More in Demand Than Ever, Yet an Established Concept: Digital Invoice Processing.
Every time we receive inquiries regarding "electronic invoice verification," we can't help but smile. Why? Because we are inevitably reminded of Franz Beckenbauer's words. When asked by a foreign reporter about the significance of the Germany vs. England match, he famously replied: „We call it a Klassiker!“
On Enduring Topics and Bestsellers in Process Digitalization
However, the COVID-19 crisis taught us otherwise. For many companies, software-supported processing of their incoming invoices is digital uncharted territory that needs to be explored.
The need for action, especially in the SME segment, is high. Digitalization is still very much in its infancy here. Therefore, we start here with the basics.
Back to the Roots – The Principle of Invoice Processing and Verification
But first, let's take a few steps back and examine what needs to happen within accounts payable so that an invoice can ultimately be authorized for payment.
Automated invoice verification describes the implementation of an administrative accounting process that, due to its scope, extends across all business units.
Essentially, there are four simple steps (see Figure 1) that must be observed and describe the verification process:
- Receipt and Entry of the Invoice
- Recording and Verification of the Invoice
- Posting and Approval of the Invoice
- Payment Settlement and Archiving/Filing of the Invoice
Figure 1: The Principle of Invoice Processing and Verification | isr.de
…the larger and more complex the company, the more intricate the process.
As a rule, there are clearly defined competency and approval rules. The so-called four-eyes principle is merely the beginning or a minimum requirement. With the increasing digitalization of accounting, workflows are also changing. Accounts payable is more than ever obliged to guide and control these processes.
Time to Act – Seizing the Opportunities of Digital Invoice Verification
Figure 2: The Advantages of Digital Invoice Processing and Verification | isr.de
- Time Savings: The processor can access a task with a single click, enabling more efficient utilization of working time.
- Cash Discount Optimization: Short processing times facilitate optimized utilization of cash discounts, leading to tangible cost savings.
- Legally Compliant Archiving according to GoBD: All documents relevant under tax and commercial law are archived in compliance with GoBD.
- More Cost-Effective and Environmentally Friendly: This benefit is evident. Digitizing your incoming invoices eliminates the need for paper, printing materials, and postage. Furthermore, digital archiving of your invoices is more space-efficient than basements full of physical folders, and the enhanced spatial flexibility is also a significant positive factor.
- Reduced Error Rate: System-supported invoice processing, including predefined workflows, mitigates potential sources of error, thereby lowering overall error rates.
Through my daily collaboration with accountants, I understand the significant relief that implementing electronic invoice verification can provide. One no longer has to chase invoices internally but can ascertain their status with just 2-3 clicks, providing complete transparency that extends beyond one's own organization. Automated checks and proactive notifications assist in focusing on essential tasks. Furthermore, if additional savings are realized by adhering to supplier discount deadlines, management will also appreciate the benefits.
Sandra Bartke | Senior Consultant | Business Process Automation
However, it is important to note:
The implementation of an IT solution alone is insufficient. Crucial is the organizational support provided from project initiation through to the handover of the invoicing solution into regular operation.
Thanks to our extensive experience and numerous successfully implemented projects in this segment, ISR provides you with an expert consultant by your side. Our preferred technology for incoming invoice processing is ISR Account Payable Flow. Furthermore, if your input channels require further digitalization, we also excel in Input Management. Solutions with which we collaborate in this area include Buildsimple, IBM Datacap, and insiders smart FIX.
Do you have further questions? Please feel free to contact us.
Cihan Klingsporn
Senior Account & Marketing Manager
Business Process Automation
cihan.klingsporn@isr.de
+49(0)151 422 05 471
The German Value Added Tax Act (UStG) contains clear regulations on the required appearance of an invoice and the mandatory data or information it must contain – § 14 para. 4 in conjunction with § 14a para. 5 UStG – these include, among others:
– Name and address of the service provider and the recipient of the service
– Tax number/VAT identification number
– Invoice date and invoice number
– Quantity and description of the delivered goods
– Time of delivery or service
– Remuneration details, as well as specification of tax rates and tax amounts
– And much more.
With the introduction of EU Directive 2014/55/EU, public administrations, for example, are obligated to work with e-invoices. The electronic invoice (e-invoice for short) contains all essential invoice information, but
– In a structured, electronic format – enabling transmission and receipt purely electronically.
– Further processing of the invoice also occurs automatically and purely electronically.
What is not meant: Paper invoices converted into PDF files and attached to emails. This does not constitute an electronic format.
– Invoice verification and recording
– Attachment assignment
– Determination of the next processor
– Account assignment
– Payment instruction
– Monitoring of open items
– Resolution of vendor inquiries
– Potentially, master data maintenance
