What does this module / this process contain:
Receipt of the invoice and the subsequent recognition of the invoice details and matching with the order data is a process that is mapped differently by different providers. Invoices can be received via various channels:
- EDI invoices can easily be converted to the required format using a mapping tool. Almost all providers master this form of invoice receipt. However, it should be noted that usually only the standard suppliers used in the eProcurement process are connected via EDI and all other suppliers send the invoice via the normal route by email as a PDF or by post on paper.
- PDF invoices or invoices by email are automatically read out by the software.
- Paper invoices must first be read with OCR software in order to then be able to be read like a PDF invoice. Not all providers support all languages, which is why there are often restrictions in relation to some regions.
Reading the content can be done in 2 different ways. With old systems, each new invoice layout has to be learned by the system once; with modern systems this is done using machine learning. Good systems achieve an automatic recognition rate of over 98% here. The most problems arise when reading invoices with several line items.
Matching the invoice with the order data can be done in different ways. To do this, it is necessary to access several pieces of data from the eProcurement or supply chain process, such as the order or the receipt of goods or services:
- 2-way invoice matching is an automated process that checks for discrepancies between purchase orders and their associated invoices before invoices are approved and paid. 2-way invoicing, also known as purchase order matching or PO matching, compares specific figures on both the purchase order and invoice. Two-way matching verifies that purchase order and invoice information match within your tolerances as follows: quantity billed is less than or equal to quantity ordered, or invoice price is less than or equal to purchase order price.
- 3-way matching is used to verify a supplier invoice by checking it against its corresponding purchase order AND order receipt. It reduces the chances of fraudulent invoices going undetected and, worse, being paid. Companies can set thresholds to determine which invoices require three-way matching. You define: quantity billed is less than or equal to quantity received.
- 4-way matching adds a fourth criterion to verify that acceptance documents and invoice information match within the quantity tolerances you define: quantity billed is less than or equal to quantity accepted.
Conformity check of the invoices according to the respective state laws is a complex process that only a few providers can carry out, since this requires knowledge of state-specific laws in the field of digital invoices and these must also be implemented in a timely manner in the event of changes in the law. Only a few providers can afford this process, which is why there is a difference between smaller, local providers and large, internationally active companies.
Mandatory e-invoicing is changing this process across Europe. In Germany, all companies have had to be able to receive structured e-invoices (XRechnung, ZUGFeRD) since 1 January 2025; companies with more than €800,000 turnover must issue them from 1 January 2027, and all companies from 1 January 2028. With the EU's "VAT in the Digital Age" package (ViDA), e-invoicing and digital reporting become mandatory for cross-border B2B transactions in the EU from 2030. PDF invoices that are read by OCR will therefore steadily disappear in B2B.
Exception management workflows with configurable tolerances should be available. Routing to the solution is automated by including the requester or approver, eliminating the need to manually track approvals.
What are the main goals:
- Process cost reduction due to the elimination of all manual steps with the exception of workflows if invoices do not match the order or the goods receipt.
- Transparency of the current obligo, especially if eInvoicing is not only seen as part of eProcurement but company-wide.
- Savings through active cash management, especially when additional functions such as dynamic discounting are used.
- Reduction of supplier support by displaying current invoices and the payment target to the supplier via the web portal. Support services for the supplier in the billing environment are usually a major expense.
Specifics per industry:
In principle, eInvoicing can be used in every industry. Production companies with recurring orders and invoices have a greater potential for savings here, since the number of invoices that are NOT automatically recognized is very small.
Sectors that purchase a large number of services or sectors with complicated billing processes, such as the transport industry or construction companies, have difficulties processing all bills electronically.
Large enterprises with many branches, especially in Asia and South America, are more likely to have problems due to regional regulations and complexities.
Latest innovations:
AI automation remains the big topic in invoice processing. There are still big differences between the providers as to the extent to which complex invoices with many items can be automatically recognized and checked. Simple and not so intelligent systems only recognize the invoice amount, but when it comes to collective invoices that have to be assigned to several order numbers, there are major differences between the providers.
Dynamic workflows, which adapt themselves or can also be easily adapted by authorized persons, simplify the handling of special cases and contribute to an even higher rate of automation.
Extensions and additional functions:
Dynamic discounting is a solution that enhances a buyer's profitability by reducing its Cost of Goods Sold (COGS). Dynamic discounting gives the buyer's vendors the flexibility to choose when they would like to get paid in exchange for a reduced price on the goods and/or services purchased. Dynamic discounting can easily be attached to an eInvoicing system via standard APIs.
Web portals for suppliers, where you can not only upload invoices but also view the status of all invoices and the payment date, help to increase supplier satisfaction and reduce the effort for supplier support. Communication in the form of chats or real-time messaging can usually also take place via such portals.