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Why enabling a 100% digital and automated e-invoicing process is still a challenge

Spend Matters has extensively covered the digitalization and automation of invoicing. As part of our SolutionMap process for comparing procurement and finance software vendors, we evaluate hundreds of technical and business requirements in support of electronic invoicing. And while each vendor we review has its own area of emphasis and functional strengths, there are some basic capabilities we expect to see in all e-invoicing solutions.

These baseline capabilities span three categories: invoice capture, validation and globalization.

From a capture perspective, an e-invoicing solution should be able to digitize and automate the:

  • Invoice capturing method (i.e., via paper/scan, XML, EDI, PO flip, auto file transfer, mobile scan, manual flat file (CSV, MS Excel), PDF OCR from email or uploaded through a portal)
  • Extraction of invoice content with optical character recognition (OCR) or other technologies, including the use of AI/ML capabilities to improve accuracy

From a validation perspective, an e-invoicing solution should have the ability to fully automate the:

  • N-way auto-matching of invoices at line-item level (PO, receipts, contracts, budgets)
  • Auto-validation of invoices against business rules
  • Auto-validation of invoice coding at the line-item level
  • Auto-validation of invoices against tax rules (header/line-item level), single and multi-authority tax calculations
  • Auto-validation of invoices against commercial rules
  • Approval process, using methods and business rules to expedite/automate approvals

From a globalization perspective, an e-invoicing solution should have the ability to automate:

  • Compliance support for post-audit and clearance countries (e.g., validated invoices, VAT compliance, digital signatures, archiving)
  • Global tax compliance support
  • Trade regulations compliance support (e.g., import tariffs, harmonized calculations)

While these are just the basics, it’s clear that building a comprehensive solution to fully digitize and automate the e-invoicing process is no easy task.

Many leading providers of procure-to-pay (P2P) and accounts payable (AP) automation solutions manage to satisfy most of these requirements. But one capability that still stumps many vendors, however, is the capture and processing of paper and PDF invoices. This creates a challenge for procurement and finance teams, as the move to paper-free (and PDF-free) models makes perfect academic sense, but the pragmatic reality is the journey to get as close to a 100% digital capture model as possible can take years, if not decades.

While digital-first formats (e.g., XML, PO flip) are more often readily supported, invoices submitted via paper or an attached PDF over email may still require manual processing (e.g., scanning) with some vendors, which can result in high processing costs, process errors, duplicate payments, accounting errors and late payments that damage supplier relationships.

In order to bridge the paper and PDF automation gap, e-invoicing solutions must have a robust digitization process for these key invoice delivery methods. Only then can an intelligent business rules engine — powered by AI and machine learning capabilities to validate, map and code the invoice content to comply with the organization’s requirements — truly eliminate the intensive manual effort and process errors that plague accounts payable organizations.

To enable companies to bridge the digital and paper/PDF gaps as a complement to existing P2P solutions and technology, The Shelby Group created a product called Digital Invoice™. The new solution clears a majority of invoices (both verified/complete and “close enough”) without human intervention. This is done through a patent-pending technology that blends machine learning, AI and a robust matching engine for approvals. It works with Coupa’s business spend management platform, deploying customized workflow rules that send an incomplete invoice to the right person for remediation within Coupa — not back to the supplier.

To learn more about The Shelby Group’s Digital Invoice™ solution, see our earlier coverage on Spend Matters.

This Brand Studio article was written with The Shelby Group.