Invoice Capture: A Comprehensive 2023 Guide to Revolutionizing Invoice Processing

How much time and money does your company lose processing supplier invoices manually? Do your AP staffers spend long hours painfully extracting data from PDFs and paper documents?

If so, you’re not alone. In fact, according to research from the Institute of Finance and Management, the average cost to manually process an invoice is $11 due to labor, materials, and errors. For companies with tens of thousands of invoices, these costs really add up.

But what if you could automatically extract all the data you needed from supplier invoices and feed it directly into your accounting system?

Enter intelligent invoice capture.

Invoice capture technology leverages the latest advances in artificial intelligence (AI) and machine learning to extract invoice data with near human accuracy. This guide will get you up to speed on everything you need to leverage invoice capture to transform your payables process.

What Exactly Is Invoice Capture and How Does It Work?

Also known as invoice data extraction or invoice OCR, invoice capture automates the extraction of data from paper and electronic invoices received from suppliers. This eliminates the need for manual data entry to process invoices.

Invoices contain critical structured data like invoice numbers, supplier details, product IDs, quantities shipped, totals due, and remittance addresses locked away in document formats like PDFs or scanned images.

By unlocking this data, invoice capture solutions can drive significant cost savings, accelerate approvals, and reduce errors. The extracted data can feed directly into ERP systems like SAP or Oracle without any manual rekeying.

But how is this possible using today’s technology?

Invoice capture solutions combine two key technologies – OCR and AI machine learning:

  • Optical character recognition (OCR) technology converts scanned images of typed, handwritten, or printed text into actual text that can be searched and edited.
  • AI machine learning algorithms analyze invoice layouts and “learn” to identify and extract fields through pattern recognition.

Here’s how it works step-by-step:

  1. Invoices are received via email, snail mail or other channels. Paper invoices are scanned to digitize them.
  2. OCR software extracts all printed text from the invoice image and converts it into searchable text.
  3. The converted text and original invoice image are input into the machine learning model.
  4. The AI model analyzes the layout, finds patterns like headers and tables, and extracts fields based on what it has learned from past invoices.
  5. The extracted fields are output into structured data, commonly in JSON, XML or CSV format.
  6. This structured data can then be ingested directly into ERP or accounting systems.

The machine learning algorithms continuously improve by analyzing new invoices and validations by human reviewers. This allows the accuracy to reach over 90% over time for most invoice capture solutions.

The Benefits of Intelligent Invoice Capture

Let’s explore some of the major benefits driving adoption of invoice capture solutions:

Slash Manual Data Entry Costs

For companies processing thousands or millions of supplier invoices annually, the big-ticket cost saver is reducing manual document processing labor.

According to an Arkadium study, data entry clerks spend an average of 4 minutes per invoice for keying and validation. At $20/hr fully loaded costs, that’s $1.33 per invoice.

Small suppliers may only submit a few thousand invoices a year. But for enterprises, the volumes are massive. As this table illustrates, a large corporation processing 100,000+ invoices can expect to spend well over $100k annually on manual document processing:

Invoices Processed AnnuallyData Entry Cost Per InvoiceTotal Annual Invoice Processing Cost
10,000$1.33$13,300
50,000$1.33$66,500
100,000$1.33$133,000
500,000$1.33$665,000
1,000,000$1.33$1,330,000

Those costs will only continue to grow as invoice volumes increase. But with intelligent data capture, you can eliminate 90% or more of that manual processing effort.

Accelerate Approvals and Payment

Slow invoice approvals leave suppliers waiting for payment. This strains your relationships and their cash flow.

Many companies report taking weeks to manually process and approve an invoice for payment. With automated data extraction and validation, you can shrink the approval cycle from weeks down to hours or minutes.

Faster payments also means you can capture early payment discounts from suppliers. If only 50% of your suppliers offer 2% discounts for payment within 10 days, that’s still over 1% year-over-year bottom line savings on total spend.

Minimize Errors and Exceptions

No matter how careful your AP team is, manual data entry inevitably leads to errors that create exceptions and payment delays. Fat finger typos, misreads from illegible documents, and transcription mistakes all waste time.

AI data capture consistency identifies data from invoices with over 90% accuracy. This leads to 50-80% fewer touch points to resolve exceptions depending on invoice complexity.

Enhance Visibility Into Spend

With fast electronic intake, invoice data can feed into analytics systems. This powers dashboards for spend analysis by supplier, product, department, location and more.

Data analytics delivers insights to negotiate volume discounts, identify wasteful or maverick spend, streamline suppliers, and optimize working capital.

Heighten Fraud and Compliance

The digital workflow makes it simple to run invoice data through compliance rules and checks. Solutions can screen for duplicate invoices, flag suspicious amounts or bank accounts, and enforce approval rules. This reduces financial risks.

Electronic formats also improve auditability – no more hunting down boxes for paper evidence!

Use Cases Driving Invoice Capture Adoption

Invoice capture automation provides value across many common business use cases:

Accounts Payable Workflow Automation – AP departments receive high volumes of supplier invoices in both paper and electronic formats. Intelligent data extraction accelerates approvals and payment processing for better working capital performance.

Back Office Mailroom Digitization – Capture data from paper mail as soon as it arrives. Feed into RPA bots or workflows to process documents like invoices without delay.

Logistics and Transportation Processing – Digitize shipping manifests, freight invoices, claims forms and other logistics documents to improve cycle times and accuracy.

Healthcare Claims Management – Extract data from medical claims, insurance forms, clinical records to streamline workflows and self-service options.

Government and Public Sector Accounting – State and local governments must digitize supplier invoices to meet open accounting mandates and improve transparency.

