In today’s fast-paced world, businesses are prioritising productivity, efficiency, and speed.
Unfortunately for us mere mortals, technology holds the key to providing these benefits, but only when combined with the key skills provided by humans - advancing our roles to become the best we can be.
One of the key areas for improvement in business remains the humble accounts payable process, which is still being bogged down by manual processes, paper documents, and too much human interaction.
Invoice processing is in desperate need of a tech injection. But how?
What is invoice processing?
Invoice processing is simply the ability to process and approve payments in a business’ ERP system by taking an invoice from a supplier or partner, checking it is valid and correct, and signalling for payment to be sent. Within a business, invoice processing is typically handled by the accounts payable (AP) team.
Sounds simple, right? But there are no end of problems that can slow down the processing of supplier invoices.
For example, the format invoices are received can vary, such as Word documents, PDFs, or electronic invoices. Again, this doesn’t sound like a big deal, but having several different formats also means different document layouts and styles - Purchase Order versus PO number, for example - which can slow down the approvals process.
Organisations have been moving towards electronic invoice processing for some time now, where the invoice data is transformed from whatever document and format it is currently in and turned into data which can be read and understood by accounts payable professionals.
So how do we do this? Enter OCR software.
What is OCR software for invoice processing?
Optical Character Recognition (OCR) software is a technology used to take paper documents that need to be digitised - in this case, supplier invoices - and upload them into a system where they can be processed.
OCR software works by first scanning documents to understand certain fields - such as supplier account number, total invoice amount, or VAT applied - as these will match up with the same fields in the ERP system so that they can be recorded, recognised, and compared against each other.
OCR technology then goes about converting the scanned documents, which can be any kind of image containing written text (typed, handwritten, or printed) into something that is digitally readable.
OCR is reliable, almost always accurate, and as such has been used for processing like the swift and secure approval of invoices for a long time now.
Because of this, there are plenty of different vendors and types of OCR technology available on the market today. So which ones should you be looking for?
What OCR invoice processing platforms are available to me?
As you start to explore the AP automation market, it’s still a good idea to ask providers if they utilise OCR technology in their digital system, as this will save your accounts payable team constantly scanning, uploading, and checking the validity of paper documents.
But as OCR has now become a standard piece of technology in accounts payable automation technology, it’s really about what kind of AP platform your business wishes to use. Some AP automation providers will use OCR, but they may use manual processes for the data extraction part, which is more time-consuming.
What you really want to know when searching for AP automation providers is if their software is a complete, end-to-end solution, and not just one that is used to digitise invoices or involves any manual processes.
Because what businesses really need is a solution that combines OCR software with data analytics tools and machine learning. Armed with this, accounts payables teams can cover the entire invoice process - converting invoices into data, transforming data into readable information, and having a system that learns this information over time to reduce the amount of human interaction.
Smart AP automation technology is able to extract information from scanned invoices or even invoices received by email, and then sets about interpreting, sending, and applying the relevant information and data fields into the ERP system - a truly touchless process.
Powered by machine learning, the technology gets smarter the more it is used and learns over time to notify when data is missing in invoices, if the information is not correct, and can even correctly match supplier payment information from previous invoices for better security.
So, when you’re looking at OCR software for invoice processing, make sure it covers all bases to keep your accounts payable department the most productive team they can be.