A Guide to Approve/Reject Invoices Based on Business Rules

Invoice processing is collateral to every organization. Every organization receives tons of invoices that are to be manually processed and verified before authorization.

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Every step of the process is important, however, it is time, resource, and cost intensive. To make this process much more efficient various companies have started to adopt invoice automation solutions for complete end-to-end workflow automation.

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The article below is a brief overview on how VisionERA IDP (Intelligent Document Processing) can achieve the same for any organization.

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To learn more, read ahead…

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Business Rules for Approving/Rejecting Invoices

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Business rules for approving/rejecting invoices are business terms or contractual obligations predetermined between the company and supplier. In addition to that these can also be certain data points that need to be there in the invoice in order to make it legible. However, since it depends on the two parties forming a contract, there are chances that they might differ. 

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Below we have created a list of business rules or obligations that need to be fulfilled in order to make a payment legible between the two parties. These are:

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• Payment Terms: A majority of companies take supplies on credit. These credits are provided on pre-defined payment terms that are to be met within a specified period of time i.e. 30 days, 60 days, and 90 days. Large organizations usually have more power for negotiation and the credit in there can actually go up to 90 days. Post that the company loses credibility and pre-payment bonus from the supplier.
• Pricing: The pricing of the merchandise needs to be predefined per unit and bulk. Often suppliers would charge differently for single units and would provide trade discounts on bulk purchases. In case of organizations and companies often these terms are predefined and catered too as business rules. 
• Payment Acceptance Mode: It is important to discuss the payment modes beforehand. It is because for instance in India, one can make UPI payments i.e. a real-time payment service but in the UK, one needs to go to the bank for fund transfer. Therefore, it becomes important that organizations predefine it for the sake of ease.
• Invoice Addressing: In a company payments are processed by accounts payable, however, they don’t have the right to authorize it. In general, this power is only given to certain individuals and sometimes delegated for lower value invoices. To achieve this, the invoices need to be addressed to the right authority both in case of the company and supplier. These sets of business rules are also pre-defined.
• Invoice Number: There can be other data points other than invoice number that are essential to an invoice. However, an invoice makes an invoice unique and easily traceable. Therefore, the format of these invoice numbers are also predetermined often between two parties that partake in the trade.

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VisionERA - Helping in Accepting/Rejecting based on Business

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Here are the following steps that will help approval/rejection of invoices based on business rules. These are:

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• Upload of invoice batch files onto the VisionERA platform.
• Verification of invoice data from the internal database for data points such as supplier name, contact, etc.
• Application of business logic. For example, the price is equal to $100 per unit.
• Notification for invoices that didn’t match the criteria.
• Extraction of all the remaining verified data into the spreadsheet or downstream application.

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Steps to Process Invoice in an Organization

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To process an invoice, an accounts payable department goes through a series of steps. Below are the generalized steps that are taken to cater the workflow of invoice processing.

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Note: The steps taken can change depending upon the company and the industry creating slight variations in the steps mentioned below.

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Step 1: Tracking and Verifying the Information

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There are certain data points that are considered while verifying a purchase. These are:

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• Date of Invoice creation and the date on which the invoice is sent from the supplier.
• Information such as contact, billing, etc. for both the purchaser and the supplier.
• Purchase service, pricing, and payment details.

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Each of these data points are carefully verified for ensuring the payment correctness and last day of payment. Once this step is completed, accounts payable moves to the next one.

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Step 2: Entry of Data and Ledger Coding

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After the data points are verified for correctness, manual entry of data into the system takes place. To handle the transactions correctly, general coding of ledgers are utilized that describes all the debits and credits.

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Step 3: Approval of Invoice

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Once step 1 and 2 are completed, accounts payable forwards the request for payment to the authorized parties. The moment these payments are authorized, the trade payables are made to the supplier for the services rendered.

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Limitations of Invoice Processing Steps in Organizations

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There are several limitations of the invoice processing cycle that can increase the operational cost by huge margins. For instance:

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• Manual data verification
• Manual data entry
• Huge volumes of unstructured data
• Less streamlined workflow
• Slow processing
• Time consuming approval process
• Cost incurred on processing a single invoice

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VisionERA - Automating Steps for Invoice Processing

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Below are the solutions provided by VisionERA IDP (Intelligent Document Processing) platform that can automate the invoice processing cycle.

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Step 1:

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During this step, accounts payable have to verify huge volumes of invoices from their own database or information submitted from a new supplier. Manually verifying these invoices is a time, resource, and cost intensive process. In fact, the cost of processing a single invoice can average out to $15. This cost can be reduced by 70% to 80% post invoice automation.

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VisionERA IDP is capable of verifying these invoices on the go using the internal database. Once a batch file is submitted to our platform, the information received on the other end is verified. In case of an exception, the platform will raise a notification and would ask to manually intervene.

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Step 2:

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Data entry can be a cumbersome task. However with VisionERA, the user is simply required to upload the batches of invoices. Once the workflow has been established with all the key values that need to be extracted, the platform will automatically extrapolate all the data into a spreadsheet or update it into any downstream application of the user’s choice. The system can also be configured to update data along with the ledger coding by predefining the data type using accounting procedures. This connection between VisionERA and downstream applications is created using APIs.

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Step 3:

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At this step, the organization can choose to use an RPA solution. An RPA solution is a combination of RPA bots that can be preconfigured to perform an operation automatically i.e. forwarding of information to relevant authority in this case. 

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Once the entire setup is laid down, each of the concerned parties only have to provide their inputs only when required. The work that demanded manual operations at every front would be automated completely. It would mean that the accounts payable has to only work as a moderator and the rest of the operation would be completed automatically.

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Note: VisionERA is currently being offered at $0 invoicing.

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To see VisionERA in action, simply use the link here to set up a detailed walkthrough with our automation experts. To use by yourself, click here to reach the trial version.

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