Automated invoice processing in manufacturing helps manufacturing businesses optimize operations, enhance efficiency, and reduce costs. With the massive volume of transactions—from purchasing raw materials and inventory receiving/issuing to finished goods sales—managing invoices and documents becomes a burden, carrying the risks of errors and compliance violations. The solution helps alleviate the burden on the finance and accounting department.
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The Reality of Back-Office Operations: The Invoice Burden in the Manufacturing Industry
The Enormous Volume of Manual Work Overwhelms the Finance and Accounting Department
The finance and accounting (F&A) department in the manufacturing sector faces immense work pressure. Daily, they process a large number of invoices and documents related to complex supply chain transactions:
- Purchasing (Purchase Order – PO): Buying raw materials, spare parts, machinery.
- Goods Receiving/Inventory Issuing: Recording and reconciling the quantity received in inventory against the invoice and purchase order.
- Sales/Finished Goods Issuing: Issuing invoices to customers.
Invoice processing in this sector is a specialized task demanding absolute high accuracy to prevent discrepancies in inventory, cost of goods sold (COGS), and tax obligations. Simultaneously, it must adhere to strict SLA (Service Level Agreement) requirements to avoid disrupting the supply chain operation (e.g., timely payment to suppliers to maintain supply).
Risk of Errors and Impact on Employee Experience
The large volume of work and the repetitive nature of manual data entry and invoice reconciliation are the main causes of human error risks.
- Data entry errors: Miscalculation of amounts, incorrect tax codes, or dates on invoices.
- Processing delays: Lengthening the payment cycle, affecting partner relationships (Suppliers) and leading to compliance risks (late tax submission, administrative penalties).
- Employee experience: Employees must dedicate valuable time to manual, repetitive tasks instead of specialized analytical duties, resulting in reduced motivation and productivity.
Real-World Data on Manufacturing Invoice Volumes
- Practical Example: A medium-sized electronic component manufacturing company might process an average of 5,000 to 10,000 incoming (raw material purchases) and outgoing (finished goods sales) invoices every month.
- With a manual processing speed of about 5-10 minutes per invoice (including receipt, classification, data entry, 3-Way Matching of PO – GR – Invoice, and approval routing), the company requires at least 3-5 full-time employees solely for this task, not including downtime for error correction.
- Research from APQC indicates that the average cost to manually process one invoice can be up to $10 – $25, whereas automation can reduce this to just $1 – $3.
The Automated Invoice Processing Solution in the Manufacturing Industry
The Invoice Processing Automation solution is the key to breaking the cycle of manual work, helping accounting staff focus on strategic tasks.
Process Description and Automation Use Cases
Automation can be applied to almost every step in the manufacturing invoice processing workflow, from receipt to archiving.
Use Case 1: Automated Accounts Payable (AP) Processing
Basic Process:
- Receipt and Classification:
- Automation: Robots/AI scan input channels (email, supplier portals, paper documents), classifying them by invoice type (VAT, Payment Voucher, Receipt…).
- Data Extraction:
- Automation: OCR/IDP technology automatically reads and extracts data (invoice number, tax ID, supplier name, total amount, VAT tax…) into the system.
- 3-Way Matching:
- Automation: RPA Robots automatically reconcile invoice data with the Purchase Order (PO) and Goods Receipt (GR) in the ERP system (SAP, Oracle, Dynamics…). If they Match, the process moves to the approval step. If a Mismatch occurs, an alert is automatically sent to the responsible staff member for exception handling.
- Approval and Payment Routing:
- Automation: Automatically initiates the predefined approval workflow and automatically creates the payment transaction.
Use Case 2: Automated Accounts Receivable (AR) Processing
- Invoice Creation: Automatically generates e-invoices based on the Finished Goods Issue Note.
- Invoice Sending: Automatically sends invoices to customers via email/portal.
- Payment Reconciliation: Automatically reconciles issued invoices with bank deposits.
Golden Technologies in Automated Invoice Processing
Building a comprehensive automated invoice processing solution requires the combination of several advanced technologies:
- RPA (Robotic Process Automation):
- Explanation: RPA uses “software robots” to mimic human actions on software interfaces (data entry into ERP, data reconciliation between systems, sending emails…).
- Application: Robots perform repetitive steps like system login, entering extracted data, executing 3-Way Matching, and initiating payment transactions.
- OCR (Optical Character Recognition):
- Explanation: Technology that converts images (scanned documents, PDFs) into editable text.
- Application: OCR is the first step in reading text and figures on paper or PDF invoices.
- IDP (Intelligent Document Processing):
- Explanation: IDP is an advanced combination of OCR, AI, and Machine Learning. It not only reads but also understands the context and structure (layout) of the document, automatically identifying necessary information fields (Key-Value Pairs).
