Automated Invoice Processing: Serving Automated Payments & Batch Transfers

Automated invoice processing solution for auto payments & batch transfer is an essential strategy helping businesses transition from a slow, error-prone process to a fast, accurate, and cost-saving system, reducing operating expenses by up to 70.0%.

Operational Reality: The Challenges of Manual Payments

Invoice Processing: The Foundation for Accounts Payable

The invoice processing operation is the most critical data preparation step, strongly supporting the execution of automated payments and batch transfers.

• Automated Payments (Straight-Through Processing – STP): For a payment transaction (e.g., supplier payment) to happen automatically without human intervention, the invoice data must be accurately verified (value, item code, PO, GR) and validated (on the tax authority portal) from the start.
• Batch Transfers: Businesses with high transaction volumes often group small payments into a batch to reduce bank transaction fees and optimize cash flow. To achieve this, detailed data for all invoices in the batch must be aggregated, standardized, and accurately entered into the Core Banking/ERP system.

Operational Challenges with Manual Execution

The manual invoice processing and payment workflow creates several serious operational challenges:

• Data Gridlock:
  • Slow Extraction: Accounting staff must manually enter data from thousands of PDF/scanned invoices into the ERP system, often leading to errors (mistyped amounts, account numbers).
  • Scattered Data: Invoice information and payment details (account number, beneficiary name) are spread across various documents and systems.
• Payment Delays: The long invoice processing cycle (from 5 – 10 days) delays the creation of batch transfer orders. This causes the business to:
  • Lose Discounts: Miss out on opportunities for early payment discounts from suppliers (often 1.0% – 2.0% of the invoice value).
  • Damage Reputation: Delayed payments negatively impact supplier relationships, threatening the supply chain.
• Risk of Errors Leading to Loss: Mistakes in manual data entry (e.g., wrong account number, wrong amount) result in rejected payment orders or incorrect transfers, costing time and remediation fees.

Actual Data on Manual Cost

• Batch Preparation Time: An average business spends about 2 – 4 hours manually preparing a payment batch of 500 transactions (collecting invoice data, matching, entering bank details into the system).
• Invoice Processing Cost: The cost to manually process one invoice (from receipt to payment approval) ranges from $15 – $25. Automated invoice processing can reduce this cost to $2 – $5.
• Missed Discount Rate: Large companies often miss out on hundreds of thousands to millions of USD in early payment discounts annually due to sluggish invoice processing workflows.

Solution Description: Automated Invoice Processing for Batch Transfer

The Automated Invoice Processing solution utilizes Hyperautomation technology to create a clean, standardized data flow, enabling near-instantaneous automated payments and batch transfers.

Applied Technologies: IDP/OCR and RPA

1. IDP (Intelligent Document Processing) and OCR:
   • Role: Automatically extracts essential data fields from invoices (Invoice, Credit Note) at the line-item level. Provides clean data: Invoice Code, Value, PO Number, Supplier Bank Information.
2. RPA (Robotic Process Automation):
   • Role: The executing robot arm. Automates all repetitive steps from invoice processing to the creation of the final payment file.

Detailed Process Description: Before and After Automation

Before Automation (Manual)

1. Receipt & Extraction: Accountant receives the invoice, manually enters data into the ERP.
2. Verification: Accountant manually performs 3-Way Matching (PO-GR-Invoice) and looks up the invoice validity on the TCT.
3. Batch Preparation: Weekly, the Accounts staff must download data from the ERP, manually check the supplier’s bank information, reformat the Excel file, and create the Batch Payment File according to the Bank’s standard.
4. Upload to Bank: The Accountant must log into the Bank’s electronic payment portal and upload the batch file.
5. Approval: Management manually approves each payment order or batch.

After Automated Invoice Processing (Automated & Seamless)

1. Automated Extraction & Verification:
   • IDP automatically extracts data.
   • RPA Robot automatically performs 3-Way Matching and looks up invoice validity. If it matches (100.0% STP), the data is instantly recorded into the ERP and flagged as “Ready for Payment.”
2. Automated Payment Order Creation:
   • The RPA Robot monitors invoices flagged as “Ready for Payment” on a predefined cycle (e.g., hourly, daily).
   • The Robot automatically accesses the ERP, retrieves the details of these invoices, and automatically generates the Batch Transfer file (e.g., XML ISO 20022 format) according to the Bank’s standard.
3. Automated Payment Instruction Submission (Serving Automated Payments):
   • The RPA Robot connects directly to the Bank’s Core Banking/Payment System via API/SFTP, or simulates user actions to upload the batch file to the electronic payment portal.
4. Electronic Approval & Execution:
   • The System triggers the electronic approval workflow for the payment batch.
   • Once approved, the payment order is automatically executed by the Bank.

Superior Value of the Automated Invoice Processing for Batch Transfer Solution

Success Story: Transforming AP into an Optimized Cash Flow Center

A typical success story in applying automated invoice processing to serve automated payments comes from manufacturing and retail groups with massive transaction volumes.

A Large Retail Group Optimizes Cash Flow

A major retail group with hundreds of stores and thousands of suppliers each month faced significant delays in the payment process, leading to the frequent loss of early payment discounts.

• Challenge: Processing 20,000 invoices monthly. The manual matching, invoice lookup, and batch transfer order creation process took 5 days, forcing the company to only make payments twice a week.
• Deployment Solution:
  • Invoice Processing Automation: Deployed IDP to extract detailed invoice data with over 95.0% accuracy and RPA to perform 3-Way Matching and validity lookup.
  • Payment Process Automation: Set up an RPA Robot to automatically check and aggregate verified invoices every 4 hours, create the batch transfer file, and upload it to the Bank portal.
• Results:
  • Payment frequency increased to daily.
  • Processing cycle reduced from 5 days to 1 day.
  • The Straight-Through Processing (STP) rate reached 75.0% of total invoices.
  • Increased net profit by capitalizing on early payment discounts, estimated to save millions of USD annually.

Lessons Learned

1. Deep Bank Integration: Success lies in the ability to automate the creation and submission of batch payment files directly to the Bank without manual intervention (API Integration or RPA Simulation).
2. Data Quality is Key: IDP/OCR must ensure the accurate extraction of 100.0% of the bank information and amount to avoid the risk of mass batch transfer rejections.
3. Measure by Cash Flow: The effectiveness of automated invoice processing should be measured not only by hours saved but also by the ROI from early payment discounts and optimized bank transaction fees.

Conclusion: Building an Automated Invoice Processing Payment & Batch Transfer Ecosystem

Automated invoice processing is not just an accounting process improvement tool but also the foundation for building a high-performance financial ecosystem, enabling optimal automated payments and batch transfer. By eliminating the burden of manual data entry and verification, businesses can accelerate capital turnover, strengthen supplier relationships, and gain a significant competitive advantage in cash flow management. This is the strategic move every large enterprise needs to make to transform its Finance division into a center of value.