June 24, 2022

Invoice Automation in Logistics - Cost Optimizing Solution for Invoice Processing

Manual invoice processing can be very cost intensive. In addition, the cost of retrieving a lost invoice can be more than invoice generation. In this scenario, invoice automation is the best possible solution to optimize cost of invoice processing and avoid issues like lost invoice, duplicate invoice, double payment, etc.

In a report by IOFM, it costs about $16.67 to process an invoice in comparison to the best-in class accounts payable organizations that did it for $3.34 without human intervention. Hence, reducing cost in accounts payable processes has been the number one agenda for the logistics industry.

While many AP departments across the logistics industry have struggled with challenges such as early payment discounts and timely payments to suppliers, only a few have realized that an invoice automation solution can help them solve these challenges along with helping them reduce time and cost.

What is Invoice Automation?

Invoice automation is defined as streamlining invoice related processes within an accounts payable department . It also includes paying the suppliers without human intervention in some cases.

While multiple organizations around the globe have been using different platforms, softwares, and APIs to partially automate their accounts payable processes and achieve automation with imperative tasks such as invoice data-entry, invoice data validation, storage of invoices data, etc, they have failed to harness the capabilities of an end-to-end automation document processing platform.

Steps Involved in Invoice Processing

To understand the problem, it is important to understand how an invoice is processed in an organization in its most traditional sense.


As explained in the diagram above, the entire process completes in 6 consecutive steps. These are:

  • Creation of the invoice.
  • Printing, posting, or emailing the invoice.
  • Sending the invoice to the accounts team for further processing.
  • Review of the invoice for final authorization of the payment.
  • Paying the overdue invoice to the supplier, vendor, or any associated party.
  • Archival of the invoice to the ledger for accounting purposes.

Depending upon the nature of the invoice, the purpose, and the organization, there may be subtle additions to the processes mentioned above. Although in entirety much of the process remains the same industry wide.

Limitations of Manual Processing

Including the cost of processing an invoice, there are multiple other variables that limit manual processing. Manual processing requires a lot of re-handling and re-entry of the same data. This leads to human induced errors, slow processing, loss of data, duplicate payments, overpayment, loss of early payment discounts, etc.

It is estimated that with a paper-based invoice, it can take upto 23 days to complete a single cycle i.e. if the process is completed with zero challenges. Additionally, the same process can extend upto 90 days with multiple usually incurring challenges, thereby, reducing the efficiency of the Accounts Payable department.

Challenges Leading to Delayed Payments during Invoice Processing

Invoice processing in the logistics industry is a series of tasks done in progression to fulfill payments and record data for general ledger. With prominent challenges associated with the process and simultaneous other processes, employees have to constantly manage their responsibilities, thereby, leading to delays.

Below are the most common challenges faced in processing logistics invoices.

Huge Volumes of Invoices

In a report by Billentis, an estimate of 550 billion invoices were produced in the year 2019. In addition to that, the volume of invoice-like documents and messages in the same year was likely to be 5 to 15 times of the actual invoices depending on the geography. This data is also relevant to business transactions, therefore, needs to be processed or recorded in one way or the other.

Depending upon the scale of the logistics company i.e. SMEs, MSEs, and Large enterprises, the reliance on document-centric processes can vary but the sheer volume of invoices produced is still a huge call for invoice automation.

Multiple Invoices with Multiple Formats

There are multiple types of invoices that serve different purposes for Accounts Payable. For example standard invoice, pro forma invoice, credit invoice, commercial invoice, recurring invoice, etc. Additionally, there are also multiple formats accounts payable has to deal with. For instance, a standard invoice can be of varied formats depending upon its source (i.e. different companies) and geolocation. This acute problem leads to challenges such as sorting of documents and processing large volumes of unstructured data that validates payment approvals.

Supplier Management

Suppliers onboard provide early payment discounts for the shipment when the payment is released by the accounts payable under a definite timeline. If this condition isn’t met, the company has to pay the usual price. Also further extension can lead to penalties, poor relationships, or both.

With maintaining multiple suppliers and inquiries including manual invoice processing, and emails, supplier management requires lots of data re-entry, duplicate data, incorrectly recorded key documents, etc. creating friction internally delaying the approvals on time.

Strategic Tasks

AP departments spend a huge share of time working with repetitive invoice processes such as data entry, data extraction, data validation etc. Additionally, they are also required to perform strategic tasks such as data analysis, forecasting, vendor master data cleanup, etc that are often left behind because of invoice processing.