- Application: Crucial for accurate data extraction from thousands of different supplier invoice templates.
- AI (Artificial Intelligence):
- Explanation: AI and Machine Learning help the system learn from previous processing cycles, continuously improving IDP accuracy and providing predictions/suggestions for exception cases.
- Application: Predicting the correct GL (General Ledger) account for posting and automatically assigning costs.
Superior Value of the Automated Manufacturing Invoice Processing Solution
Adopting this solution brings strategic benefits to manufacturing businesses:
| Value | Details |
| Cost Reduction & Speed Increase | Reduces invoice processing time by $\mathbf{70\% – 90\%}$. Lowers labor costs and operating expenses. |
| Increased Accuracy | Boosts accuracy up to $\mathbf{99\%}$ thanks to IDP/AI technology, eliminating manual data entry errors. |
| Ensured Compliance & Transparency | Automated approval workflows and electronic archiving make auditing and tax compliance easier and more transparent. |
| Cash Flow Optimization | Timely payment to suppliers, utilizing early payment discounts. Improves supply chain relationships. |
| Workforce Liberation | Shifts F&A employees from data entry to high-value activities like financial analysis, forecasting, and risk management. |
Success Story: Applying Automation to Invoice Processing in Manufacturing Enterprises
Deploying automated invoice processing is more than just purchasing software. Success requires a clear strategy and the right approach.
Process Improvement is Key
Before implementing technology, businesses need to review and improve their current processes:
- Standardization: Standardize forms and requirements for invoice formats from suppliers (if possible).
- Simplification: Eliminate redundant, unnecessary steps in the approval or reconciliation process.
- Source Digitization: Maximize the transition from paper invoices to e-invoices/PDFs to optimize input for OCR/IDP.
Automating an inefficient process only creates “a fast way to do inefficient work.”
Implementation Approach from an Akabot Expert Perspective
As an automation solution deployment specialist like Akabot, we adhere to strategic implementation steps to ensure effectiveness:
What is Akabot?
Akabot is a pioneering Robotic Process Automation (RPA) platform in Vietnam, specializing in providing comprehensive automation solutions for business processes, including automated invoice processing. Akabot combines RPA, IDP, and AI technology to create Robots capable of continuous, 24/7 operation.
Strategic Implementation Steps (In Collaboration with Akabot)
- Assessment & Process Selection (Discovery Phase): Identify invoice processing workflows with the highest manual effort and greatest impact on cost/risk. Clearly define inputs, outputs, and related systems (ERP, Accounting).
- Solution Design (Design Phase): Build the detailed automated processing flow (To-Be Process). Select and customize IDP/OCR technology to achieve the highest data extraction accuracy for the specific invoice templates of the manufacturing business.
- Development & Testing (Development & Testing Phase): Build the RPA Robot and integrate it with IDP/ERP. Conduct parallel testing between the manual process and the Robot to ensure $\mathbf{100\%}$ accuracy and compliance.
- Deployment & Operation: Deploy the Robot into the live environment. Establish a management process for monitoring the Robot’s performance and accuracy (Bot Monitoring).
- Continuous Improvement: Use real-world operational data to re-train the AI/IDP model, helping the Robot become increasingly smarter and more accurate.
Typical Success Story: Akabot Case Study
Client Name (Reference): A large Steel Manufacturing Corporation in Vietnam.
Challenge: A volume of $\mathbf{7,000}$ incoming invoices/month (diverse templates, varying scan quality), requiring complex 3-Way Matching (PO-GR-Invoice) and manual posting into SAP.
Akabot Solution: Deployed an Automated Invoice Processing Solution integrating RPA, IDP, and AI.
- IDP automatically extracted data from invoices with over $\mathbf{95\%}$ accuracy from the first time.
- The RPA Robot automatically performed 3-Way Matching in SAP and automated the accounting entry.
Results:
- Reduced the time to process one invoice from $\mathbf{8}$ minutes to $\mathbf{1.5}$ minutes.
- Saved $\mathbf{70\%}$ of the time for the Accounts Payable department.
- Increased data accuracy to $\mathbf{99\%}$, eliminating the risk of penalties for late filing.
Conclusion: The Future of Manufacturing Invoice Processing
In the digital era, transforming back-office processes, especially automated invoice processing, is no longer an option but a mandatory requirement for manufacturing businesses to maintain a competitive edge. By adopting breakthrough technologies like RPA, IDP, and AI, businesses not only thoroughly solve the burden of manual work but also create a solid foundation for future growth and compliance. Start your automation journey today to optimize your costs and accelerate your operations.
