Streamline AP: Dynamics 365 Vendor Invoice Automation

Embrace the transformative power of vendor invoice automation in Microsoft Dynamics 365 Finance and unlock the full potential of your accounts payable operations. Streamline your workflows, improve financial management, and build stronger vendor relationships with the efficiency and accuracy offered by Dynamics 365 Finance.

Aaron Klein

Aaron Klein

Introduction

Invoice automation revolutionizes the traditional invoicing process by leveraging advanced technology and intelligent automation. By automating tasks such as data capture, invoice matching, validation, and approval, organizations can significantly reduce manual intervention and achieve streamlined and optimized workflows. 

Microsoft Dynamics 365 Finance, a leading platform in this domain, offers a comprehensive suite of features designed to transform vendor invoice processing. From automated submission to workflow and intelligent matching to enhanced visibility and flexible process resumption, Dynamics 365 Finance empowers businesses to achieve touchless and streamlined workflows. With its powerful capabilities, the platform allows for the seamless submission of imported vendor invoices, eliminating the need for manual intervention and saving organizations valuable time for accounts payable teams. By mitigating the likelihood of errors through automated processes, such as prepayments and matching product receipts to invoices, Microsoft Dynamics 365 Finance enhances accuracy and maintains financial integrity. The platform also provides comprehensive visibility into the progress of invoices, enabling proactive decision-making and ensuring timely processing. By freeing up valuable time for finance professionals, the automation of manual tasks allows for optimal resource utilization and the allocation of expertise to more critical activities.

In this blog post, I uncover invoice automation capabilities in Dynamics 365 and dive into the specifics of vendor invoice automation and its related benefits. 

What is Invoice Automation?

Invoice automation is the process of using technology and software to streamline and optimize the invoicing process. It involves automating tasks such as data capture, invoice matching, validation, and approval, reducing the need for manual intervention. By eliminating manual tasks and introducing intelligent automation, invoice automation improves accuracy, reduces processing time, minimizes errors, and enhances overall efficiency in accounts payable operations. This allows organizations to handle a high volume of invoices more effectively and focus on strategic financial management.

What is Vendor Invoice Automation?

Vendor invoice automation refers to the use of technology and software solutions to automate the entire lifecycle of vendor invoices within an organization. It involves automating processes such as invoice receipt, data extraction, validation, matching with purchase orders or contracts, routing for approval, and payment. By leveraging automation, organizations can reduce manual effort, improve accuracy, accelerate invoice processing, enhance visibility, and achieve greater control and efficiency in managing vendor invoices. Vendor invoice automation streamlines accounts payable operations and allows businesses to optimize their relationships with vendors by ensuring timely and accurate payments.

Understanding the Business Value of Vendor Invoice Automation

Vendor invoice automation offers significant business value by streamlining accounts payable processes and delivering tangible benefits to organizations. By reducing manual effort, improving efficiency, accelerating processing times, enhancing financial management, and strengthening vendor relationships, automated vendor invoice management transforms the way businesses handle invoices.

Efficiency & Cost Savings

Automating vendor invoice management eliminates manual data entry and repetitive tasks, allowing resources to be allocated strategically. This reduces errors, ensures accuracy, and frees up valuable time for more strategic activities. The streamlined process also enables faster review and approval cycles, leading to quicker payments, optimized cash flow, and potential early payment discounts.

Visibility & Financial Management

Automated solutions provide real-time visibility into the accounts payable process, enabling better monitoring, reporting, and analysis. Managers can track invoice status, identify bottlenecks, and make data-driven decisions for improved operational efficiency. With accurate and up-to-date information, organizations can enhance financial planning, forecasting, and budgeting.

Paper Invoice Automation

Many organizations collaborate with external partners to handle paper invoices through the assistance of an optical character recognition (OCR) service provider. This provider converts the invoices into machine-readable data, known as invoice metadata. In order to facilitate automation, the features of the Accounts Payable automation allow you to incorporate and utilize these artifacts from the Accounts Payable system.

Vendor Relationships & Satisfaction

Efficient invoice processing through automation fosters stronger vendor relationships. Timely payments, reduced disputes, and clear visibility into invoice status enhance trust and collaboration. Vendors experience improved satisfaction, leading to better terms, discounts, and smoother interactions.

Overall, vendor invoice automation delivers significant business value by enhancing efficiency, optimizing costs, improving financial management, and strengthening vendor relationships. With streamlined processes, organizations can drive growth, achieve better financial control, and focus on strategic initiatives that contribute to long-term success.

Request a Demo

Learn more about the benefits of invoice automation through a demo of Dynamics 365 Finance.

