How to Reduce Invoice Processing Time by 50%

Reducing invoice processing time by 50% is achievable with automation, better workflows, and integrated tools. Manual invoice processing can take up to 20.8 days and cost $7.75 per invoice, leading to delays, errors, and missed opportunities. Automation can cut costs to $2.00 per invoice, reduce processing time to 3.8 days, and improve accuracy. Here’s how:

• Automate Key Steps: Use tools with OCR, three-way matching, and workflow automation to handle invoices faster.

• Simplify Approvals: Set clear rules, reduce approval steps, and use auto-routing to avoid bottlenecks.

• Integrate Financial Tools: Sync invoice systems with accounting software for real-time updates and fewer errors.

• Track Metrics: Monitor KPIs like cost per invoice, processing time, and error rates to measure improvements.

Quick Comparison: Manual vs. Automated Invoice Processing

Reduce AP Invoice Processing Costs by up to 80%

Review Your Current Invoice Process

Before diving into automation, take a close look at your current invoice workflow. Mapping out each step can help you identify where things tend to slow down.

Identify Delays and Issues

Here are some common trouble spots:

Manual 3‐way matching is another frequent source of discrepancies [2].

Document your entire process, from the moment invoices are received to when payments are made. Use tools like flowcharts or swimlane diagrams to outline each step, including who’s responsible and how long each stage takes.

Measure Your Current Processing Times

Understanding how long your current process takes is key to tracking improvements. Research from Ardent Partners highlights the gap between manual and automated systems [3]:

Manual Processing Timeline:

• Invoice receipt to validation: 1–2 days

• Validation to approval: 4–7 days

• Approval to payment: 1–2 days

• Total cycle time: 7–13 days

Industry Benchmarks:

• Best-in-class companies: 2.8 days

• Average manual processing: 10.9 days

• Automated processing: 3.7 days

Track timestamps for each stage - receipt, validation, approval, and payment. Calculate the average duration for each step, note exceptions, and compare your findings to these benchmarks.

Interestingly, the approval stage alone can take up 40–60% of the entire processing time. By clearly mapping your process, you'll be better prepared to introduce automation tools that can help eliminate these delays.

Use Automated Invoice Tools

After mapping out your process, the next step to cutting invoice processing time by 50% is automation. With the right tools, businesses can handle much larger invoice volumes efficiently [1].

Key Features to Look For

Modern invoice software should include these features to streamline your workflow:

These features are essential for selecting the right invoice software to fit your needs.

Comparing Software Options: Gotbilled and More

Here’s a quick breakdown of popular solutions available for businesses:

Evaluate your business requirements and budget to choose the best fit before moving on to the setup process.

Steps to Set Up Invoice Automation

1. Prepare Your System
   Update and clean your vendor database, and ensure invoice formats are standardized.

2. Configure Workflows
   Set up approval routes based on invoice amounts and departments.

3. Integrate Your Tools
   Link your automation software with your accounting platform, such as QuickBooks or NetSuite.

4. Test and Train
   Run a pilot program with a small batch of invoices and provide training for your team.

Businesses using automation report processing costs as low as $1.30 per invoice line item, compared to $3.58 for those relying on manual methods [1].

Speed Up Invoice Approvals

With automation in place, you can cut down on approval times significantly. Did you know AP teams spend about 20% of their time - roughly a full workday each week - on invoice processing? Streamlining this process can reduce processing time by up to 50% [4].

Reduce Approval Steps

Simplify the approval process to save time and avoid unnecessary bottlenecks. Here’s how:

• Set clear dollar-amount thresholds for different approval levels.

• Use rules-based approvals for low-value or recurring invoices, so your team can focus on exceptions.

• Assign backup approvers to keep things moving during absences.

• Maintain segregation of duties to strengthen internal controls.

• Allow approvers to make minor edits rather than rejecting invoices over small details [6].

Once these steps are in place, automate routing and reminders to speed things up even more.

Set Up Auto-Routing and Alerts

Automated routing can eliminate delays caused by manual processes. For instance, PinPoint Media improved its workflow by adopting smart, department-based routing [5]. Similarly, Astrid & Miyu shaved two full days off their accounts payable closing time with an automated system:

"Since moving to Payhawk, we've been able to close our accounts payable ledgers two days earlier than with our previous platform! And we no longer dread the end of the month!" – Lucy Payne, Head of Financial Control and Reporting at Astrid & Miyu [5]

Here’s how automated routing can make a difference:

• Route invoices based on factors like amount, vendor category, or department.

• Send automatic reminders for pending approvals.

• Escalate delayed approvals to supervisors.

• Notify finance teams about exceptions that need attention.

• Track timestamps for every approval step.

