Streamline AP Processes with Invoice Capture for Dynamics 365 Finance

Manual invoice processing is one of the most time-consuming and error-prone tasks in the accounts payable (AP) department. From managing paper invoices to chasing down approvals and rekeying data, traditional workflows often lead to delays, duplicate payments, and compliance risks.

Fortunately, Microsoft Dynamics 365 Finance offers integrated invoice capture solutions that help organizations modernize their accounts payable (AP) processes. Whether you're dealing with hundreds or thousands of invoices each month, automating invoice capture can significantly reduce costs and increase efficiency. Here's how.

What Is Invoice Capture?

Invoice capture refers to the process of automatically extracting key data from supplier invoices, such as vendor name, invoice number, date, amount, and line items, and entering it into your financial system. Advanced invoice capture solutions use OCR (Optical Character Recognition) and AI-driven data recognition to pull information from paper, PDF, and digital invoices with high accuracy.

In the context of Dynamics 365 Finance, invoice capture can be integrated directly into your existing workflows, allowing seamless invoice processing from receipt to payment.

Does Microsoft Dynamics Have OCR?

Yes, Microsoft Dynamics 365 Finance offers OCR capabilities through its Dynamics 365 Invoice Capture solution, which leverages AI Builder and Microsoft Power Automate. This functionality enables users to automatically scan and extract data from invoices using machine learning and optical character recognition (OCR) technologies.

The solution is designed to identify key fields like invoice numbers, vendor details, total amounts, and dates—even when the layout varies from one supplier to another. For businesses that require more robust or specialized OCR features, integrations with third-party tools like Kofax, Medius, ABBYY, or Yooz can further enhance data capture accuracy and streamline the entire AP workflow.

Benefits of Invoice Capture in Dynamics 365 Finance

Microsoft Dynamics 365 Finance is widely adopted by organizations seeking a comprehensive financial solution. Here are just a few of the reasons why.

1. Improved Accuracy and Reduced Errors

Manual data entry is not only slow—it's prone to human error. Invoice capture tools automatically extract and validate data, ensuring that information such as invoice amounts, due dates, and vendor details is accurate before it reaches your ERP system.

2. Faster Invoice Processing

With automation, invoices can be ingested, matched, and routed for approval within minutes. This reduces cycle times significantly and helps you take advantage of early payment discounts or avoid late payment penalties.

3. Seamless Integration with AP Workflows

Invoice capture in Dynamics 365 can be linked to your purchase order and payment processes. Automated 2-way or 3-way matching (invoice, PO, and receipt) minimizes the need for manual review and enables touchless processing for compliant invoices.

4. Enhanced Visibility and Control

AP managers can monitor invoice status in real time and identify bottlenecks quickly. Dashboards and reporting tools provide insights into KPIs like invoice cycle time, exceptions, and vendor performance.

5. Support for Compliance and Audits

Automated systems create an audit trail for every invoice, showing when it was received, who approved it, and when it was paid. This simplifies compliance with internal controls and external audits.

How to Get Started

To implement invoice capture in Dynamics 365 Finance, you can explore native functionality as well as third-party integrations. Microsoft offers Dynamics 365 Invoice Capture, a relatively new capability that uses AI Builder and Power Automate to streamline invoice processing. Alternatively, many companies integrate with AP automation providers like Rio, which offer advanced features such as supplier portals, exception handling, and invoice archiving.

Key Steps:

• Assess your current AP process: Understand where bottlenecks and inefficiencies exist.
• Define your requirements: Consider volume, approval workflows, data accuracy, and integration needs.
• Choose the right solution: Whether native or third-party, ensure the solution integrates smoothly with Dynamics 365 Finance.
• Train your team: Ensure staff understand how to review, approve, and manage invoices using the new system.
• Monitor and optimize: Continuously review performance data to further refine and improve your AP process.
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Why Dynamics 365's Built-in Invoice Capture Might Not Be Enough

Dynamics 365 Finance's built-in invoice capture feature is a great starting point that continues to be used by a number of organizations. It can handle basic OCR data extraction and seamlessly link invoices to your existing AP workflows. But as your invoice volume grows or your processes get more complex, some AP teams have noticed that they have hit a few limitations.

For example:

• Limited Exception Handling
• When an invoice doesn't match your PO or receipt, Dynamics' native tools might struggle to route it efficiently for review and resolution.
• Supplier Collaboration Gaps
• Dynamics 365 Finance doesn't offer robust self-service portals for suppliers to submit invoices, check payment status, or resolve disputes.
• Lack of Advanced Analytics
• While Dynamics provides some reporting, it's not purpose-built for deep insights into AP performance, supplier compliance, or process bottlenecks.

So, while Dynamics 365 invoice capture is a solid foundation, it's not always enough for large organizations that want to move beyond automation basics and drive real strategic improvements.

How Rio Extends and Enhances Dynamics 365 Invoice Automation

That's where Rio steps in. Think of Rio as the digital AP team member that turbocharges what Dynamics 365 Finance already does.

Here's how:

• AI-Powered Exception Handling
• Rio doesn't just flag exceptions—it routes them automatically to the right stakeholders, using AI to learn from past resolutions and get smarter over time.
• Supplier Self-Service Portals
• Rio gives suppliers an easy-to-use portal to submit invoices, track payment status, and manage disputes. That cuts down on emails and phone calls, freeing up your AP team.
• Deeper Insights and Reporting
• Rio's dashboards and analytics tools are built to shine a spotlight on process performance, cash flow trends, and supplier performance—so you can make smarter, faster decisions.
• Touchless Invoice Processing
• With Rio's advanced data capture, automated matching, and exception resolution, your AP team can process a large share of invoices without lifting a finger.

The best part?

Rio is designed to work with Dynamics 365 Finance—so you don't have to rip and replace your old solution. It's about extending what you already have and taking your invoice automation to the next level. See how it fits with your existing strategy by filling out the form below.