Multiple Standalone Systems

From creating a purchase request to its final payment, there is a complex network of processes that work in unison. This accounts for multiple standalone systems that often falter because of their codependency. For instance, creating a purchase request then confirming the request externally (by inventory management) to its final approval from the authority, there are multiple standalone systems at work. This points towards an invoice automation solution that can collaborate these standalone entities and turn it into a system of cumulative progress without breaking the flow.

Poor Visibility

Accounts Payable clerks spend half of their time searching for a required document. This time can be excruciatingly high with file cabinets and dockers working against urgencies.

Even if the data is digitized and stored in a desktop, it takes a decent amount of time for a PC to search a particular file (especially if it isn't being used often). It happens because PCs are limited by cache memory and cannot provide the required document instantly (everytime). On the contrary, it is possible with a cloud-based central repository.

No Scalability

In a survey report by Aberdeen Group, 33% of the participants agreed to have faced challenges while processing huge volumes of data with the existing staffing level. Manual processing isn’t scalable. With an increase in the number of invoices to process, the organizations are also required to upscale their workforce to finish off the work in time.

On the flipside, with invoice automation using platforms like IDP, the number of documents processed can be both upscaled and downscaled without wasting any additional resources, assets, or costs.

What are the Technologies that can Improve Invoice Automation?

Today organizations are shifting towards AI Intelligence to negate redundant processes, optimize workflows, and automate repetitive tasks. It ensures that the employees are not limited, instead, they are empowered and have the time & capacity to use their intellect for processes that require their attention.

Below are some technologies that hold the power to transform the logistics industry while making invoice automation easier for them.

Artificial Intelligence: Artificial Intelligence gives the power of intellectual responses to a machine just like a human. In invoice automation, AI can help improve overall performance of the accounts payable department and help optimize the workflow.

Computer Vision: This technology helps computers derive information from an input i.e. image, video, or text. For invoice automation having computer vision can aid tremendously in scanning out information from an invoice, thereby, accelerating the data entry process manifolds.

Natural Language Processing: Natural Language Processing works in coherence with computer vision. NLP provides contextual references to the data computer vision is scanning.

An automated digital system can scan data out from an invoice but it cannot understand it. With NLP, a digital system can understand the extracted data further aiding in situations where the invoice automation solution has to make decisions on its own.

For example, with two formats of invoice, if the vendor name has to be extracted and stored into the database, NLP will look for “Name” entry in both the invoice and extract the data that is there in the entry & store it into the final database. It happens because NLP associates with the phrase “Name” based on its past experiences.

How can VisionERA Help in Improving Invoice Automation?

VisionERA is an IDP platform that helps organizations with heavy document volumes in automation of related processes end-to-end. To enable automation, it takes the help of advanced proprietary technologies like artificial intelligence (AI), machine learning (ML), natural language processing (NLP), and computer vision.

The platform is DIY customizable, scalable, and provides better visibility to documents as per any organization's requirements. Adding to it, it is also cloud native helping organizations to centralize their database not only in their existing infrastructure but in cloud as well.

Apart from this, it offers best in class features like automatic gridlining, industry beating table detection system, autocorrection, etc. It comes with a continuous feedback learning mechanism which helps the platform learn, evolve, and not make the same mistakes ever. VisionERA requires zero sample training and can be easily operated by anyone with zero coding experience.

It allows organizations to have their own DIY custom workflow along with the desired document types. It can process thousands and millions of documents without any manual intervention by using the desired document as a source of truth for verification for example driver’s license, social security number certificate, passport, etc.

VisionERA is an industry and use case agnostic solution that works on its 3D principles i.e. decode, decipher, and decide. Its compelling features and processing capabilities makes it a one-stop solution for any organization’s document processing needs.

Final Words

With accounts payable departments, invoice processing is the toughest cookie they might have to break. With invoice automation, employees can be further empowered to work diligently while helping them avoid the redundant, repetitive, and mundane everyday menial tasks such as data entry and data validation for colossal amounts of documents. Automating the entire invoice automation process can even help the logistics industry to enjoy the benefits of timely payments along with maintaining great relationships with suppliers.

To know more about the endless benefits that an IPD platform such as VisionERA brings for the accounts payable departments in the logistics industry, talk to our automation experts today.

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