In the digital age, businesses are constantly searching for ways to improve efficiency and streamline their operations. One area where many organizations struggle is the accounts payable process. The manual verification of invoices can be time-consuming, prone to errors, and result in delayed payments to suppliers. This is where digital invoice verification comes into play.

What is Digital Invoice Verification?

Digital invoice verification is the process of electronically validating and verifying invoices received from suppliers. It involves the use of automation software and algorithms to compare the details on invoices with a company's purchase orders, contracts, and other relevant data. By leveraging technology, businesses can significantly reduce the time and effort required for invoice processing, while improving accuracy and ensuring compliance with financial regulations.

Benefits of Digital Invoice Verification

Implementing a digital invoice verification system offers several benefits for businesses:

Time and Cost Savings

By automating the invoice verification process, businesses can significantly reduce the time and effort required for manual data entry, validation, and approval. This frees up resources to focus on more strategic tasks, while also reducing the risk of errors and delays.

Improved Accuracy

Manual invoice verification is prone to errors, such as data entry mistakes and duplicate payments. Digital invoice verification minimizes these risks through automated data extraction and validation, ensuring accurate and complete invoice processing.

Streamlined Workflow

Digital invoice verification enables the implementation of standardized approval workflows, routing invoices to the appropriate stakeholders for review and authorization. This eliminates bottlenecks, reduces manual intervention, and improves overall efficiency.

Enhanced Compliance

With digital invoice verification, businesses can ensure compliance with financial regulations and internal control policies. The system can flag any deviations or exceptions, allowing for timely resolution and preventing fraudulent or non-compliant activities.

How Does Nirmalya Digital Invoice Verification Work?

Artificial intelligence is becoming increasingly essential as a tool to revolutionize the entire invoicing process, particularly in supporting digital invoice verification. This technology has rendered the traditional methods obsolete. Invoice verification can be categorized into two types: formal verification and factual verification. Formal invoice verification ensures the compliance of essential details, referred to as mandatory information, which must be present on every invoice. On the other hand, factual invoice verification scrutinizes the accuracy of invoicing the rendered services or delivered goods.

Formal verification checklist

The initial action to take when examining incoming invoices is to conduct formal verification. It is imperative to confirm that the invoice adheres to compliance guidelines and encompasses all the necessary information. This entails verifying details regarding the issuer and recipient, a distinct invoice number, the date of issuance, GSTN, PAN number, as well as the quantity and nature of goods delivered or services rendered.

• Company and Address of the Invoice Issuer
• Company and Address of the Invoice Recipient
• Invoice Date
• GST No or Tax ID or VAT Number of the Invoice Issuer
• Invoice Number
• Quantity and Type of Delivery or Scope and Type of Other Service
• Time of Delivery or Service
• Reductions in Fees (e.g., Cash Discounts or Rebates)
• Payment Breakdown by Tax Rates and Tax Exemptions

Factual verification checklist

Factual verification is crucial to ensure quality control during invoice processing. It entails confirming if the invoice accurately includes the items that were delivered within the expected timeframe.

• Compare the content of the invoice with the corresponding order confirmation to ensure that the invoiced items match what was originally requested.
• Cross-reference the invoice with the order receipt to verify if it accurately reflects the actual items received.
• Ensure that all agreed-upon conditions are met and consider any relevant discounts that should be included.
• Verify if the sales tax reported on the invoice complies with the legal requirements.
• Check if there are sufficient supporting documents to validate the transactions listed on the invoice.

