Modern Digital Business | DocuWare Blog

Invoice Automation: Streamline Invoice Processing and AP Workflows

Written by Joan Honig | Feb 12, 2026
 
Surprisingly, Invoice processing is manual across many US organizations. According to industry figures, 68% of companies still key invoice data by hand, carrying a cost of around $15 per invoice and causing processing delays that can stretch up to two weeks.  
 
Invoice automation shortens the path from receipt to approval and payment. Organizations adopting automated workflows can reduce costs to less than $4 per invoice and cut processing time by up to 80%.
 
In this blog post, we explain what invoice automation is, how it works step by step (from capture to payment), and the benefits and KPIs your business should track. We’ll also outline the features to look for when selecting invoice automation software and share how companies like M.H. EBY Inc. speed up approvals with a document management solution.

Table of Contents 
 

What is invoice automation? 

Most finance teams are trying to reduce backlogs, avoid rework, and keep invoices moving to take advantage of early payment discounts. Invoice automation relieves these pressures by replacing manual handoffs with structured, trackable workflows. 

Definition in the AP context 

Invoice automation refers to the end-to-end handling of supplier invoices. In an accounts payable (AP) environment, this includes: 
 
  • Capturing invoices from multiple channels. 
  • Extracting and validating data.
  • Matching invoices to purchase orders and proof of delivery.
  • Routing invoices for approval and posting them to accounting software or an ERP.
  • Forwarding approved invoices for payment. 
Put simply, invoice automation takes the steps AP teams already perform and applies consistent business rules, so each step happens faster with fewer errors. 
 
One point that often causes confusion is the difference between invoice automation on the accounts payable (AP) and the accounts receivable (AR) side. They solve different problems and apply to different teams: 
 
  • Invoice automation (AP): Receiving, validating, approving and paying supplier invoices.
  • Automated invoicing (AR): Generating and sending invoices to customers.

Manual vs. automated invoice processing at a glance 

For many AP teams, manual invoice processing is defined by interruptions. Invoices arrive through different channels, data is entered into multiple systems, and approvals depend on email   follow-ups. Small delays compound quickly, especially as invoice volumes grow. 
 
A manual invoice processing day often looks like this: 
 
  • Checking shared inboxes and downloading invoice attachments.
  • Printing or saving invoices to local or network folders.
  • Keying invoice data into your accounting software or ERP.
  • Emailing invoices for approval and chasing responses.
  • Filing documents for future reference. 
Invoice processing automation streamlines this workload. Invoices are captured once, predetermined rules guide their movement, and their status is visible at every step.  
 
With an automated workflow: 
 
  • Invoices from all sources flow into a single, digital workspace.
  • Data is captured and validated automatically. 
  • Approval routing follows predefined rules.  
  • Invoice status is always visible without manual checks. 
  • Documents are searchable throughout their lifecycle. 
  • Automation replaces fragmented handoffs with a structured process that scales as your business grows.  

How the invoice automation process works 

Invoice automation follows a clear path from the moment an invoice arrives to the moment it is paid and archived. While every organization configures the details differently, the core stages are the same. 

Step 1: Invoice capture from every channel 

Invoices reach AP teams through many routes — including email, supplier portals, scanned paper invoices, uploads from shared folders and Electronic Data Interchange (EDI) feeds. 
 
AP automation consolidates incoming invoices into a centralized solution, preventing lost invoices and enabling monitoring from day one. 

Step 2: Data capture and validation 

Once invoices are captured, traditional OCR or intelligent document processing extracts key data points such as: 
 
  • Vendor name and invoice number. 
  • Invoice and due date. 
  • Purchase order number. 
  • Line items, taxes and totals. 
Validation rules check whether required fields are present, totals align correctly, and the invoice matches a vendor already in the system. Potential duplicates or anomalies are flagged at this stage, before they create delays.  

Step 3: Matching and coding 

Invoice automation supports different processing paths depending on the invoice type. 
 
For PO-based invoices, the system performs 2-way or 3-way matching against purchase orders and goods or services received. Configured tolerances allow minor variances to pass automatically while routing larger discrepancies for review. 
 
Non-PO invoices are coded to general ledger accounts and cost centers using predefined rules or historical patterns. Suggested coding based on vendor and past transactions reduces manual effort while still allowing reviewers to intervene when needed. 
 
Exceptions, such as missing POs, partial receipts or pricing discrepancies, follow defined escalation processes, so one issue does not stall other invoices in the queue. 

