Guide to the Invoice Automation Process for Dynamics 365

Companies are consistently seeking ways to enhance operational efficiency, reduce costs, and facilitate process improvement. One area that’s ripe for overhaul is the management of accounts payable (AP) processes, particularly through automated invoicing solutions. In this guide, we’ll explain the invoice automation process for Dynamics 365 (D365) and explore how ExFlow AP enhances this cycle.

Microsoft Dynamics 365, a leading enterprise resource planning (ERP) system, offers robust capabilities in this area, and with the addition of embedded solutions like ExFlow AP, organizations can achieve significant efficiency gains. 

Key highlights:

• The invoice automation process in Dynamics 365 eliminates manual data entry, reduces errors, and improves approval speed across the AP cycle.
• With invoice process automation, companies gain real-time visibility into invoice status, cash flow, and spend control directly within their ERP system.
• Automating invoice processing in D365 using ExFlow enables businesses to scale seamlessly, handle complex approval rules, and stay audit-ready.
• ExFlow AP automation leverages intelligent data capture and native D365 integration to streamline every step from invoice receipt to payment.

What is Automated Invoice Processing in D365?

Automated invoice processing in Dynamics 365 is the use of digital tools to streamline and manage the entire invoice workflow, from receiving invoices to final payment, directly within the ERP system. This process leverages technologies like AI, OCR, and built-in approval workflows to eliminate manual data entry, reduce human errors, and speed up processing cycles. By embedding automated systems into Dynamics 365, companies can increase efficiency, improve accuracy, and maintain a clear audit trail within a unified financial environment.

Invoice automation further enhances financial control by providing real-time visibility into outstanding invoices, payment status, and cash flow. It simplifies compliance, reduces processing costs, and frees up finance teams to focus on strategic tasks rather than repetitive administrative work. When fully integrated with Dynamics 365, invoice automation ensures smoother operations and supports scalable growth.

How Does Automated Invoice Processing Work?

Automated invoice processing works by using digital tools and intelligent technologies to manage invoices from receipt to payment without manual input. By integrating with systems like Microsoft Dynamics 365, companies can streamline each step of the accounts payable workflow, saving time, reducing human error, and improving financial control.

Here are the six steps in a typical process:

1. Invoice Capture: Invoices are received via email, portal, or scan and imported into the system.
2. Data Extraction: OCR (optical character recognition) or AI extracts key details such as vendor name, invoice number, dates, and totals.
3. Validation: The system checks the invoice against purchase orders, receipts, or contract terms for accuracy.
4. Approval Routing: Based on predefined rules, the invoice is automatically routed to the correct approver.
5. Posting and Payment: Once approved, the invoice is posted in the ERP and scheduled for payment.
6. Audit and Financial Reporting: The process is logged for compliance and visibility, with real-time dashboards and reporting options.

Automated invoice processing eliminates the need for manual data entry and accelerates the entire AP cycle. It reduces the risk of late payments and duplicate invoices while giving finance teams better oversight of cash flow.

With automatic invoice processing, approvals can be triggered based on set thresholds, meaning low-value or routine invoices can be handled without human intervention. This frees up staff to focus on higher-value tasks and ensures the business scales its AP function efficiently.

Benefits of Automated Invoice Processing in D365

The benefits of automated invoice processing in Microsoft Dynamics 365 go beyond just saving time—they improve accuracy, control, and scalability across your accounts payable operations. By integrating automation directly into your ERP, you can streamline processes and empower your finance team to work more strategically.

• Faster Invoice Handling: With automatic invoicing, incoming invoices are captured, matched, and routed for approval with minimal manual effort, significantly reducing processing time and accelerating payment cycles.
• Better Visibility of Approval Workflows: Built-in dashboards and tracking tools give finance teams real-time insight into the approval process, helping them spot delays, manage bottlenecks, and ensure accountability at every step.
• Reduced Errors: By removing manual data entry from the invoice workflow, automation reduces the risk of duplication, missed fields, or incorrect entries, leading to more accurate financial reporting and fewer payment issues.
• Scalability: Automatic invoicing allows businesses to handle increasing invoice volumes without adding staff, making it easier to scale operations as the company grows or expands globally.
• Enhanced Supplier Relationships: A reliable automated invoice workflow ensures that vendors are paid accurately and on time, improving trust and strengthening long-term business relationships.

Challenges you can Address with Invoice Workflow Automation

Manual processing is time-consuming, error-prone, and resource-intensive. Traditional paper-based accounting systems often involve data entry, routing for approval via email or physical mail, and matching of invoices with purchase orders and receipts. 