Digital invoice verification process

Verifying incoming invoices manually is a laborious task that is susceptible to errors. Therefore, incorporating a digital invoice workflow is essential for companies in their digitalization strategy. This process commences with the digital handling of incoming mail and concludes with a secure archive in electronic document management system. The process of digital invoice verification typically involves the following steps:

• The process of invoice receipt and digitization involves scanning paper invoices and converting them into PDF format before sending them to the Electronic Document Management System (EDMS). In addition to this, EDMS also automatically collects invoices that have been received in digital format, such as through email, through various interfaces.
• EDMS utilizes OCR text recognition to transform the information from scanned invoices into a usable format. It automatically extracts essential details, including the invoice number, amount, delivery date, and list of items, and stores them as structured metadata. When receiving digitally-generated invoices in XRechnung or ZUGFeRD formats, the provided metadata is already organized in a structured format.
• Incoming invoices are stored in the digital invoice ledger according to their chronological order for subsequent processing. The invoice in accounting is carefully reviewed by an employee to ensure accuracy and thoroughness of information. Moreover, the invoice undergoes scrutiny against both the order confirmation and the order receipt for verification.
• In order to be posted, an invoice must undergo approval from either a purchasing employee or an authorized individual from the department responsible for placing the order. However, for automatic postings, particularly for invoices with a small amount, the approval process is bypassed and the invoice is promptly posted after verification.
• The invoice shall be entered into the accounting system and subsequently authorized for payment by an assigned employee before being posted. Once a post is made, the pertinent documents like invoice, order confirmation, and delivery note are marked as inactive and subsequently stored in EDMS in a secure and unmodifiable manner, ensuring audit compliance. Authorized individuals retain read-only privileges, while any modifications become infeasible.

Signification of OCR

When you digitize the process of verifying invoices, you enhance your efficiency while significantly decreasing the occurrence of errors. Additionally, this aids in guaranteeing comprehensive documentation for future reference and any potential audits. OCR text recognition plays a vital role in the verification of digital invoices:

• Precise digitization of invoice content: By employing OCR technology, it is possible to accurately convert invoice content into digital data, enabling the precise capture of all relevant information.
• Organized storage with structured metadata: Storing invoice contents as structured metadata ensures that digital invoices can be efficiently managed in an orderly manner.
• Minimized manual data entry: OCR technology eliminates the need for manual data entry from PDFs or original documents, reducing the chances of errors and relieving employees from this tedious task.
• Enhanced accuracy and reliability: Implementing OCR recognition for digitization eradicates any media gaps, resulting in an improved accuracy and reliability throughout the entire invoice verification process.

AI enabled verification

Take your digital invoice verification to the next level with Nirmalya, an AI-powered EDMS. By implementing this advanced platform, you can eliminate manual work steps and streamline the entire process:

• Leveraging the power of AI, Nirmalya EDMS automatically extracts and captures data, even from challenging sections of the invoice.
• The intelligent platform intelligently compares the information from invoices with the corresponding data in the ERP system, minimizing potential sources of error.
• Let AI take charge of the verification process, allowing it to identify missing information and enabling you to correct any errors directly.
• Nirmalya EDMS continuously enhances its checks by learning from new invoices, ensuring an optimized and error-free verification experience.
• Experience a seamless transition by relying on Nirmalya EDMS to automatically assign the invoice to the appropriate processor, considering deputy rules as well.
   

The process is exceptionally swift, resulting in significant time savings. It is also highly secure, ensuring the absence of any media gaps or typos. In addition, it offers the convenience of cross-checking with the order confirmation within seconds. The process is cost-effective as well, allowing payment only for the items that have been delivered. It complies with discount periods, eliminating the risk of missing payment deadlines and incurring reminder fees.The implementation of artificial intelligence in the invoice verification process has become indispensable in today's business landscape. In order to remain competitive and enhance the efficiency of work processes, it is now crucial to embrace AI. By strategically incorporating AI, businesses can completely transform their invoice verification process, ultimately leading to significant advancements in overall company success. The meticulous verification of invoices serves as the foundation for numerous other operations within an organization. Introducing artificial intelligence into this equation essentially means reimagining these processes from the ground up, which opens up a vast array of opportunities to optimize resource allocation and utilization.

Digital invoice verification is a game-changer for businesses looking to optimize their accounts payable processes. By leveraging automation and technology, organizations can streamline their invoice verification workflows, reduce costs, improve accuracy, and ensure compliance. Embracing digital solutions in finance and accounting is not only a smart move but also a necessary step towards a more efficient and agile future.

Elevate your invoice management with Nirmalya and embrace the benefits of a highly efficient and reliable AI-supported NERP platform.