The Smart Automation solution (Intelligent Automation) in invoice processing is a combination of RPA, IDP, and AI – designed to free the Finance and Accounting department from repetitive work, achieve superior productivity, and ensure absolute compliance.
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Manual Invoice Processing – The Operational Burden on the Accounting Department
Invoice Processing Operations: A Mandatory Procedure
The invoice processing operation in the Finance and Accounting department is the backbone procedure for confirming liabilities and making payments to suppliers. It involves many complex steps:
- Invoice Receipt: Collecting invoices from multiple sources (email, paper, supplier portals) in various formats (XML, PDF, scanned image).
- Data Extraction: Manually entering invoice information (date, amount, item code, tax, VAT) into the ERP/Accounting system.
- Verification & Matching: Checking the invoice validity (on the General Department of Taxation website) and matching it against the Purchase Order (PO) and Goods Receipt (GR)—the 3-Way Matching process.
- Approval & Payment: Routing the invoice through the approval workflow and finally executing the payment.
Operational Challenges with Manual Invoice Processing
When the above process is performed manually, businesses face a series of challenges:
- High Risk of Errors: Manual data entry from invoices in different formats is prone to typing errors (incorrect amounts, PO numbers, account numbers), leading to discrepancies in ledgers and liabilities.
- High Operating Costs: The large volume of repetitive work requires a sizeable Accounting staff, consuming high labor costs and time.
- Payment Delays and Supplier Relations: The extended invoice processing cycle (5 – 10 days) delays payment, reducing credibility, leading to the loss of early payment discounts, and threatening the business’s production and business supply chain continuity.
- Compliance Difficulties: The lack of an automated mechanism to verify invoice validity on the General Department of Taxation website creates a risk of expenses being disallowed by tax authorities during audits.
Actual Data on the Manual Burden
- Processing Time: Manually processing a complex invoice requiring 3-way matching typically takes an average of 8 – 15 minutes.
- Data Entry Errors: The manual data entry error rate in AP operations ranges from 3.0% – 5.0%. With thousands of invoices, the number of errors requiring correction is substantial.
- Processing Cost: The cost per manual AP transaction (including labor and exception handling time) can range from $15 – $25, whereas automation reduces this cost to only $2 – $5.
Smart Automation (Intelligent Automation) Solution for Invoice Processing
The Smart Automation solution is an upgrade from traditional automation, utilizing cognitive technologies not only to execute actions but also to read, understand, and make decisions.
Applied Technologies
The solution integrates the following technologies to create a closed, intelligent process:
- IDP (Intelligent Document Processing) & OCR: Uses Artificial Intelligence (AI) to extract detailed data, even from unstructured invoices or scanned images, with high accuracy.
- RPA (Robotic Process Automation): The Robot simulates human actions to access ERP systems, banking portals, and the TCT portal.
Detailed Description of the Invoice Processing Workflow
| Before Automation | |
| Step | Manual Description |
| Receipt | The Accountant downloads the invoice PDF from email, prints it, or opens the file. |
| Extraction | The Accountant manually types each line of data into the ERP (SAP, Oracle). |
| Verification | The Accountant opens the TCT portal, manually enters the Lookup Code and Captcha; Opens the PO and GR files to cross-reference them in Excel. |
| Payment | The Accountant manually creates the Batch Transfer File and uploads it to the bank portal. |
After Smart Automation Implementation (Centralized & Automated)
- Automated Data Collection and Extraction:
- RPA Robot automatically scans email, folders, and supplier portals to collect invoices.
- IDP automatically reads, classifies, and extracts all data (including line-item) with high accuracy (95.0%).
- Fully Automated Verification and Matching:
- RPA Robot automatically accesses the General Department of Taxation website (with integrated AI to solve Captcha), looks up invoices in bulk, and records the results.
- The Robot automatically connects to the ERP to perform 3-Way Matching (PO-GR-Invoice).
- Intelligent Exception Handling:
- The AI system automatically classifies exceptions (price, quantity discrepancies) and applies the Tolerance Threshold.
- Only exceptions exceeding the threshold are routed to the electronic approval workflow for managers, achieving a high Straight-Through Processing (STP) rate.
- Automated Payment & Batch Transfer:
- Invoices with a 100.0% match are automatically aggregated by the RPA Robot, which automatically generates the Batch Transfer File (standard bank format) and sends it out. The entire process from invoice receipt to payment order creation occurs automatically.
Traditional Automation (RPA) vs. Intelligent Automation
| Criterion | Traditional Automation (RPA) | Smart Automation (Intelligent Automation) |
| Data Handling | Structured data | Unstructured data (PDF, images, email). |
| Invoice Extraction | Can only enter data that is already digitized. | Automatically reads, understands, extracts, and standardizes data (thanks to IDP/AI). |
| Invoice Lookup | Repetitive manual Captcha entry, prone to failure when Captcha changes. | AI automatically solves Captcha, ensuring continuous invoice lookup. |
| Matching | Only performs simple logical rules. | Performs complex 3-Way Matching, with Machine Learning capability to classify exceptions. |
Value of the Invoice Intelligent Automation Solution
| Value | Specific Metrics |
| Cost Reduction | Reduces invoice processing costs by 70.0% – 85.0% ($15-25 per invoice reduced to $2-5 per invoice). |
| Speed Increase | Shortens the invoice processing cycle from 10 days to 1 day. |
| Accuracy | Increases data entry accuracy to 99.0%. |
| AP Efficiency | Increases the Straight-Through Processing (STP) rate to 70.0% – 80.0%. |
| ROI | Achieves high ROI (Return on Investment) by capitalizing on early payment discounts. |
Success Story: Freeing Up Financial Resources with Invoice Intelligent Automation
The success stories of large corporations prove that Invoice Intelligent Automation is the key to transforming the Finance function into a strategic center.
Multinational Manufacturing Corporation
A Foreign Direct Investment (FDI) group in the electronics component manufacturing sector in Vietnam had to process 15,000 incoming invoices monthly, with dual compliance requirements (Vietnam & Parent Company HQ).
- Challenge: 70.0% of the Accountant’s time was consumed by manual data entry, invoice lookup, and matching in SAP.
- Solution: Deployment of the Intelligent Automation Solution, integrating a Machine Learning IDP model to handle multi-language invoices and an RPA Robot to fully automate the entire process: extraction, 3-way matching in SAP, TCT invoice lookup, and automated payment file creation.
- Results:
- Reduced processing time by over 80.0% per invoice.
- Allowed Accountants to focus on exception management and financial analysis, enhancing the employee experience.
- Ensured dual compliance and shortened the closing cycle, supporting the global consolidated reporting process.
Lessons Learned
- Start with Data: Ensure the quality of input data. Smart Automation requires investment in high-quality IDP technology to address the challenge of unstructured invoices.
- Deep Integration: Success comes from seamless integration between the Robot (RPA) and the core ERP system (SAP, Oracle) and the TCT portal.
- Measure by STP Rate: The goal is to maximize the Straight-Through Processing (STP) rate, leaving only the exceptions (usually below 20.0%) for human intervention.
Conclusion: Smart Automation – The Future of Invoice Processing
Smart Automation is the definitive solution for reducing the burden of manual invoice processing. By combining the power of RPA, IDP, and AI, businesses can not only eliminate the risk of errors and speed up payment but also free up valuable Accounting resources to focus on strategic activities. This is an investment that delivers a dual benefit: enhancing operational efficiency and firmly strengthening the foundation of financial compliance.
