Here’s how you automate your invoice processing in 2023 and beyond
Invoice processing is changing. After decades in which everything was done completely manually, the first automations have provided relief. Even though companies have automated parts of invoice capture today with traditional Optical Character Recognition (OCR), this is far from solving the problem. In fact, companies are increasingly struggling to manage their growing invoice volumes.
However, as a key part of the accounts payable (AP) process, automated incoming invoice processing is a necessity. Otherwise, late payments are just one of the serious consequences. Intelligent Document Processing (IDP) is the solution for 2023 and beyond, eliminating 100% of your organization’s manual invoice data entry.
- Past: Manual processing of invoices
- A- High error rate
- B- Slow invoice capture
- C- High costs and no scalability
- D- Inability to make timely payments
- Present: Processing of invoices with traditional OCR solution
- A- Reliant on templates
- B- Varying invoice layouts
- C- High maintenance costs
- Future: Fully automated processing of invoices with Intelligent Document Processing
- A- How unique will AI OCR be in the future?
- B- How to choose the right Intelligent Document Processing solution
- C- Advantages of using Parashift for your invoice capture
- D- Why other companies recommend Parashift
- Parashift IDP for more than just your invoices
1. Past: Manual processing of invoices
It wasn’t all that long ago when paper invoices were the norm. Even today, the past is still part of the present in many companies. While some invoices are received electronically, others are still received physically. The manual invoice process looks like this:
- After goods are received, the vendor sends the paper invoice by mail.
- Your team enters the data into the accounting system by hand.
- If you work with purchase orders, employees match the purchase order data against the invoice data.
- If there are discrepancies, employees must look for the reason for the errors – for example, incorrect entries or vendor changes.
- Employees scan the invoice and also physically file it in the archive.
- The responsible employee approves the invoice.
- Payment is made.
Unless your company has only a few employees, manual invoice processing has obvious disadvantages:
A- High error rate
A central problem with manual invoice data entry is the high susceptibility to errors. Even trained specialists are prone to careless errors, especially when documents are of poor quality. This leads to inaccurate invoice data, expensive corrections and delays all around.
Manual capture = increased risk of errors = high cost of identifying and correcting the errors.
B- Slow invoice capture
Manual entry of invoice data is not only slow in itself, but also delays the entire AP process. This becomes very slow and requires vast amounts of resources, mostly in the form of additional employees. Reduced operational efficiency is the logical consequence.
Slow incoming invoice process = inefficient accounts payable = high costs.
C- High costs and no scalability
High costs for businesses are not even the worst of it. As businesses grow, invoice volumes increase, and with manual capture comes the inability to scale. Simply hiring more people on the AP team is not a worthwhile option for most companies, and for good reason.
As the company grows, invoice volume increases = no scalability possible with manual invoice processing workflow.
D- Inability to make timely payments
Delays in processing lead to delays in payments. Not only does this put your company at risk of missing deadlines and thus not benefiting from cash discounts. Late payments can also result in high fees and damage the relationship between your company and the vendor.
Late payments = no use of discounts and risk of fees.
2. Present: Processing of invoices with traditional OCR solution
Today, most companies have automated at least parts of their invoicing process. A digital invoice workflow offers enormous advantages. However, even in 2022 only 16.2% of companies have fully automated their AP department. The question is whether ignorance or a false assumption is responsible for not automating more. 42.2% of companies feel that their “current invoice processing processes work.” This is despite the fact that, at $9.25, the average cost of processing an invoice speaks for itself.
Traditional Optical Character Recognition (OCR) solutions that companies have integrated for data capture offer clear advantages over manual processing. The implementation makes the process much faster and more productive. However, legacy OCR solutions also have clear limitations:
A- Reliant on templates
Traditional OCR solutions are anything but flexible. They are based on templates and are therefore dependent on a clear format and require clear rules. This is only achieved by configuring the capture solution for the individual fields to be extracted.
