One of the biggest sources of stress for accounts payable teams is manual invoice processing. For every single invoice, someone must open it, examine the information inside, enter it into a database, double-check for errors, and send it for approval. The more invoices a company receives, the more time and effort employees will spend processing them. Past a certain point, this approach is just not viable anymore as it slows down the invoice approval cycle and costs too much money. The good news is that you can replace manual invoice processing with invoice data extraction to streamline the whole workflow and lower costs.
Not sure what invoice data extraction is? Keep reading this post to learn what it is and how it can benefit your business.
Why manual invoice processing doesn’t cut it anymore
If you rely on manual invoice processing, then you probably are already familiar with its many challenges:
- Inputting data manually takes a lot of time and thus costs a lot of money for your company;
- Paper invoices can sit on a desk for days or get lost while moving from one person to another;
- The entire invoice approval process slows down;
- As your company grows, employees will have more invoices to process, eventually to a point where it’s too time-consuming and stressful;
- Employees can — and will — make data entry errors due to stress, a drop in focus, or fatigue. These mistakes hurt the accuracy of your financial records and are hard to track and fix;
- You can miss out on opportunities like early payment discounts;
- And more.
For all these reasons, it makes sense to look for an alternative that is faster and more cost-efficient than manual data entry. Thankfully, automation technologies have evolved a lot in recent years. Now, it is possible to automate the entire data entry process to reduce processing times while improving data accuracy. This is precisely what invoice data extraction is for.
What is invoice data extraction?
It’s all in the name: invoice data extraction refers to the use of a software tool to extract data from invoices.
To be more specific, you can use an intelligent data extraction tool that pulls data from incoming invoices (whether it’s one or a hundred) with complete accuracy and exports it to a destination of your choice,
How does invoice data extraction work?
So how can a software solution know exactly where data is located in an invoice and extract it? Well, data extraction tools use various document processing technologies, like OCR (Optical Character Recognition) and pattern recognition, to scan a document, recognize the information within it, and convert it to machine-readable text.
To locate each data point, the user of the data extraction tool will typically set up extraction “rules” beforehand. In other words, they train the tool to locate data fields by selecting each one on a sample invoice. That way, whenever new invoices with the same layout are uploaded, the data extraction tool follows the rules created by the user to locate and extract data points.
From there, you can consolidate data from one or several invoices into a single spreadsheet. You can also set up an integration with your accounting system (e.g. Freshbooks) so that any extracted data is automatically exported there.
The benefits of invoice data extraction
As you can imagine, data extraction helps you overcome the invoice processing challenges we mentioned earlier. Specifically, with the right invoice data extraction tool, yo:
- Drastically reduce the time needed for invoice processing;
- Prevent data entry errors, therefore improving data accuracy and quality;
- Improve the accuracy of your financial records;
- Pay invoices on time;
- Prevent security issues caused by paper invoices, like internal fraud;
- Achieve better compliance;
- Nurture better relationships with vendors;
- Relieve A/P employees from the stress of manual data entry.
Closing Thoughts
We live in a world where both suppliers and customers expect fast responsiveness. Manual data entry holds you back from operating at full speed, so you need to replace it with automated data capture. Invoice processing will become far smoother and less costly.
If an invoice data extraction tool seems like the solution to your invoice processing issues, you should choose the best one available. You want to use a solution that is user-friendly, flexible in its data extraction parameters, secure, scalable, affordable, and which can integrate with your accounting system. One solution that meets these criteria is Docparser. If you want to learn how to use Docparser, we recommend you read this blog post.
