Blog / Purchase-to-pay
2019 Guide to OCR, Invoice Scanning & Data Capture
Most organizations say manual data entry and the high volume of email and paper invoices they receive are a challenge.*
Compounding the issue:
- In many cases invoice scanning uses dated OCR technology which has limited functionality and depth
- Emailed invoices from suppliers are printed out and manually keyed into the ERP
- For growing companies, larger invoice volumes means hiring more staff to handle the manual effort
In the report, “efficient invoices” are described as those in EDI format, or invoices submitted through a solution portal, both solutions to the issues above. Unfortunately, 80 to 90% of invoices received by both large and small companies is either paper or email (PDF).
There are some attractive options for handling all formats of invoices however – from both an implementation and price perspective.
Here are the 5 ways to process an invoice in 2018, from most efficient to least:
• Digital PDF Capture in the Cloud
A supplier creates an invoice in their ERP and generates it as a digital PDF. The PDF is sent to the buyer at a designated email address where automation and AI instantly reads the data and extracts it. The process is fast and 100% accurate, because the PDF has a data layer that reflects exactly what was input. It also has an extremely high on-boarding rate because the supplier just has to send the invoice to the specified email address in its original PDF file format.
• Advanced OCR
Where as older OCR technology is resource intensive (data has to be manually field-mapped, as an example) Advanced OCR teaches itself to identify supplier invoices based on their layouts and then automatically stores that information for future reference. It also intuitively maps the data fields in each invoice and stores them in a database.
A supplier sends a paper invoice:
The invoice is scanned by Advanced OCR that recognizes the layout of the supplier and then extracts essential data fields. This process takes a few minutes and is 95% accurate. No on-boarding required as suppliers are continuting to send invoices in the mail.
A supplier sends an electronic file of a scanned invoice:
In other words, the invoice is an image of the invoice (instead of a PDF with a data layer as mentioned above). Advanced OCR scans this information with the same results as paper invoices.
• Invoice Portal
Invoice data is manually entered into a supplier portal by the supplier. This replicates the manual keying of data into your ERP but the manual keying is left to the supplier. Good for small suppliers, and has a very low on-boarding rate.
• Traditional XML or EDI
A supplier sends an XML or EDI file to the buyer. This is good for buyers who are set up to receive it, but the supplier has to justify the cost of changing their billing application and infrastructure to send XML and EDI documents. EDI and XML have high data accuracy but a low on-boarding rate.
Keying invoice data into the ERP, printing out PDFs, storing large amounts of paper files, and staying committed to paper processes. Only sustainable for very small operations.
The Business Case for Advanced OCR and Digital Capture
For organizations that want to capture invoice data digitally, there are a few parameters to consider when choosing the most optimum method. They include:
- the time it takes for set up
- infrastructure changes and I.T. resources
- the cost to the buyer
- the cost to the supplier
- data accuracy
- on-boarding rates
As you can see from the chart below, PDF and Advanced OCR are the most attractive options for both buyers and suppliers.
An Optimal Solution
Palette Capture solutions utilize both PDF/Electronic and Advanced OCR. They process both paper and electronic files in any format: PDF, EDI, XML, Word, Excel, JPG, TiFF, and more. It’s available in the Cloud and has minimal I.T. involvement. Accuracy rates for paper are 95%, and for PDF/Electronic formats 100%. There is no added cost for suppliers. Palette Capture solutions seamlessly integrate with your ERP, and there is a Full Service option for larger invoice volumes.
For more information see Palette Digital Capture.
*2018 Guide to Payables Automation – Paystream