Top-performing companies process invoices and payments at costs 60–80% lower than their competitors [4]. A great example is MDM Props, which reduced its reconciliation time from 32 hours to just minutes by automating its approval process [5]. Clearly defined approval procedures - complete with timelines and backup approvers - ensure smooth operations, even when team members change [7]. This structured approach not only saves time but also keeps everything under control.

Connect with Financial Software

Linking your invoice processing system to financial tools can cut down on manual tasks and reduce errors. By syncing your AP automation with your accounting software, you can create a smooth workflow that keeps your financial data accurate and current [8].

Software Integration Steps

Follow these steps to plan your integration effectively:

1. Map Your Data Requirements

   Pinpoint the exact data that needs to move between systems. For instance, Superior Masonry cut their processing time by 75% by mapping the flow of invoice data between Stampli and Sage Intacct Construction [9]. Their setup automatically identified key details such as:

   • Vendor information

   • Invoice amounts

   • Due dates

   • Purchase order numbers

   • Account codes

2. Choose the Right Integration Method

   Select integration tools that align with your current systems and business needs. N&N Moving Supplies transitioned to NetSuite for unified accounting, slashing processing time by 84% while improving accuracy across their multi-state operations [10].

3. Test and Validate

   Before going live, thoroughly test your integration. Superior Masonry, for example, used testing to catch issues like vendor overcharges and missing items, ultimately saving over $10,000 each month through automated error detection [9].

Keep Data Accurate Across Systems

Once integrated, ensure your systems stay synchronized. Accurate data is essential for smooth operations. Research shows that 68% of businesses report invoice error rates of 5% or less when proper integration is in place [9].

"We've never been able to stay ahead of job costs until now, and Stampli is one of the big drivers behind that because we can process invoices so fast." - Matt Andersen, CFO, Superior Masonry [9]

To maintain accuracy:

• Use automated validation and matching tools to check invoice details.

• Enable real-time synchronization between platforms.

• Define clear data ownership and update protocols.

• Conduct regular reconciliation checks.

For the best outcomes, include the following features in your integration:

Track and Improve Results

Once invoice approvals are automated, keeping an eye on performance is key. It helps identify bottlenecks and spot areas where things can run smoother. With automation, it's possible to handle up to 4 times more invoices, but only if you continuously measure and tweak your processes [1].

Performance Metrics to Watch

Certain KPIs can tell you if your automation efforts are paying off:

Automated dashboards make tracking these metrics easier, giving you a clear view of what's working and what needs fixing [12].

"The difference between average and exceptional accounts payable performance often comes down to knowing exactly what to measure and how to act on those insights." – Brex [13]

Use these KPIs as a foundation for ongoing process improvements.

Making Regular Improvements

For example, one IT services company managed to cut their purchase cycle time by over half just by monitoring their metrics and making regular adjustments [11].

Here’s how you can keep improving:

1. Conduct Monthly Reviews

   • Compare current metrics with your baseline.

   • Spot bottlenecks in workflows.

   • Track cost savings and efficiency improvements.

2. Gather User Input

   • Collect feedback from your team on any challenges.

   • Set up simple ways for users to share their input.

   • Focus on changes that will make the biggest difference.

3. Update Your System

   • Regularly update your software.

   • Fine-tune machine learning tools.

   • Add new technologies as they become available.

Make sure your efforts align with your company’s goals. For example, if cash flow is a priority, focus on metrics like early payment discounts or improving payment timing [13].

Other tips for ongoing improvements include:

• Breaking goals into smaller, achievable steps.

• Offering regular training to keep your team sharp.

• Reviewing approval workflows every quarter.

• Keeping an eye on industry benchmarks for insights.

Conclusion

Streamline invoice processing and cut time in half with automation and smart workflows. Data shows that AI-powered systems can reduce costs from $12–$15 per invoice to just $2–$3, while speeding up document handling by 75% compared to manual methods [15][14].

For example, Hitachi Payment Services now processes over 36,000 bank statements monthly with 99% accuracy, reducing processing time from hours to just 2 minutes per statement. Similarly, Valtatech slashed invoice processing time from 20 minutes to under 5 minutes, maintaining 98% data extraction accuracy [14].

Here’s how automation impacts key areas:

These metrics highlight how automation reduces errors and boosts efficiency. Companies like Arbor Realty Trust showcase this potential by processing 75,000 claims annually with 99% accuracy and achieving 95% straight-through processing. Such results demonstrate the transformative power of automation.

The right tools, efficient approval workflows, and integrated financial systems are key to success. For instance, ConstructConnect’s use of Zuora doubled processing capacity for smaller teams, proving how the right solution can elevate operations.

Automation is the future of invoice processing. By adopting these strategies and continuously optimizing your approach, you can not only achieve that 50% reduction in processing time but potentially exceed it.