Step 4: Approval workflows 

Approval workflows route invoices to the right people based on factors such as amount threshold, department, project, vendor or invoice type.  
 
Approvals can be configured (parallel or sequentially) and completed through a browser or mobile device, so every action is recorded with timestamps and comments. Automated reminders and escalation paths help prevent invoices from stalling when approvals are overdue. 

Step 5: ERP and accounting integration 

Once approved, invoices are prepared for posting in your accounting system or ERP. Depending on the software’s configuration, this may involve automatic posting of approved invoices or the creation of preposted entries for final review.  
 
This step keeps vendor master data, cost centers and general ledger accounts in sync to avoid duplicate maintenance. Status updates flow back into the invoice automation platform, so AP teams can see at a glance which invoices are posted, pending, or need attention.  

Step 6: Payment processing and status reporting 

Invoice automation prepares approved invoices for payment by feeding clean data into the ERP or integrated payment solutions. Invoices are grouped into payment batches for checks, automated clearing house (ACH), cards or virtual cards, without manual rework. 
 
AP teams can see what is due, when it is due, and under which payment terms, which supports better timing decisions and the capture of early-payment discounts. Invoice status remains visible throughout the process, from received ​→​ approved ​→​ posted ​→​ paid, reducing uncertainty and follow-up work. 

Step 7: Archiving, search and audit trail 

After payment, invoices and related documents, such as purchase orders, receipts, and contracts, are stored in a secure digital archive.  
 
Retention policies ensure records are kept for the required period, while metadata and full-text search make it easy to locate invoices and supporting documents when needed for audits, compliance requirements and internal reviews. 

Why invoice automation matters to finance teams  

AP automation addresses these issues by: 

Reducing manual workload and errors  

  • No more manual keying, re-keying into the ERP, or repetitive data lookups. 
  • Reduced risk of mis-keyed amounts, incorrect vendor selection, or duplicate payments. 

Speeding up cycle times and keeping suppliers happy  

  • Shortened time from invoice receipt to approval and payment, avoiding late fees and missed discount opportunities. 
  • Clear status visibility for AP teams and business stakeholders, reducing back-and-forth with suppliers. 
  • Strengthening control, compliance and fraud prevention. 
  • Standardized approval chains, delegation rules, and segregation of duties (SoD) embedded directly into workflows. 
  • Consistent duplicate detection, tolerance checks and anomaly flagging reduce fraud and payment leakage. 

Improving visibility and cash flow planning  

  • Real-time dashboards show open, approved and paid invoices. 
  • Supports accurate cash forecasting and more strategic scheduling of payments. 

Manual vs. automated invoice processing 

Manual and automated invoice processing reach the same endpoint, but they get there in very different ways. The table below highlights how those differences affect day-to-day AP work. 
 

Before/after comparison table 

Action  Manual Invoice Processing Automated Invoice Processing
Intake and capture  Scattered (email, scanned paper, shared drives) Centralized (OCR/IDP capture from multiple sources)
Data entry   Manual keying, prone to errors Automated OCR/IDP extraction, faster and more accurate
Matching   Ad-hoc checks, inconsistencies Rule-based PO/GR matching, reduces errors and delays
Approvals  Email chains and spreadsheets, slow Structured workflows with SLAs, faster approvals
Cycle time   Days/weeks, prone to delays Hours/days, quicker processing times
Visibility Limited, reactive status tracking Real-time dashboards, proactive monitoring
Compliance and audits   Hard-to-trace paper trail, high risk Built-in logs, retention policies, and audit trails  
AP team experience  High stress, repetitive tasks, low value More analytical, exception-focused work, higher productivity

Common misconceptions about invoice automation 

“We are too small / too complex”  

Invoice automation’s value is not limited to large enterprises. Small and mid-size organizations often see the most significant results, especially when they operate from multiple locations. Automation helps bring structure to complexity by applying consistent rules across invoices, even when the underlying systems or processes vary. 

“We have to standardize everything first”  

Full standardization is not a prerequisite for invoice automation. Many teams start with a limited scope, such as one department or invoice type, and expand over time.  
 
Configuration options allow workflows, approval rules and tolerances to reflect current processes while gradually introducing more consistency. This incremental approach reduces disruption and makes change easier to manage. 