B- Varying invoice layouts
When the layouts of invoices change, traditional OCR is done without configuring additional templates. Chances are you work with different vendors. And therefore also have to capture and process invoices with different layouts.
C- High maintenance costs
The quality of text recognition and extraction depends directly on the quality of the image delivered to the OCR software. To increase the accuracy of OCR, more templates and rules need to be configured. This raises the configuration and maintenance costs for your company. Besides, this solution is never 100% accurate, which means you need to constantly check and correct data manually.
3. Future: Fully automated processing of invoices with Intelligent Document Processing
Instead of your organization using OCR solutions with limited capabilities, you’re better off turning to an advanced solution for invoice processing automation. Intelligent Document Processing (IDP), also known as AI OCR, is based on various artificial intelligence (AI) technologies, including machine learning and deep learning.
Parashift’s AI-based IDP platform brings together unique features to make sense of data and deliver the best possible extraction performance for your invoice processing needs. The future of intelligent document processing is here – today.
A- How unique will AI OCR be in the future?
Thanks to the advancement of machine learning and deep learning algorithms, tremendous progress has been made in document extraction and AI-based OCR in recent years. On the road to fully autonomous document extraction, the Parashift team is working on the vision of developing an API that processes all documents and returns the data without human intervention:
Imagine a world where document extraction is completely autonomous, super accurate, and pain-free.
B- How to choose the right Intelligent Document Processing solution
When evaluating the right Intelligent Document Processing solution for your business, the following questions can help guide you:
- How easy is the integration? Is the solution interoperable with your existing systems and does it operate in a cloud infrastructure?
- What value does the solution add? Is the platform easily scalable and can processes be automated end-to-end?
- How powerful is the AI OCR? Are unstructured, complex invoices as well as other documents no obstacle and does the solution learn automatically?
- How easy is the platform to use? Can you create new document types with just a few clicks if needed?
- How big is the vision of the solution provider? Do they constantly improve the platform and are the technologies future-oriented?
You can find a detailed overview here.
C- Advantages of using Parashift for your invoice capture
With invoice automation, you want to reduce costs and speed up processes in your company. This requires specific demands on the IDP solution:
Capture and read line item data accurately: Do you want to perform a detailed comparison with a purchase order? Or do a comparison of vendor master agreements? No problem, because Parashift automatically extracts all the necessary line item data from the invoices.
Full validation: Parashift takes care of everything related to invoices for you, including validation. This eliminates 100% of manual interactions for your employees and allows you to assign them to value-added work.
AI combined with human intelligence: For best extraction results, Parashift combines AI-based data extraction technology with human validators (human in the loop). The AI does the work of reading and structuring the invoice data. If the AI is not sure that it has captured the correct information, it resorts to the human in the loop for follow-up validation.
D- Why other companies recommend Parashift
Future-oriented Document Swarm Learning: The foundation of Parashift IDP is proprietary Document Swarm Learning. The forward-looking approach of the technology and the Cloud OCR API enables global AI training across all customers and across billions of data points. Progress is made continuously through all documents processed in the cloud and shared immediately with all customers on the network. This opens up the possibility of cost and effort sharing with all users of the platform.
GDPR compliant cloud platform: Parashift’s modern cloud infrastructure is fully GDPR compliant. ISO27001 and HIPAA compliant data centers make Parashift a secure provider for your document extraction needs. No matter where in the world or what industry your company is located. More information regarding security and compliance can be found here.
Easy integration, no configuration: You get document extraction software that’s easy to integrate and doesn’t require expensive projects for optimization. The Parashift Cloud AI-OCR API enables highly shortened turnaround times and reduces the total cost of ownership tremendously.
4. Parashift IDP for more than just your invoices
As the most advanced and versatile Intelligent Document Processing platform on the market, Parashift is not only the solution for your digital invoice processing. Rather, you can use it to automatically process hundreds of other business documents, including purchase orders and pension fund statements, for example.
So don’t hesitate to tell us about your automation project – we’d love to help.