points, and areas requiring extensive manual effort.
With your assessment complete and your future goals defined, make a detailed list of must-have and nice-to-have features based on your needs. Consider the invoice volume you handle, the complexity of approvals, integration requirements, and compliance needs. Research vendors that match your requirements closely.
Request demos, look at case studies, and ask detailed questions about their technology, support offerings, and implementation process. Shortlist the vendors that best fit your needs.
Implementing new software also impacts people, so communicate the benefits of automation early to your team and provide comprehensive training. This ensures everyone feels comfortable with the new system and workflows.
Ready to Transform Your Payables Process?
Tipalti offers an end-to-end AP automation platform designed for growing European businesses. It goes beyond basic automation to manage the full invoice lifecycle––from AI-powered data capture to multi-level approvals and global payments across 200+ countries, syncing with ERPs. This integrated approach eliminates manual work, reduces errors, and enables real-time control over EU and global invoicing.
FAQs
How does automated invoicing help with EU compliance like VAT and Peppol?
Advanced automation platforms are designed for EU compliance. They can automatically validate VAT numbers to support Making Tax Digital (MTD) regulations and can receive and process structured e-invoices directly through the Peppol network, which is becoming a standard for public-sector and B2B transactions across the EU. They also create indelible audit trails to help with GDPR compliance.
What is the role of AI in invoice processing automation?
AI is the engine that makes modern automation intelligent. Beyond basic OCR scanning, AI powers intelligent data capture to learn any invoice layout without manual templates, predictive coding to suggest correct GL codes based on historical data, smart approvals to route invoices to the right people based on learned patterns, and fraud detection to identify anomalies and potential duplicate payments that a human might miss.
Will an automation platform integrate with my existing ERP system?
A key feature of a leading automation platform is its ability to integrate seamlessly with major ERP and accounting systems. Solutions like Tipalti offer pre-built, deep integrations with software like Oracle NetSuite, Sage, Xero, SAP, and Microsoft Dynamics. This ensures that all invoice and payment data is synced in real-time, providing a single source of truth for your financials.
See automated invoice processing in action
Streamline your EU payables process, from VAT handling to global payments, with one intelligent platform. Gain control, reduce errors, and scale with ease.
AP Automation 
Mass Payments 
Europe 
Marketplaces
100 – 1000
Business services
Procurement 
AdTech
Software and technology
Healthcare