With invoice processing automation, you streamline the accounts payable processes, reducing the risk of errors and costly delays in payment.

Here are the top challenges you can tackle with invoice workflow automation:

Manual Data Entry Errors

Manual data entry is one of the most common sources of mistakes in accounts payable. Typos, incorrect amounts, or mismatched vendor details can lead to payment delays and accounting discrepancies. With automated invoice entry, these risks are significantly reduced, as intelligent capture tools extract and validate data with greater accuracy and consistency.

Duplicate Payments

Without a centralized system to flag potential duplicates, businesses are at risk of paying the same invoice more than once—especially when invoices are routed through multiple channels. Invoice workflow automation scans for identical invoice numbers, dates, or amounts, alerting users to duplicates before payment is processed. This ensures better control and prevents unnecessary financial losses.

Slow Approval Cycles

Manual approval routing often involves email chains, paper signatures, or delayed responses from approvers. These slowdowns can cause late payments, missed early-payment discounts, and strained supplier relationships. By implementing an invoice automation process, businesses can automatically route invoices based on predefined rules, accelerating approvals and improving accountability.

High Processing Costs

Handling invoices manually involves labor, time, printing, and storage costs—all of which add up quickly. Automation minimizes the need for physical paperwork, reduces human involvement, and shortens the overall cycle time. This leads to significant cost savings per invoice and frees up your team to focus on higher-value tasks.

How to Automate Invoice Processing in D365

With Dynamics 365, organizations have a powerful platform for streamlining their financial operations, including AP processes. By leveraging the built-in capabilities of ExFlow with Dynamics 365 Business Central Automation and Finance and Operations, companies can automate key tasks such as invoice capture, validation, matching, and approval.

1. Map Your Current Invoice Workflow

The first step in the invoice automation process is to fully understand your existing invoice workflow. Document how invoices are received, entered, matched, and approved. Identify bottlenecks, delays, or manual handoffs that cause inefficiencies. This groundwork is crucial for selecting the right tools and configuring them effectively within Dynamics 365.

2. Choose Automated Invoice Processing Software That Fits Your ERP

To ensure seamless integration, select automated invoice processing software that is natively built into Microsoft Dynamics 365. Solutions like ExFlow offer deep functionality, such as intelligent data capture, automated matching, and built-in approval workflows, without requiring a separate interface. Native integration also minimizes IT overhead and reduces data silos.

3. Define Approval Rules and Exceptions

Once the foundation is set, define business rules for approvals. Within Dynamics 365, you can configure workflows to automatically route invoices based on vendor, amount, or cost center. Automating these rules simplifies the automated invoice process, reduces errors, and ensures compliance. You can also establish exceptions for invoices requiring manual review.

4. Test Your Process Before Scaling

Before rolling out company-wide, run a test with a small set of invoices. Involve key users from finance, procurement, and IT to validate performance, accuracy, and user experience. This trial phase helps catch issues early and allows you to refine the process for better results.

5. Train Your Team on New Workflows

A successful transition depends on adoption. Provide training sessions, user guides, and support resources to help your team adapt to the new system. Highlight how invoice automation frees them from repetitive tasks and allows more time for strategic work like forecasting and analysis.

How to Choose an Automated Invoice Processing Software

Choosing the right automated invoice processing software isn’t just about features. It’s about finding a solution that fits your workflows and scales with your business. 

To make the most of your investment, here are three key areas to focus on during the selection process:

Prioritize ERP Compatibility

When evaluating options, start by focusing on ERP compatibility. To get the most value from your invoice automation process, choose a solution that integrates directly with Dynamics 365. This reduces the need for custom connectors or external systems. Tools like ExFlow operate natively within D365, which ensures data integrity and real-time visibility across your AP function.

Ask About Invoice Automation Implementation

The success of your automation initiative depends heavily on how smoothly it’s implemented. Ask potential vendors about their invoice automation implementation strategy — do they offer guided setup, best practices, and ongoing support? A structured onboarding process makes it easier to get up and running without delays or disruptions.

Assess Vendor Onboarding Tools

Scalability matters. As your business grows, so does your supplier base. The best automated invoice processing software includes features that make it easy to onboard new vendors, such as supplier portals, flexible file formats (PDF, XML, EDI), and self-service options. These capabilities ensure your invoice automation process remains efficient as complexity increases.

