Capturing accurate and comprehensive data from invoices is no longer just a mundane administrative task. It has become a strategic necessity as the data contained within invoices holds valuable insights into a company’s spending patterns, and vendor performance. The invoice’s data value, however, depends on how quickly it is processed.
Fortunately, with the technological evolution and introduction of AI, it is possible to process invoices in near real time.
Understanding Invoice Capture
Businesses receive invoices through various channels, such as email, electronic data interchange (EDI), or vendor portals. Invoice capture extracts relevant information from these documents and converts it into a digital format through a combination of advanced technologies and intelligent software algorithms.
Once an invoice is received, automated invoice capturing systems use Optical Character Recognition (OCR) technology to analyze the scanned or electronic document and convert it into machine-readable text. The process includes identifying key fields such as vendor details, invoice numbers, dates, line items, quantities, and prices.
After the data is extracted, it is validated, verified, and cross-checked against predefined rules and formats to ensure accuracy and consistency. This step helps identify any errors, discrepancies, or missing information in the captured data. Automated systems are also equipped to handle exceptions. For example, if an invoice does not meet predefined validation criteria or requires manual intervention, the system flags it for review.
The validated invoice data is then integrated into the company’s financial systems, such as accounting software or enterprise resource planning (ERP) systems. This integration ensures that the captured invoice data is seamlessly transferred and synchronized with other financial records and processes.
Limitations of Manual Invoice Data Capture
According to Adobe, the expenses associated with manual invoice processing amount to approximately $15 to $40 per invoice, including the costs related to paper, printing, postage, and labor . High processing cost is not the only challenge with manual invoice capture, there are various other limitations associated with manual invoice data capture such as:
- Time-Consuming: Manual invoice capture involves laborious tasks such as data entry, paper handling, and physical storage. The process can be slow, especially when dealing with a high volume of invoices, leading to delays in processing and payment cycles.
- Inefficiency in Invoice Matching: Without automated systems to assist in matching and verifying invoice details, there is a high chance of inaccuracies and payment errors.
- Limited Visibility and Reporting: With manual invoice capture it is difficult to extract and analyze invoice data for reporting and analysis purposes. It limits visibility into spending patterns, invoice statuses, and other key metrics, which has an adverse impact on decision making.
- High Chances of Error: Manual data entry is prone to human errors such as typos, omissions, and misinterpretation of handwritten information. These errors can result in inaccurate data entry, discrepancies in payment amounts, and reconciliation issues.
Automated Invoice Capture: The Need of the Hour
In 2021, global retail e-commerce sales reached around 5.2 trillion U.S. dollars. It is projected that this figure will experience a substantial growth of 56 percent in the coming years, with an estimated value of approximately 8.1 trillion dollars by 2026. Yet, most businesses are not satisfactorily equipped to handle the high volume and velocity of incoming documents and the data they contain.
Moreover, businesses send invoices in various formats such as PDF, or Excel, adding to the complexity of the data extraction process, which is why automation has become the need of the hour for businesses, whether in retail or any other industry.
Here is how automated invoice capture helps spur business growth:
- Automated systems can handle large volumes of data efficiently and consistently without sacrificing speed or accuracy. They can process invoices in bulk, extract data rapidly, and validate it against predefined rules, ensuring smooth operations even during periods of high activity.
- These systems can also be configured and customized to adapt to evolving business needs. They offer flexibility in handling different invoice formats, layouts, and data structures, allowing businesses to onboard new vendors, and expand their supplier base.
- Automated systems can integrate with other business systems, such as accounting software, ERP systems, or workflow management tools, accelerating invoice processing.
Implementing Automated Invoice Capture
Before jumping on to the bandwagon of automating your invoice capture, there are some prerequisites that you need to be aware of. Preparing your data and existing systems before transitioning will ensure that you can start getting a return on your investment right away. Here are some points that you should keep in mind:
- Identify the specific requirements of your business, including the types of invoices you receive, the volume of invoices, and the integration needs with existing systems.
- Clearly define the objectives of implementing automated invoice capture, such as reducing processing time, improving accuracy, or gaining better visibility into financial data.
- Research and evaluate different automated invoice capture solutions available in the market. Consider factors such as functionality, scalability, ease of use, integration capabilities, and vendor support.
- Cleanse and organize your existing invoice data to ensure data consistency and accuracy.
- Establish standard formats and templates for invoices, if applicable, to facilitate automated extraction.
- Assess the compatibility of your existing systems, such as accounting software or ERP systems, with the chosen invoice capture solution.
- Define the fields and data points to be captured from the invoices, such as vendor details, invoice numbers, line items, and amounts.
- Set up validation rules and business logic to ensure the accuracy and quality of the captured data.
- Customize workflows and exception handling processes to accommodate any unique requirements or scenarios.
Automate Invoice Data Capture with Astera Report Miner
Astera Report Miner is an automated AI-powered data extraction solution that can quickly extract data from multiple files within minutes. Here are some notable features of Astera Report Miner that accelerate invoice data capture:
- User-friendly interface: The tool has a drag-and-drop environment, which makes it easier for users to operate it regardless of their technical expertise.
- Intelligent Data Extraction: The AI-powered tool utilizes machine learning algorithms to extract relevant information from unstructured or semi-structured data sources, especially PDFs. The tool is fully equipped to handle various types of templates even if they are different. All a user needs to do is identify the data they want and the tool extracts the data from the specified fields.
- Support for Multiple Data Sources: The tool supports a wide range of data sources, including databases, files (such as CSV, Excel, PDF)
- Automated Data Validation: The tool provides mechanisms to validate the extracted data against predefined rules or business logic to ensure its quality and accuracy. It can flag inconsistencies, errors, or outliers for further review or action.
- Scalability and Performance: The tool is designed to handle large volumes of data efficiently. It can process data in parallel, optimize extraction tasks, and scale resources as per the demand, ensuring high performance and throughput.
- Job Scheduling: The job scheduling feature enables the automation of data extraction tasks, eliminating the need for manual initiation. Users can set up extraction jobs to run at specific times, such as daily, weekly, monthly, or based on events.
Download a 14-day free trial for Astera Report Miner and accelerate data extraction from invoices.