To keep up with customer demands and maintain cash flow, your business needs to optimize processes to improve efficiency and accuracy. One option for doing that is invoice scanning.
Modern invoice scanning software can digitize paper invoices and allow your organization to extract key data from those invoices, helping save time and money.
This article looks at the benefits of invoice scanning software, including how it works and its transformative role in your accounts payable automation journey.
What is invoice scanning?
Invoice scanning is the process of converting paper invoices into digital formats. You can do this in one of two ways: scanning the invoice or taking a picture of the invoice using a smartphone or other device.
Many people might use the terms "invoice scanning" and "data capture" interchangeably. However, they are distinct steps in a process.
Invoice scanning digitizes invoices, whiledata capture extracts information from the invoice, saving your accounts payable team time because they don't have to enter that data manually.
Data capture is a more advanced step that involves analyzing the digital invoice to identify and record specific invoice data points, such as the total amount due, payment terms, and vendor information.
Digitization is the first step toward efficient invoice management, allowing your business to store, search, and manage invoices electronically.
Not long ago, manual data entry was standard. The process looked something like this:
- The company would receive an invoice from a vendor
- The accounting team would manually enter data into the accounting system
- The accounts payable team would perform a 2-way, 3-way, or 4-way match to confirm the invoice amount and other details
- Team members would send the invoice to the right parties for approval
- Once approved, the accounts payable team would make the payment
- A team member would keep a physical copy of the invoice in a filing system
This process was time-consuming, took a lot of manual effort, and was prone to errors at every step in the workflow.
The transition from paper-based to digital systems is a significant leap in operational efficiency, eliminating many manual steps in the process, reducing the physical storage space required, and facilitating easy access to historical data.
How does invoice scanning work?
The core technology enabling the digitization of invoice data is Optical Character Recognition (OCR).
OCR technology scans the text on vendor invoices and converts it into editable and searchable digital data.
This process involves capturing an image of the invoice and then using sophisticated algorithms to identify and interpret characters and numbers on the page.
With invoice scanning software, the process looks something like this:
- Capture. There can be multiple ways to get invoices into the invoice processing software. Vendors and contractors may send them via email, or employees can scan them using an invoice scanner or mobile device and upload them into a digital inbox.
- Extract data. The layout, structure, and fields included on an invoice can vary from vendor to vendor. With the help of intelligent document processing software and machine learning technology, invoice scanning software can identify and extract data for processing.
- Data validation. Your invoice processing software validates the extracted data based on pre-defined validation rules. If the data doesn't meet the set standards or it finds any anomalies, the invoice is routed for manual verification.
- Invoice approval. Your invoice processing software routes the invoice to the right person for approval based on your approval workflows and business rules.
- Payment made. Once the invoice is approved, the accounts payable department makes an electronic payment or mails a check.
While this might seem like a small reduction in steps compared to manual invoice processing, remember that the automated invoice capture software handles many of these steps without human intervention.
Automation streamlines the process, significantly reducing the time and effort involved in invoice management.
With tools like BILL, your team only needs to get involved when there's an exception.
For example, if the amount on recurring invoices suddenly changes, you receive an invoice from an unapproved vendor, or you have already paid an invoice, the software brings the discrepancy to the attention of the right team member.
10 benefits of invoice scanning software
If you're trying to decide whether invoice scanning is a viable option for your business, consider the following benefits.
1. Time savings
Automating your invoice scanning processes can drastically reduce the time required to process invoices.
By eliminating manual data entry and the need to handle physical documents, your team can reallocate precious hours toward more strategic activities.
2. Improved accuracy
Using OCR technology and advanced data capture algorithms, invoice scanning software minimizes human errors associated with manual data entry.
This leads to more accurate financial records, ensuring reliability in financial reporting and analysis.
3. Higher productivity
By automating routine tasks, employees are freed from the tedious and time-consuming manual invoice processing.
This allows your team to focus on higher-value tasks and increases overall productivity.
4. Scalability
Invoice scanning software can quickly adapt to the growing needs of a business.
Whether your invoice volume increases due to business expansion or seasonal peaks, the software can handle the increased workload without additional human resources.
5. Data security
Modern invoice scanning solutions have robust security features designed to protect sensitive financial information.
Encryption, secure access controls, and compliance with data protection regulations help ensure your invoices are safe from unauthorized access and breaches.
Tip: See how BILL helps keep your financial data safe
6. Enhanced accessibility
Digitized invoices can be accessed from anywhere, at any time, provided there is internet connectivity.
This supports remote work and ensures physical location constraints don't hinder your financial processes.
7. Cost reduction
Many businesses realize cost savings from reducing the need for physical storage space and cutting down on paper usage.
Additionally, the efficiency gains from automated invoice processing can reduce overhead costs associated with manual tasks.
8. Improved vendor relationships
The faster you process invoices, the more timely your payments can be.
This can enhance vendor relationships and position the business to take advantage of early payment discounts.
9. Environmental impact
Transitioning to a paperless invoice processing system contributes to environmental sustainability efforts.
By reducing paper consumption, you can reduce your business's environmental footprint.
10. Improved employee engagement
Automated invoice scanning frees your team members from tedious and repetitive manual processes and data entry.
This allows them to focus on more meaningful work, boosting morale and job satisfaction.
Limitations of automated invoice scanning
While automated invoice scanning offers many benefits, it's essential to acknowledge that the technology has its limitations.
For example, despite significant advancements in OCR technology and data capture algorithms, achieving 100% accuracy in automated invoice scanning isn't always possible.
Various factors can contribute to discrepancies and errors in the digitized data.
For example, automated systems may struggle to interpret handwritten invoices and unusual or highly stylized fonts on scanned documents.
Poor-quality scans with blurred images and skewed text can also impact the OCR's ability to accurately recognize characters and numbers on an invoice.
While you may never be able to eliminate these issues entirely, implementing quality control checks to review and correct scanned invoices can help ensure data accuracy.
Also, selecting the right invoice recognition software provider—one that continually invests in improving the software—can ensure you benefit from the latest advancements in OCR technology, data extraction, and security features.
Looking for a reliable invoice scanning solution?
BILL simplifies invoice scanning by getting your invoices into the system with minimal manual entry.
From there, BILL extracts key invoice data and handles the routing for you based on the approval workflows you set up to conform to your business rules.
BILL also integrates with the leading accounting software and other financial process tools, including QuickBooks, Oracle NetSuite, Xero, Sage, and Microsoft.
This integration is another way BILL helps to reduce manual entry, speed up account reconciliation, and simplify your workflow.
If you're ready to streamline how your company pays and gets paid, start using BILL today.
As technology continues to evolve, invoice automation will become increasingly essential for maintaining a competitive advantage and operational excellence.