Benefits of Vendor Invoice Automation in Microsoft Dynamics 365 Finance

Automating vendor invoice processing with Microsoft Dynamics 365 Finance presents a wide array of advantages for organizations seeking enhanced efficiency and accuracy. By leveraging the automation capabilities of this powerful platform, businesses can achieve the following benefits:

Increased Collaboration & Efficiency

Microsoft Dynamics 365 Finance allows for the seamless submission of imported vendor invoices to the workflow system, eliminating the need for manual intervention. The automated touchless process runs in the background at specified intervals (hourly or daily), ensuring a smooth flow of invoices and saving valuable time for accounts payable teams.

Error Reduction

Automating processes such as prepayments, matching product receipts to invoices, and simulating posting significantly reduces the likelihood of errors. Manual data entry and processing are prone to mistakes, but with Microsoft Dynamics 365 Finance, you can mitigate these risks, improving accuracy and maintaining financial integrity.

Streamlined Workflow

With automated vendor invoice processing, you gain comprehensive visibility into the progress of invoices at every stage of the workflow. Microsoft Dynamics 365 Finance allows accounts payable clerks and managers to track invoices, view their history, and analyze results effortlessly. This transparency enables proactive decision-making and ensures the timely processing of invoices.

Optimal Resource Utilization

By automating manual tasks, accounts payable teams can focus on strategic activities that add value to the organization. Microsoft Dynamics 365 Finance frees up valuable time for finance professionals, enabling them to allocate their expertise to more critical tasks, resulting in optimal resource utilization.

In summary, automating vendor invoice processing with Microsoft Dynamics 365 Finance brings enhanced efficiency and accuracy to organizations. By seamlessly submitting imported vendor invoices to the workflow system and automating critical processes, such as prepayments and invoice matching, businesses can achieve increased efficiency and reduced errors. The platform provides comprehensive visibility into invoice progress, enabling proactive decision-making and timely processing. With automation freeing up valuable time for finance professionals, organizations can optimize resource utilization and focus on strategic tasks, ultimately improving overall operational effectiveness and financial management.

Key Features of Microsoft Dynamics 365 Finance for Vendor Invoice Automation

Microsoft Dynamics 365 Finance offers a range of robust features that empower organizations to achieve touchless and streamlined vendor invoice processing. Some of these key features include:

Automated Submission to Workflow

With Microsoft Dynamics 365 Finance, imported vendor invoices can be automatically submitted to the workflow system. This touchless process runs in the background at specified intervals (hourly or daily), ensuring timely progress without the need for manual intervention.

Intelligent Matching

Leveraging the power of Microsoft Dynamics 365 Finance, automated processes can match posted product receipt lines to pending vendor invoice lines. By employing three-way matching policies, the system attempts to match quantities until successful or until a specified number of attempts have been made. This feature reduces manual effort and streamlines the matching process.

Posting Simulation

Microsoft Dynamics 365 Finance allows for posting simulation, which completes validation steps for vendor invoices without updating accounts. This capability enables accounts payable professionals to identify and resolve potential issues before final posting, ensuring accuracy and minimizing errors.

Enhanced Workflow Visibility

With Microsoft Dynamics 365 Finance, you gain an intuitive and user-friendly view of vendor invoice workflow history. Accessible directly from the vendor invoice, this feature reduces clicks and provides detailed information on current and completed process steps. In case of any unsuccessful steps, comprehensive failure reasons are provided for efficient troubleshooting.

Analytics and Metrics

Microsoft Power BI integration in Dynamics 365 Finance offers powerful analytics and metrics for accounts payable managers. These insights enable monitoring and evaluation of the efficiency of vendor invoice automation. By leveraging data-driven decision-making, organizations can continuously improve their processes and drive better financial outcomes.

Flexible Process Resumption

In situations where an imported invoice encounters issues during automated processing, Microsoft Dynamics 365 Finance allows for manual review and editing before resubmission to the workflow system. This flexibility streamlines the resolution of multiple invoice failures and ensures a smooth process flow.

Overall, Microsoft Dynamics 365 Finance provides a comprehensive set of features that enable touchless and streamlined vendor invoice processing. The automated submission to the workflow system ensures timely progress without manual intervention, enhancing efficiency. The intelligent matching capability matches product receipt lines to vendor invoice lines, reducing manual effort and streamlining the matching process. With posting simulation, validation steps can be completed without updating accounts, ensuring accuracy and minimizing errors before final posting. The enhanced workflow visibility offers an intuitive view of vendor invoice workflow history, reducing clicks and providing detailed information for efficient process tracking. Integration with Microsoft Power BI enables powerful analytics and metrics, empowering accounts payable managers to monitor and improve the efficiency of vendor invoice automation. Additionally, the flexible process resumption allows for manual review and editing of invoices before resubmission, facilitating the resolution of any issues. Leveraging these key features in Dynamics 365 Finance, organizations can achieve seamless, efficient, and error-free vendor invoice processing, optimizing their accounts payable operations and driving better financial outcomes.