Automating Invoice Processing: Best Features for Seamless Workflows

Automating invoice processing in Microsoft Dynamics 365 transforms accounts payable from a manual, error-prone task into a streamlined, strategic operation. By using intelligent features built directly into the ERP, especially when enhanced with a solution like ExFlow, organizations can reduce bottlenecks, improve accuracy, and gain greater control over spend management.

To build truly cohesive AP workflows, it’s essential to leverage the right features. From invoice data capture to compliance tracking, each function plays a critical role in driving speed, visibility, and control. Below is a breakdown of the best features to look for when automating invoice processing:

Automated Invoice Processing Software Features	How These Features Work	Top Benefits of the Features
Invoice Data Capture	Use OCR and AI to extract invoice details (vendor, date, amount) from digital or scanned files.	Eliminates manual data entry and reduces errors.
Automated Invoice Matching	Match invoice line items to purchase orders and goods receipts within D365.	Speeds up validation and prevents overpayments.
Compliance and Audit Trails	Track all actions and approvals with time-stamped logs accessible for audit reviews.	Enhances transparency and supports regulatory compliance.
Budget Control and Alerts	Flag invoices that exceed budget thresholds or fall outside of policy limits.	Prevents overspending and supports proactive decision-making.
Expense Management Process Overview	Provide a centralized view of all invoice-related expenses and approval stages.	Improves visibility and helps teams manage cash flow.

Why Automate Invoice Processing With Dynamics 365 Automation and ExFlow

With ExFlow AP automation, organizations can improve accuracy and accelerate invoice processing times. By automating routine tasks and leveraging AI-powered insights, finance teams can gain better visibility and control over their AP processes, enabling them to make more informed decisions and drive greater business value.

Below are three reasons to automate invoice processing with D365 and ExFlow.

1. D365 AUTOMATED INVOICE WORKFLOWS MEET SCALABILITY DEMANDS

ExFlow’s customizable approval workflows allow organizations to define rules and routing paths based on their unique business requirements. Whether it’s routing invoices for approval based on amount, vendor, or expense category, ExFlow provides the flexibility and scalability to adapt to changing business needs.

2. EXFLOW AP AUTOMATION ENHANCES FLEXIBILITY WITH CLOUD-BASED INVOICING

The ExFlow approval web is a cloud-based solution, which means organizations can access it anytime, anywhere, and from any device with an internet connection. This flexibility enables finance teams to collaborate more effectively, even in a remote or distributed work environment, and ensures that automatic invoice processing continues without delays, regardless of location.

3. INVOICE PROCESS AUTOMATION MAXIMIZES PRODUCTIVITY

By implementing ExFlow for invoice automation in Dynamics 365, organizations can achieve tangible process improvements and cost savings. By reducing manual effort and streamlining workflows, ExFlow enables finance teams to focus on value-added activities, such as vendor management, strategic sourcing, and financial planning.

How Invoice Automation Impacts CFOs

The invoice automation process is not just about optimization; it’s about transforming the finance function to become a strategic partner in driving business success. CFOs are tasked with ensuring financial processes’ accuracy, timeliness, and compliance. 

By implementing automated invoice processing software like ExFlow, CFOs can streamline AP operations, improve visibility into financial performance, and mitigate compliance risks. Furthermore, automation frees up finance teams from mundane, repetitive tasks, allowing them to focus on more strategic activities that add value to the organization. 

Whether it’s analyzing financial data, identifying cost-saving opportunities, or driving process improvements, CFOs can automate invoice processing to enhance their role as strategic advisors to the business.

How ExFlow Simplifies Invoice Automation Implementation in D365

ExFlow AP automation is a market-leading solution embedded in Dynamics 365. By leveraging ExFlow’s advanced capabilities, organizations can automate the entire invoice processing lifecycle, from capture to payment. ExFlow’s intelligent document capture technology automatically extracts relevant data, eliminating the need for manual data entry and reducing errors.

ExFlow’s automation implementation covers the entire lifecycle of a transaction, from initial data capture to payment. This includes:

• Invoice Capture: Automated extraction of data from incoming invoices eliminates the need for manual data entry.
• Approval Workflow: Configurable approval workflows based on business rules and hierarchies ensure the timely approval of invoices.
• A built-in solution: Embedded into Dynamics 365, ExFlow enables smooth data exchange and collaboration between departments.
• Compliance Management: Built-in tools and audit trails for financial controllers ensure compliance with regulatory requirements and internal policies.
• Payment Processing: Streamlined payment processing includes options for electronic payments and integration with banking systems.

Learn how AP automation with ExFlow can help boost your business’s bottom line by booking a demo today.