Any Organization with High Document Volumes – Banks, insurance firms, educational institutions, and many other document-intensive entities gain significant benefits from intelligent data capture.

Critical Capabilities to Look For

With so many vendors now providing intelligent invoice capture, how do you select the right solution for your business? Here are some of the most critical capabilities to evaluate:

Accuracy Rates Exceeding 90%

For the majority of your invoices, you’ll want completely touchless automated extraction. Accuracy rates indicate what percentage of your invoices the system can process straight-through without human intervention.

Look for accuracy rates of over 90% to minimize manual quality checking. The best solutions exceed 95%.

AI that Keeps Getting Smarter

Machine learning offers advantages over rules-based technology. But it only works well if the algorithms continuously train on new data.

Prioritize solutions that learn from ongoing human validation to improve over time. Avoid systems with static intelligence.

Comprehensive Language Support

Many companies have suppliers from around the globe. English-only solutions won’t cut it.

Seek AI models that can handle your mix of languages like German, Chinese, Arabic, French, Spanish, and more.

Seamless System Integrations

To maximize ROI, the extracted invoice data must feed into your existing systems like:

  • ERP platforms (SAP, Oracle, Infor, Microsoft Dynamics)
  • Accounting systems (NetSuite, Sage Intacct, QuickBooks)
  • AP automation workflows

Assess how easily a vendor’s solution integrates with your technology stack.

On-Premise and SaaS Options

Some companies prefer keeping data on-premise for security or compliance. Others want the convenience of cloud.

Look for flexible vendors that offer both deployment options to suit your needs.

Pricing Aligned to Value

Vendors price solutions in different ways – per user, transaction, document page, etc.

Focus on models that align costs to the value you receive. Avoid paying for functionality you don’t need.

Leading Intelligent Invoice Capture Vendors

The invoice capture market has expanded rapidly, with dozens of vendors now providing intelligent data extraction capabilities. Here is an overview of leading solutions:

Rossum

Focused exclusively on AI-powered intelligent document processing, Rossum offers an accurate SaaS invoice capture solution integrating seamlessly with business systems.

Key Capabilities:

  • SaaS-only platform continuously trained by invoice data
  • Document understanding beyond just templates
  • Strong pre-built integrations (ERP, cloud storage, etc)
  • Free trial for invoice batches

HyperScience

HyperScience captures data from complex business documents like invoices using an AI approach it calls "human-like" understanding. Fast setup and comprehensive features.

Key Capabilities:

  • Human-assisted AI training creates custom models fast
  • Pre-built AP invoice solution for quick implementation
  • Broad capture capabilities beyond just invoices
  • Free trial available

ABBYY

A long-time data capture leader, ABBYY offers robust invoice processing capabilities through its ABBYY Vantage platform. Available both on-premise and in the cloud.

Key Capabilities:

  • Flexible deployment options: on-premise or SaaS
  • Invoice templates out-of-the-box for fast setup
  • Tight integrations with popular ECM/BPM platforms
  • Can handle complex multi-page invoices

Amazon Textract

As a new fully-managed AWS service, Amazon Textract allows for scalable high-volume invoice data extraction. Integrates tightly with other AWS services.

Key Capabilities:

  • Pay-as-you-go pricing simple for high volumes
  • Native integration with other AWS services
  • Auto-scaling for high volumes
  • Table extraction capabilities

Kofax

The 800-lb gorilla of data capture, Kofax offers advanced invoice capture capabilities through its Intelligent Automation platform. More complex to implement but very deep functionality.

Key Capabilities:

  • Leading accuracy rates and document support
  • Sophisticated automation and integration capabilities
  • Invoice templates and pretrained AI models
  • Both cloud and on-premise options

There are also great options from DocuWare, Ephesoft, Hypatos, Nanonets, Parashift, and more. The key is finding the right mix of features tailored to your specific invoice formats and volumes.

Implementation Best Practices

Following best practices will ensure you successfully rollout and continuously improve invoice data capture capabilities:

  • Start with a limited pilot focused on specific suppliers and invoice types.
  • Monitor accuracy through validation rounds and feed errors back to improve the AI.
  • Standardize invoice templates from suppliers as much as possible before ingesting them.
  • Build business rules and validations to flag suspicious transactions for review.
  • Slowly expand the rollout and volume as accuracy and performance benchmarks are met.
  • Blend AI data extraction with RPA bots handling exceptions through prescribed rules.
  • Treat implementation as an ongoing improvement process, not a one-time project.

The Future of Intelligent Document Processing

Invoice capture capabilities will continue advancing rapidly, leveraging AI and machine learning innovations. Here are some likely developments on the horizon:

  • Expanded language support for global business needs
  • Tighter embedded integrations with major ERP platforms
  • Increasing use of mobile capture from phones rather than just scanners
  • End-to-end automation combining data extraction, RPA, rules engines and workflows
  • Augmented intelligence collaborating with humans-in-the-loop at key steps

As the technology matures, extraction accuracy will reach over 98% for standard invoice layouts. This will accelerate adoption across business functions beyond just invoices to other document types.

Are You Ready to Streamline Invoice Processing?

Manual invoice data entry is frustratingly slow and expensive. But intelligent capture solutions can automate extraction at remarkable speeds and accuracy.

This guide provided a comprehensive overview of:

  • How invoice capture technology works using AI/ML
  • The key benefits driving adoption
  • Major use cases getting results right now
  • Top vendors in the invoice capture marketplace

To determine if invoice capture is right for your business, start with a small pilot. Most vendors offer trial licenses or batch testing services.

By transforming how you process supplier invoices, you can redirect AP staff to more impactful work while improving compliance, cash flow, and analytics. The ROI can be compelling.

Are you ready to stop wasting money on manual invoice processing? Reach out to explore your automation options!

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