Discover More Benefits & Use-Cases for D365 AP Automation & OCR

Revolutionizing Accounts Payable: Complete Automation with Invoice Capture

Accounts payable has been fully automated through the implementation of invoice capture, which enables continuous intelligent automation by reading and recognizing vendor invoices. This functionality is made possible through the utilization of Microsoft Azure Form Recognizer, AI Builder, and the Microsoft Power Platform. Users are provided with a preconfigured solution that includes vendor invoice models and a framework for ongoing learning to handle invoice exceptions. This feature was introduced in the public preview for the PO Invoice during the 2022 release wave 1. Subsequent updates have focused on improving matching capabilities, as well as introducing additional functionalities for non-PO invoices and the vendor invoice journal, ensuring that users have a comprehensive accounts payable automation solution.

The system also supports the invoice journal, which encompasses both pending vendor invoices and the invoice journal itself. This feature has been made available for general use.

For more complex invoice formats that are not covered by the prebuilt invoice processing model, customers have the option to define custom AI models. However, integrating these custom models alongside the prebuilt ones requires administrators to create appropriate workflows to facilitate their consumption.

To improve the accuracy of invoice recognition, the system allows users to review and correct fields with low confidence scores through an application interface. The corrected data can then be sent to AI Builder for further training, ensuring that exceptional data is continuously used to refine the recognition capabilities of the system.

Applying Prepayments to Vendor Invoices Automatically in D365 Finance

In Dynamics 365, vendor invoice automation simplifies the process of applying prepayments to invoices. Prepayments can be created for purchase orders and used to settle accounts payable when vendor invoices are received. The system automatically matches purchase order numbers on vendor invoices with corresponding prepayments during import.

When applicable, prepayment lines are added to existing invoice lines without being considered during the invoice matching process. The application of prepayments depends on different purchasing processes:

One vendor invoice per purchase order:

The prepayment on the purchase order is applied to the vendor invoice.

One vendor invoice for multiple purchase orders:

Prepayments from all purchase orders are applied to the vendor invoice.

Multiple vendor invoices per purchase order:

The prepayment on the purchase order is applied to the first imported vendor invoice. If the prepayment amount exceeds the invoice amount, manual application of prepayment is required

Multiple vendor invoices for multiple purchase orders:

Prepayments from the purchase orders are applied to the first relevant invoice. If the prepayment amount exceeds the invoice amount, manual prepayment application is necessary. Any remaining prepayments can be applied to subsequent invoices.

If prepayment application fails, the “Block follow-up automation process in case of prepayment application failure” option determines the next steps. If set to “Yes,” the invoice remains blocked until the prepayment is manually applied. The “Include in automated processing” option must be set to “No” for the blocked invoice, allowing manual prepayment application. Afterward, the option can be set back to “Yes” for automated processing.

Alternatively, automatic prepayment application can be bypassed by temporarily setting the “Include in automated processing” option to “No” and then back to “Yes.” This bypasses the prepayment and unblocks the vendor invoice for subsequent automated processing.

If the “Block follow-up automation process in case of prepayment application failure” option is set to “No,” follow-up automation processes continue, and prepayments can still be applied during settlement.

Vendor invoice automation in Dynamics 365 simplifies the application of prepayments to invoices, streamlining the accounts payable process. By automating the matching of purchase order numbers with corresponding prepayments, organizations can efficiently settle accounts payable. The flexibility in applying prepayments based on different purchasing scenarios ensures accuracy and reduces manual effort. Whether it’s a single vendor invoice or multiple invoices per purchase order, Dynamics 365 handles prepayment application seamlessly. In cases of prepayment application failure, the system allows for manual intervention or continues with follow-up automation processes based on the configured settings. With Dynamics 365, businesses can optimize their accounts payable workflow, improving efficiency and accuracy in handling vendor invoices.

Request a Demo

Learn more about the benefits of invoice automation through a demo of Dynamics 365 Finance.

Conclusion

In conclusion, vendor invoice automation in Microsoft Dynamics 365 Finance provides significant business value by streamlining accounts payable processes and delivering tangible benefits to organizations. By automating vendor invoice management, businesses can achieve increased efficiency, cost savings, enhanced financial management, and improved vendor relationships. Dynamics 365 Finance offers key features such as automated submission to workflow, intelligent matching, posting simulation, enhanced workflow visibility, analytics and metrics, and flexible process resumption. These features enable organizations to streamline their vendor invoice processing, reduce manual effort, mitigate errors, and optimize resource utilization. By leveraging the power of Dynamics 365 Finance for vendor invoice automation, businesses can drive growth, improve financial control, and focus on strategic initiatives that contribute to long-term success. Embrace the advantages of vendor invoice automation in Dynamics 365 Finance and unlock the full potential of your accounts payable operations.

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