In today’s fast-paced business environment, manual accounts payable (AP) processes can be a significant burden on finance teams. As businesses grow and the volume of invoices increases, the need for automation becomes crucial to maintain efficiency and accuracy. One technology that is revolutionizing AP automation is Optical Character Recognition (OCR). In this comprehensive guide, we will explore how OCR AP invoice automation works, its benefits, and how it can streamline your accounts payable workflow.
What is OCR AP Invoice Automation?
OCR, short for Optical Character Recognition, is a technology that enables computers to read and capture text from digital files, such as PDFs, and convert them into editable data. When applied to AP invoice processing, OCR automates the extraction of key invoice information, reducing the need for manual data entry. By leveraging OCR technology, AP teams can save time, minimize errors, and improve overall efficiency in their invoice processing workflows.
How Does OCR AP Invoice Automation Work?
The process of OCR AP invoice automation follows a series of steps that transform a paper invoice into digital data. Let’s take a closer look at each step:
Step 1: Uploading the Invoice
The first step in OCR AP invoice automation is to upload the invoice to your designated AP inbox. Invoices can be uploaded manually or received via email. OCR systems typically accept a variety of file formats, including PDF, Word, Excel, JPEG, and TIFF.
Step 2: OCR Data Extraction
Once the invoice is uploaded, the OCR software begins the data extraction process. The software reads the core invoice data, such as vendor name, invoice number, invoice date, due date, sales tax, and total. It also captures line item details, including description, quantity, unit price, and amount.
Step 3: Creating a New Payable
After the OCR data extraction is completed, the captured fields are used to create a new payable in your AP system or integrated accounting software. The payable details are automatically populated based on the extracted data. At this stage, additional information, such as account codes, may be applied depending on the system used.
Step 4: Review and Approval
Once the new payable is created, it undergoes a review process by the AP team. They can easily verify the accuracy of the auto-filled data and make any necessary adjustments. After the review and approval, the invoice is ready to be paid.
Step 5: Payment Processing
With the invoice approved, the AP team selects a payment method and delivery option. The payment is then processed and recorded in the accounting system. OCR AP invoice automation streamlines this entire process, reducing the time and effort required for manual tasks.
Benefits of OCR AP Invoice Automation
Implementing OCR technology in your AP invoice processing workflow offers several benefits for finance teams and the organization as a whole. Let’s explore the key advantages:
1. Time-saving and Increased Efficiency
Manual data entry can be time-consuming and prone to errors. OCR AP invoice automation significantly reduces the time spent on entering data manually, allowing your AP team to focus on more value-added activities. Studies have shown that OCR can reduce bill coding time by up to 60%, saving teams minutes per invoice. With automation, your team can process hundreds or even thousands of invoices more efficiently.
2. Improved Accuracy and Reduced Errors
Manual data entry is susceptible to errors, which can lead to costly mistakes and reconciliation issues down the line. OCR AP invoice automation eliminates the risk of human error by automatically populating invoice data and applying account codes based on accurate data extraction. This ensures that invoices are processed correctly the first time, reducing the need for manual intervention and minimizing the chances of errors.
3. Enhanced Productivity and Resource Optimization
By automating AP invoice processing with OCR, finance teams can optimize their resources and improve overall productivity. With less time spent on manual data entry, AP professionals can redirect their efforts towards more strategic tasks, such as financial analysis, forecasting, and vendor management. OCR AP invoice automation allows your team to accomplish more with the same resources, resulting in increased efficiency and productivity.
4. Streamlined AP Workflow
OCR AP invoice automation integrates seamlessly with your existing AP workflow, streamlining the entire process from invoice receipt to payment settlement. The automated data extraction and population of payable details enable a faster and more streamlined workflow. By eliminating manual tasks, OCR AP invoice automation reduces bottlenecks, ensures timely payment processing, and improves the overall efficiency of your AP department.
5. Scalability and Growth
As your business grows, the volume of invoices will inevitably increase. Manual AP processes may struggle to keep up with the growing demands, leading to delays and potential errors. OCR AP invoice automation is highly scalable and can handle large volumes of invoices with ease. Whether you receive invoices via email or in paper format, OCR technology can efficiently extract the necessary data, ensuring that your AP processes remain efficient and effective as your business expands.
Integrating OCR AP Invoice Automation into Your Workflow
Implementing OCR AP invoice automation requires careful consideration of your existing AP workflow and the software solutions available. Here are some important factors to consider:
1. Real-time, Two-way Sync with Accounting Software
For a comprehensive AP automation system, it is crucial to choose an OCR solution that offers real-time, two-way synchronization with your accounting software. This integration ensures that invoice data captured through OCR is seamlessly transferred to your accounting system. It also allows for accurate and up-to-date reporting, reconciliation, and payment tracking.
2. API Flexibility and Customization
Every organization has unique requirements and may need to customize their AP systems and processes. Look for an OCR AP automation solution that provides a flexible API (Application Programming Interface) to enable developers to tailor the system to your specific needs. A robust API allows for seamless integration with other software and enables customizations that align with your business processes.
3. Vendor Database Integration
To fully leverage the benefits of OCR AP invoice automation, it is essential to have a vendor database integration. This integration ensures that the OCR solution can match the vendor’s name on the invoice with the vendor information in your system, reducing manual intervention and maintaining data accuracy. The ability to automatically update vendor information, such as contact details and payment terms, saves time and minimizes errors.
Choosing the Right OCR AP Invoice Automation Solution
When selecting an OCR AP invoice automation solution, it is important to consider your specific business needs and goals. One such solution is Routable, a comprehensive AP automation platform that offers OCR capabilities along with a range of other features. With Routable, you can seamlessly upload and process invoices, leverage OCR technology for accurate data extraction, and automate your entire payables workflow.
Routable’s OCR invoice processing feature automatically extracts core invoice data, including vendor name, invoice number, invoice date, due date, sales tax, and total. Line item details such as description, quantity, unit price, and amount are also captured. This data is used to create new payables in your accounting system, eliminating the need for manual data entry and reducing errors.
In addition to OCR capabilities, Routable offers a real-time, two-way sync with popular accounting software such as Xero, QuickBooks, NetSuite, and Sage Intacct. This ensures that your AP processes remain synchronized and up-to-date, providing accurate reporting and seamless payment reconciliation.
OCR AP invoice automation is revolutionizing the way businesses handle their accounts payable processes. By leveraging OCR technology, organizations can streamline their invoice processing workflows, save time, improve accuracy, and enhance overall efficiency. The benefits of OCR AP invoice automation include time-saving, increased productivity, reduced errors, streamlined workflows, and scalability. When choosing an OCR solution, it is important to consider factors such as real-time synchronization with accounting software, API flexibility, and vendor database integration. Routable offers a comprehensive AP automation platform that includes OCR capabilities, real-time sync, and a range of other features to optimize your AP workflow. Embrace the power of OCR AP invoice automation and take your accounts payable processes to the next level.