Automated Accruals Processing in Electronic Invoicing

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Solution Overview

Problem

Current processes for obtaining and providing accrual expense data to finance departments are burdensome, inaccurate, and lack automation, leading to delays and errors in financial reporting, particularly for companies using accrual basis accounting with third-party vendors like law firms.

Innovation Solution

A software facility for electronic invoicing and budgeting that automates the accrual process by allowing vendors to directly enter or upload unbilled amounts, ensures timely submission, prevents double-counting, and integrates with budgeting to generate accurate accruals, reducing manual effort and errors.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If vendors manually submit unbilled amounts in spreadsheets at the end of the fiscal year, then the finance department can obtain accrual data, but the process is burdensome and inaccurate

Engineering Contradiction:

Improveaccuracy of accrual dataVSAvoidburden on vendors and companies

Core Design Contradiction:

ReliabilityVSEase of operation

Solution Approach 1:

The system enables vendors to automatically track and report their own unbilled amounts through an electronic invoicing platform. Vendors can enter time and billing information directly into the system, which automatically calculates accruals without requiring manual spreadsheet submissions. This self-service approach reduces the burden on both vendors and companies while improving data accuracy through automated calculations and real-time tracking.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The patent replaces the manual mechanical process of spreadsheet tracking and calculation with an automated electronic system. The system automatically tracks time entries, calculates unbilled amounts, generates accrual data, and integrates with the company's finance system. This substitution eliminates manual data entry errors and reduces the operational burden while maintaining reliable accrual information.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

2Loss of time

If companies contact law firms before receiving invoices to obtain accrual information, then finance departments can prepare timely financial statements, but the process requires additional manual effort and estimates

Engineering Contradiction:

Improvetimeliness of financial reportingVSAvoidcomplexity of accrual process

Core Design Contradiction:

Loss of timeVSDevice complexity

Solution Approach 1:

The system implements automated feedback mechanisms where the electronic invoicing platform continuously monitors and reports unbilled amounts to the company's finance system. The system provides real-time or near-real-time accrual information without requiring manual inquiries to law firms. This feedback loop ensures timely financial reporting while simplifying the process through automated data exchange and elimination of manual estimation procedures.

Inventive Principle:

Principle #23Feedback

3Loss of time

If vendors provide only estimates of future billing amounts before the end of the month, then accrual data can be provided timely, but the accuracy of the accrual information is reduced

Engineering Contradiction:

Improvetimeliness of accrual dataVSAvoidaccuracy of billing estimates

Core Design Contradiction:

Loss of timeVSMeasurement precision

Solution Approach 1:

The system performs preliminary tracking and calculation of unbilled amounts throughout the billing period. Vendors can enter time and billing information as work progresses, and the system continuously calculates accruals based on actual data rather than end-of-month estimates. This preliminary action approach provides timely accrual data with improved accuracy by using actual tracked information rather than projections.

Inventive Principle:

Principle #10Preliminary action

4Reliability

If the system integrates electronic invoicing with budgeting, then accrual accuracy is improved, but the system complexity increases

Engineering Contradiction:

Improveaccuracy of accrualsVSAvoidsystem integration complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent merges the electronic invoicing system with the budgeting system into an integrated platform. The same system that tracks vendor invoices and unbilled amounts also manages budget information and generates accrual data. This consolidation improves accrual accuracy by ensuring consistent data across both functions while managing complexity through a unified system architecture rather than separate integrated systems.

Inventive Principle:

Principle #5Merging (Combining)

Data Source

PatentUS11615464B2Accruals processing within an electronic invoicing and budgeting system

Publication Date: 2023.03.28 THOMSON REUTERS ENTERPRISE CENTRE GMBH

AI summary

A facility for conveying accrual amounts through an intermediary service is described. The facility permits vendors to each upload unbilled amounts for one or more matters for a client according to vendor-specific matter identifiers. The facility maps the vendor-specific identifiers for the uploaded unbilled amounts to client-specific identifiers. When the facility receives a request from the client to be you unbilled amounts for one or more matters, the facility displays to a client user the unbilled amounts for the requested matters according to the client-specific identifiers associated with the requested matters.