Key features to look for in invoice automation software 

When finance teams start evaluating invoice automation software, feature lists can quickly grow long. Focusing on the following capabilities will help you find a solution that meets your day-to-day needs: 
 
1. Capture and data extraction: Automation software should be able to handle invoices from all the channels they already arrive via, including email, scans, supplier portals and EDI. OCR or intelligent document processing reliably extracts key data without requiring constant correction, even when invoice formats vary by vendor. 
 
2. Approval workflows: Approval workflows should be flexible enough to meet the needs of different departments. This includes routing based on amount, vendor and cost center, along with reminders and escalation paths.  
 
3. ERP and payment integration: Your new software should integrate cleanly with existing ERP and accounting systems so invoice data can be shared without rekeying or manual reconciliation. Integration with payment processes is equally important, allowing approved invoices to flow into payment runs without extra handoffs. 
 
4. Visibility and reporting: Built-in dashboards will help your AP team understand what is waiting, what is approved, and what is paid at any given time. Reporting should make it easy to monitor cycle times, workloads, and exceptions without exporting data into spreadsheets. 
 
5. Security and compliance: Invoice data includes sensitive financial information, so formal access controls, encryption, retention policies and audit trails are essential to ensure compliance. These features also support internal governance and reduce the effort required to prepare for audits. 

Case Study: M.H. EBY Inc. — Faster invoice approvals with DocuWare 

M.H. EBY Inc. is a US-based manufacturing company that builds custom transportation equipment, operating across multiple locations and departments.  
 
Before adopting DocuWare, invoice and purchase order approvals relied on physical mail, scanning paper documents and manual handoffs between sites. This added days to the approval process and made remote work difficult to support. 
 
The company began using DocuWare to enable remote approval of invoices and purchase orders without slowing operations. They initially focused on accounts payable, where simple digital workflows replaced manual routing and mailing documents. Invoices are captured electronically, indexed automatically, reviewed by AP staff, and routed for approval. 
 
For the AP team, the most immediate impact has been the removal of delays caused by working with paper documents and manual follow-up. Invoices no longer need to be collected, packaged and sent between locations for review. Instead, approvals are completed remotely, keeping invoices moving even when teams are not onsite. 
 
With DocuWare, M.H. EBY reduced approval cycle times and gained better visibility into invoice status. The AP team spends less time tracking invoices and related documents, and more time reviewing and resolving exceptions, creating a more reliable and manageable process. 
 
M.H. EBY has now expanded its use of DocuWare beyond AP, applying the same capture, indexing and automated workflow to other areas of the business, including their manufacturing and parts department.  
 

Take the next step with invoice automation 

Introduce invoice processing automation to your business with DocuWare’s intuitive, secure platform. 

FAQ 

Does invoice automation work if we still receive paper invoices? 

Yes, invoice automation can handle paper invoices by scanning them and using OCR/IDP to extract data before routing them through the same digital workflow as emailed PDFs or e-invoices. This lets you standardize the process even if suppliers are at different levels of digital maturity. 

Do we need to change our accounting software or ERP before we automate invoice processing? 

Invoice automation integrates with existing systems. Your company can modernize your workflows without modifying your IT infrastructure. 

How long does it typically take to implement invoice automation? 

Implementation time varies by complexity, but many mid-sized organizations can go live with a first wave in a few weeks by starting with one workflow or a subset of invoice types. After that, the configuration can be extended in phases to cover more vendors and workflows. 

What internal changes do AP teams need to prepare for? 

A project team that includes your IT department or an outside vendor standardizes key elements like invoice intake channels, coding rules, and approval threshholds so automation can enforce your business rules. AP roles shift from manual keying to monitoring exceptions, improving vendor data and analyzing process performance. 

How does invoice automation handle non-PO invoices? 

Non-PO invoices can be routed to designated staff members for coding and approval using rules based on vendor, department or cost center. Systems can prefill or suggest GL accounts and cost centers based on past patterns. 

Is invoice automation secure for sensitive financial data? 

Modern platforms, like DocuWare, use encryption, role-based access control, authentication, and detailed audit logs to protect invoice and vendor data. You can also apply retention policies and permissions, so only authorized users see specific invoices, supporting internal controls and compliance. 

How can we measure ROI from invoice automation? 

Common indicators include a reduction in processing time per invoice, lower cost per invoice, fewer late-payment fees, and higher early-payment discount capture. Many teams also track error rates, exception volume and user satisfaction to demonstrate both positive financial and operational impact. Invoice payment delays can also result in credit holds which lead to the suspension of deliveries. The results of delivery suspensions means late production and impact sales. 
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