On the 4th day of Christmas my CFO got for me Invoice Data Extract-ability (aka Intelligent Advanced OCR)
Another focal Accounts Payable best practices step is to get out of the data entry business and get into the business outcome optimization business. Namely, stop keying in invoices and use proven technology to automate the entry for you. OCR, Intelligent, Advanced OCR at that, is the vehicle of choice for many enterprise organizations and now through cloud infrastructure, even mid-market businesses can obtain the business benefits they previously couldnt enjoy. This is the linchpin that ties the first few days of Christmas AP style together...it's the engine that makes the invoice conversion and process transformation step possible, unlocking efficiency and delivering significant results to you!
OCR technology has been around for some time and is effectively used by many organizations for the purposes of quickly and accurately converting printed text to indexable data. Many industries use OCR on structured documents that require manual processing en masse. Remember all those #2 pencils you had to use on your SATs and ACTs you didnt think those actually got processed manually did you ? Those are very clear examples of basic scan and recognition technology looking for and identifying where markings (data) were on a structured document.
Since its humble origins, even before the SAT example, OCR has been used to capture information off of semi-structured documents. Invoices are exactly that type of document. However, one of the complexities around invoice capture lies in the fact that for the most part, no two invoices are identical. Sure, vendors maintain an invoice template, on which they lay down the transaction details, but from vendor to vendor, the various fields necessary to drive the approval and posting process can be presented on different areas of the page. This is why technologies for OCR that rely on template or zonal based approaches are doomed to failure in a high volume, high pressure setting like AP. With vendors that shift their invoice templates, these old and outmoded approaches require ongoing maintenance and support to keep running effectively.
In contrast, newer Accounts Payable software packages rely on Intelligent Advanced OCR that can intuitively read and extract information within a document based on keywords within the document or document attributes. Think of it as a little terminator technology for data entry. In seriousness, it is a foray into artificial intelligence from a technology perspective and not only is highly accurate but it learns as it goes with guidance from users. For instance, most OCR engines boast accuracy levels around 98%. This means that every 2 characters out of 100 might need some validation or correction, but the other 98 times the system gets it right on the first pass.
Key benefits to Intelligent Advanced OCR:
1. Elimination of Data Entry no more manual keying of invoices into your ERP. With OCR automation and integration to your financial system, the data can literally be pulled right from the invoice image and populated directly in the appropriate fields of the financial system.
2. Faster AP Invoice processing most organizations can see up to 70% productivity improvements, and since for most Accounts Payable staff, most of their time is spent banging invoices into the system, they can now actually use the data and faster process as a point of leverage with suppliers to broaden the base of available discounts. You can check out the in our Best Practices to AP Automation eBook, here.
3. Decreased entry errors. With high levels of confidence achievable through OCR Accounts Payable software, its not uncommon to see invoice entry error drop as a result of automation.
One of the drawbacks to OCR technology is that it can be very costly to deploy. However, again, with the transition to cloud-based SaaS offerings, OCR is now highly extendable and scalable to even SMB businesses that never before could justify the investment in the technology. Now, though various AP services providers, the OCR component is an Accounts Payable best practices step that should not be overlooked when upgrading your Accounts Payable software system.
Stay tuned for day 5 in our 12 Days of Christmas AP Style!
Click here to learn whats right for your business AP Automation or E-Invoicing