Incoming Invoice Processing with Microsoft Dynamics 365 ERP
- Automatically receive, validate, and post invoices
- Digital workflows for faster processing, fewer errors, and full transparency
- Seamless integration of incoming invoices into your ERP system
Advantages of digital invoice processing in Microsoft Dynamics 365 ERP
Invoices from all channels—email, scanned documents, or e-invoices—are centrally received, automatically read, and validated. Manual data entry and media disruptions are eliminated entirely.
Manage invoice approvals securely and transparently with role-based workflows, escalation rules, and full visibility into every step of the process—including due dates and payment deadlines.
Ensure compliance with legal requirements through GoBD-compliant archiving and full documentation of all processing steps. The solution meets both GDPR and audit standards.
The solution integrates directly with Microsoft Dynamics 365 Finance, Business Central, and older versions like AX or NAV - no system breaks, no duplicate data entry. It's scalable and ready for future regulatory changes, such as mandatory e-invoicing.
Optimized incoming invoice processing in Microsoft Dynamics ERP
Microsoft Dynamics ERP effectively supports core financial and procurement processes. However, when it comes to fully automating incoming invoice processing, the standard system quickly hits its limits. Key features like OCR scanning, e-invoice capture, rule-based workflows, and audit-proof archiving are often missing or only partially available. The result? High manual effort, media disruptions, and a lack of transparency in day-to-day operations.
A specialized solution for incoming invoice processing fills these gaps—right where Microsoft Dynamics falls short. It automates invoice receipt, embeds intelligent validation and approval workflows, and provides end-to-end visibility across the entire invoice lifecycle. Plus, with the web-based interface, users without access to Microsoft Dynamics can be easily involved in the process. The outcome: reduced manual work, full legal compliance, and a scalable, future-ready foundation for digital invoice processing.
How automated incoming invoice processing works
1. Receive – automate incoming invoices
Incoming invoices arrive through a variety of channels: by email, as PDFs, in structured e-invoice formats (e.g., XRechnung, ZUGFeRD), via e-invoice portals like those in the Peppol network or other national platforms – and sometimes still on paper.
The specialized solution captures all formats in a centralized, media-break-free process. Integrated OCR technology automatically extracts and structures data from PDFs and paper invoices. Structured formats like XML or XRechnung are imported directly. Key information such as vendor data, invoice totals, PO numbers, and line items is automatically recognized and matched with master data in Microsoft Dynamics—no manual input required.
2. Check & Approve – digital workflows
Once received, each invoice enters a rule-based validation and approval workflow. Built-in logic checks for completeness, consistency, and – where applicable – matches invoices to POs and goods receipts (3-way match). Incomplete or incorrect invoices are routed for clarification automatically.
The approval process is fully digital and highly configurable. Whether approval is based on amount, cost center, project, or organizational unit, all rules are supported by the system. Mobile approvals, delegation rules, and escalations ensure seamless processing and full transparency. Every step is logged with a complete audit trail.
3. Post & Archive – fast, secure, and legally compliant
After approval, invoice data is transferred to Microsoft Dynamics ERP and posted – with all relevant details, such as vendor information, account assignments, purchase order links, and goods receipt references. Depending on your setup, posting can be manual or fully automated.
All documents and approval records are archived in an audit-proof system. Each invoice is stored along with all associated steps, attachments, and decisions– fully compliant with GoBD, GDPR, and audit requirements.
Dashboards and reports provide real-time insights into processing status, helping you track open invoices, lead times, and payment deadlines. Analytics also support monitoring of key metrics like discount windows and process performance.
Challenges without a specialized solution
Many companies rely on the standard version of Microsoft Dynamics ERP without an extension for incoming invoice processing. However, the shift toward mandatory e-invoicing has clearly highlighted the system’s limitations in real-world scenarios. Gaps in functionality—particularly around the automated processing and validation of incoming e-invoices—have become increasingly apparent.
Common issues include limited format support, manual workarounds, and media disruptions that slow down processing. While Microsoft Dynamics offers capabilities for generating outgoing invoices and provides basic tools for importing structured data, many organizations still rely on interim solutions, manual verification steps, or inefficient processes to handle incoming invoices.
This lack of automation directly impacts efficiency, transparency, and compliance. Companies using older versions like NAV or on-premises deployments face even greater challenges, as Microsoft offers minimal support for modern invoice processing in these environments. Even with the latest Business Central SaaS versions, key features such as automated e-invoice receipt, multi-level approvals, and seamless downstream processing remain limited.
To overcome these challenges, a specialized solution is essential, that:
- automatically captures and processes all standard e-invoice formats,
- meets operational needs and scales with business requirements,
- ensures full compliance with legal regulations,
- digitally maps invoice review, approval, and posting workflows, and
- is fully integrated into Microsoft Dynamics ERP.
The software behind it all: edoc invoice
The basis of our digital incoming invoice processing solution is the standard software edoc invoice with a maintenance contract. It draws on experience from a large number of successful workflow projects in this field. edoc invoice provides a state-of-the-art technological platform featuring the latest development and control technologies for optimized performance. It runs in the cloud, on-premises or as a hybrid solution.
In edoc we have found a partner who can provide both the ECM system and the integration into our ERP system, Dynamics NAV, from a single source and who can competently oversee the implementation.
Uta Goldberg, ERP project manager, SBS Dienstleistungs GmbH
Implementing digital incoming invoice processing in Microsoft Dynamics ERP
Integrating a specialized solution for digital incoming invoice processing into Microsoft Dynamics ERP (such as Dynamics 365 Finance, Business Central, or legacy systems like Dynamics AX/NAV) typically requires no major changes to the ERP environment. The goal is to enhance the existing ERP infrastructure with the capabilities needed for efficient, automated, and legally compliant invoice processing—and to fully digitize the entire incoming invoice workflow.
The process begins with a thorough analysis of the existing Dynamics setup: Which modules are currently in use? How is the invoice process structured today? What are the specific requirements regarding workflows, posting logic, compliance, and system interfaces? Based on these insights, a tailored integration plan is developed.
The solution is then connected to Microsoft Dynamics using standardized connectors or APIs. All relevant systems—such as email inboxes for incoming invoices, scanning stations, e-invoicing platforms, or existing DMS/archive systems—are integrated. The built-in OCR and data recognition components are configured to automatically extract invoice data and match it against the master data in Dynamics. The approval workflow is customized to align with your organizational structure, roles, and approval requirements.
After the technical implementation, a structured testing phase follows using real-life scenarios and sample invoices. Only once all processes run smoothly is the system rolled out to production—with a defined go-live date, user training, and optional go-live support to ensure a smooth transition.
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