In this article, we will explore invoice capture and OCR invoice capture. We will also cover the benefits of using data capture for invoices. Read on to learn more.
Invoice scanning and data capture is the process of extracting and digitizing key information from invoices using software or automation tools. It aims to streamline accounts payable workflows by minimizing manual data entry and reducing errors.
Example: Using an invoice data capture software, a company can automatically extract data like invoice number and total amount from an invoice for 100 units of Product X1234.
OCR invoice capture is the use of Optical Character Recognition technology to automatically extract text and data from scanned or digital invoices. It enhances efficiency and accuracy in processing invoices by converting printed or handwritten information into machine-readable data.
Example: Using an OCR software, a company can extract data such as invoice number and total amount from a scanned invoice for 200 units of Product A5678.
Invoice capturing is important for a business for a number of reasons. Here are some of the most common ones:
Invoice data capturing software reduces human errors associated with manual data entry, ensuring more accurate financial records. This leads to fewer discrepancies and improved data integrity.
Automating the data extraction process speeds up invoice processing times. This allows accounts payable teams to handle a higher volume of invoices without additional labor costs.
By minimizing manual tasks, companies can reduce labor costs and avoid late payment fees. The efficiency gains from automation often translate into significant financial savings.
Software solutions often include features to ensure compliance with tax regulations and corporate policies. This reduces the risk of fines and legal issues related to incorrect invoice processing.
Centralized digital storage of invoice data improves accessibility and organization. This facilitates easier retrieval and analysis of financial information for auditing and reporting purposes.
Automated invoice capture can integrate with existing accounting systems, streamlining the approval process. This ensures quicker validation and payment of invoices.
Here’s how invoice capturing works:
Invoices are received through various channels such as email, mail, or electronic submission. The received invoices are collected and prepared for processing.
Example: An invoice for 150 units of Product B1234 is received via email and saved to the company’s accounts payable folder.
Physical invoices are scanned to create digital copies, while electronic invoices are directly imported into the system. This step ensures all invoices are in a consistent digital format for processing.
Example: A paper invoice for 75 units of Product C7890 is scanned and saved as a PDF in the company’s invoice management system.
OCR software reads the digital invoices and extracts relevant data fields such as invoice number, date, supplier, and total amount. The extracted data is converted into machine-readable text.
Example: Using Lido, the system extracts data from a digital invoice for 200 units of Product D4567, identifying the invoice number and total amount.
The extracted data is validated against predefined rules and criteria to ensure accuracy and completeness. Any discrepancies or errors are flagged for review.
Example: The system checks the invoice for 100 units of Product E2345 and flags a mismatch in the supplier name for manual verification.
Validated data is automatically integrated into the company’s accounting software. This step updates accounts payable records and prepares the invoice for approval.
Example: Data from an invoice for 50 units of Product F6789 is imported into the company’s SAP system, updating the accounts payable ledger.
Invoices are routed through an approval workflow based on the company’s policies and hierarchy. Approvers review and approve the invoice for payment.
Example: An invoice for 120 units of Product G3456 is sent to the department head for approval through the company’s electronic approval system.
Approved invoices are scheduled for payment according to the company’s payment terms. The payment is executed, and the transaction is recorded in the financial system.
Example: The approved invoice for 80 units of Product H7890 is scheduled for payment, and the amount is transferred to the supplier’s account.
Processed invoices are archived for future reference and compliance purposes. Digital archiving ensures easy retrieval and audit trails.
Example: The invoice for 90 units of Product I4567 is archived in the company’s cloud storage, accessible for future audits.
Data from captured invoices is used to generate reports and analytics for financial insights and decision-making. This helps in identifying trends and optimizing cash flow management.
Example: A report is generated showing the monthly spend on Product J1234, helping the company negotiate better terms with the supplier.
We hope that you now have a better understanding of what invoice data capture and OCR invoice capture are. If you enjoyed this article, you might also like our articles on AI invoice data capture and what invoice processing is.