In today’s fast-paced business world, efficiency is key. As businesses grow and their B2B payment volume increases, manual processes can become a burden on day-to-day operations. One area where this is particularly evident is in accounts payable (AP), where teams often have to manually enter data from invoices into their accounting systems. This not only takes up valuable time but also increases the risk of errors. To overcome these challenges and improve overall productivity, many businesses are turning to OCR (optical character recognition) for accounts payable automation.
What is OCR for Accounts Payable?
OCR, or optical character recognition, is a technology that allows computer systems to read and capture text from digital files, such as PDFs, and convert it into editable data. In the context of accounts payable, OCR invoice processing is the automation of data extraction from invoices. By using OCR technology, AP teams can significantly reduce the time and effort spent on manual data entry, minimize the risk of errors, and improve overall efficiency in the invoice processing workflow.
How Does OCR for Accounts Payable Work?
The process of OCR for accounts payable can be broken down into several steps:
1. Invoice Upload
The first step in the OCR invoice processing workflow is to upload the invoice to the designated AP inbox. Invoices can be uploaded via email or manual file upload. OCR systems typically accept various file formats, including PDF, Word, Excel, and image files like JPEG or TIFF.
2. OCR Data Extraction
Once the invoice is uploaded, the OCR software starts 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 data, including descriptions, quantities, unit prices, and amounts. The OCR technology is designed to accurately recognize and convert the text on the invoice into digitized data.
3. Payable Creation
After the OCR data extraction is complete, the captured fields are used to create a new payable in the AP system or integrated accounting software. The OCR system populates the payable details, and depending on the system used, additional information such as account codes may be automatically populated. At this stage, the payment can be assigned for review by the AP team.
4. Payment Approval and Processing
Once the invoice has been reviewed and approved, the AP team selects a payment method and delivery option. The invoice is then processed through the normal AP approval process, and once approved, it is ready to be paid. The OCR system streamlines the payment process by eliminating the need for manual data entry and reducing the risk of errors.
Benefits of OCR for Accounts Payable
Implementing OCR for accounts payable automation offers several benefits for businesses and their finance teams. Let’s explore some of these benefits in more detail:
1. Time Savings
OCR invoice processing significantly reduces the time spent on manual data entry tasks. According to Routable, OCR can reduce bill coding time by up to 60%, saving several minutes per invoice. With the increasing volume of invoices, this time savings can have a substantial impact on overall productivity and allow AP teams to focus on more strategic activities.
2. Increased Accuracy
Manual data entry is prone to errors, which can have costly consequences for businesses. OCR for accounts payable eliminates the need for manual data entry, minimizing the risk of human errors. By automating the data extraction process, OCR technology ensures that information is accurately captured from invoices, reducing the need for manual corrections and reconciliation.
3. Enhanced Productivity
By automating the invoice processing workflow, OCR allows finance teams to streamline their operations and improve overall productivity. With less time spent on manual data entry and processing, AP teams can allocate their resources to more value-added tasks, such as strategic financial analysis, budgeting, and forecasting. OCR technology frees up time for finance professionals to focus on activities that contribute to the growth and success of the business.
4. Improved Compliance
OCR for accounts payable can help businesses maintain compliance with regulatory requirements. By automating the data extraction process, OCR ensures that invoice information is accurately captured and recorded, reducing the risk of compliance errors. This can be particularly important for businesses operating in highly regulated industries or those subject to strict auditing requirements.
OCR for Accounts Payable: A Component of AP Automation
While OCR technology plays a vital role in streamlining invoice processing, it is essential to recognize that OCR alone is not a complete solution for AP automation. To fully optimize the AP process, businesses should consider a comprehensive AP automation system that integrates OCR technology with other essential features. Here are some additional capabilities to look for in an AP automation solution:
1. Real-Time Integration with Accounting Software
A robust AP automation system should offer real-time, two-way sync with your accounting software. This integration ensures seamless data transfer between the AP system and the accounting software, enabling accurate and up-to-date financial reporting. It also eliminates the need for manual data entry in both systems, further improving efficiency and reducing the risk of errors.
2. Flexibility and Customization
Every business has unique requirements and processes. An AP automation solution with a flexible API (Application Programming Interface) allows businesses to customize the system to their specific needs. A well-documented API enables developers to integrate the AP automation software with other systems and build custom workflows that align with the business’s core processes.
3. Reporting and Analytics
A comprehensive AP automation system should provide robust reporting and analytics capabilities. These features enable businesses to gain insights into their AP processes, identify bottlenecks, and make data-driven decisions. The ability to generate customizable reports and access real-time analytics can help businesses optimize their financial operations and improve overall performance.
Choosing an OCR for Accounts Payable Solution
When selecting an OCR for accounts payable solution, it’s important to consider your business’s unique requirements and goals. One solution that offers a comprehensive AP automation system, including OCR technology, is Routable.
Routable’s OCR invoice processing feature automates the extraction of core invoice data and line item details. The captured information, such as vendor name, invoice number, due date, and amounts, is used to create payables in the AP system or integrated accounting software. Routable also offers real-time, two-way sync with popular accounting software like Xero, QuickBooks, NetSuite, and Sage Intacct, ensuring seamless integration and data accuracy.
With Routable’s OCR invoice processing and full AP automation capabilities, businesses can streamline their accounts payable processes, reduce manual tasks, and improve overall efficiency. By leveraging OCR technology and a comprehensive AP automation system, businesses can focus on strategic financial management, compliance, and growth.
Conclusion
OCR for accounts payable automation is a game-changer for businesses looking to streamline their invoice processing workflows. By leveraging OCR technology, businesses can significantly reduce manual data entry, improve accuracy, enhance productivity, and ensure compliance. When combined with a comprehensive AP automation system, OCR can transform the way businesses manage their accounts payable processes, allowing finance teams to focus on value-added activities and contribute to the overall success of the business. Choose a solution like Routable that offers OCR invoice processing and a range of other essential AP automation features to optimize your AP operations and drive business growth.