ApprovalMax XU Magazine - Issue 18

How to: Introduce a bill automation app stack

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Best practices for introducing a Xero-based bill automation app stack to increase invoice processing efficiency…

Basic bill processing includes receiving and capturing invoices in the accounting system in the form of bills, then validating and eventually paying them.

If purchase orders are used in the organisation, bills need to be matched to the appropriate purchase orders and PO status needs to be updated once the bill is paid. That is a more advanced way of bill processing.

Traditionally, bills are processed manually using paper and email for bill authorisation. That oftentimes incurs poor accounting data quality, e.g. incorrect or incomplete coding, an insufficient process transparency and a lack of a clear auditable authorisation trail.

Bill automation

There is a more advanced approach to bill processing – that is bill automation.

As per Xero’s latest Cash Flow App Advisory Playbook, bill automation is embracing of the modern cloud technology and eradication of manual interventions and paper-based processes for functions such as invoice submission, practice management, client management and approval management.

As the initial step, you are advised to introduce data digitisation, which implies digital data capture and cloud data storage for accounting documents.

Once you have your data in the digital form, you can proceed to implementing data automation, which essentially is extension of data digitisation with workflow driven data validation and decision control that ensure that your accounting data are complete, verified and auditable.

Xero-based bill automation app stack

In the Xero ecosystem, a basic bill automation app stack consists of the following key components:

  • Xero as the cloud accounting platsform that is used for cloud data storage, centralised document management and accounting.
  • Digital data capture tools, such as Receipt Bank, datamolino, AutoEntry and Hubdoc.
  • Approval workflow and automation app, such as ApprovalMax that helps with approval management for Bills, Purchase Orders and other types of ACs and APs.

Purchase order to bill automation

To establish full data automation, you need to achieve the following two milestones.

First, an automated approval workflow for all accounting documents needs to be introduced to provide multi-level and multi-step authorisation, approval exceptions handling, approval delegation, automated notifications to approvers and PO requestors.

Secondly, financial controls in the form of proper review and coding need to be set up. This is essential to properly track and forecast the cash flow.

A seamless bill automation flow based on Xero and ApprovalMax looks the following way:

Invoice data capture is done by any Xero-connected OCR tool, Xero’s “Email to Bill” function, Hubdoc – or a combination of the above.

Digital data management and accounting is provided by Xero.

Purchase orders are created in ApprovaMax and routed as per the approval workflow. Bills are pulled from Xero in the “awaiting approval” status and in case PO were earlier created and approved, bills are matched to the corresponding purchase orders. Budget check can be done to ensure the budget has not been exceeded before the bill authorisation occurs. Financial controls are then enforced as part of the encode/review and approval process, and once fully approved, bills are marked as “approved for payment” in Xero. A full audit log is attached to every approved bill. Once the bill is paid, any matched purchase order can be marked as “billed” and closed as well.

Find out more:

To find out more visit: approvalmax.com

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About the author

Konstantin Bredyuk

CEO and Co- Founder, ApprovalMax With roots in business process management and optimisation software development, Konstantin has undertaken hundreds of product implementations for ApprovalMax clients worldwide. Over the years, Konstantin has obtained a unique industry knowledge from both the finance and technology perspectives and has consulted multiple organisations with profiles ranging from SMBs to governments and industry tycoons.