Invoice Data Capture
What Is Invoice Data Capture?
In the simplest terms, invoice data capture is the process of extracting data from invoices to be used for accounts payable (AP) processing. The methods by which businesses extract data can vary widely depending on the industry and available technology, but in the modern era of business older methods of manual invoice data capture are rapidly being replaced by automated software solutions. While the exact data being captured will also vary across organizations, some of the most commonly collected types of invoice data include:
- Invoice number
- Purchase order (PO) number
- Project number
- Supplier name
- Supplier address
- Payment amount
- Invoice date
- Industry-specific data
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Depending on the invoice formats your organization receives, this data may not be easy to extract using standard tools or manual extraction. That is why an automated invoice data capture solution is such an important investment for any business that handles a large volume of invoices from multiple sources.
Your organization generates a whole lot of data every day, and in a data-driven business landscape all of that information is more valuable than ever before. For a busy enterprise organization, though, making sure all of the relevant data is captured from a wide range of sources and formats can be a major challenge. Meeting that challenge is especially important when it comes to your invoice data capture process, where missing or incorrect information can lead to late payments, delayed shipments, and damaged customer relationships. Let’s explore the complex invoice data capture needs of the modern enterprise business.
Why is Manual Invoice Data Capture a Problem?
Not so long ago, capturing data from invoices and purchase orders was handled without the assistance of accounts payable automation tools. In fact, even in our current era of artificial intelligence and machine learning, a surprising number of organizations still handle elements of the invoice data capture process manually. As recently as 2019, more than 40% of financial departments reported that they still regularly received invoices via fax, and nearly 75% said most of their invoices were received as paper documents sent via physical mail. Continuing to rely on these outdated, manual methods of invoice processing can create a number of avoidable problems, especially for businesses dealing with high volumes of invoices. Just a few of the risks of manual invoice data capture include:
Large organizations receive invoices from multiple sources, and usually via a range of different channels. Each separate method of invoicing creates a greater potential of important data being misplaced, overlooked, or lost. That risk becomes even higher with physical documents printed on paper, especially in an organization where vendors are submitting invoices to multiple teams or departments.
The larger a company, the longer its invoice processing window is likely to be. That is often because enterprise businesses are usually processing a large volume of invoices from a wide selection of vendors and suppliers. For organizations in that situation, it can be all too easy to let payment deadlines slip past. That can incur penalties for late payments and make vendors dubious of working with a business in the future.
High cost per invoice
Capturing invoice data manually is simply a more expensive process than relying on automated invoice capture solutions. While the specific costs of processing vary widely depending on individual organizations, vendors, and industries, studies show that manual data extraction can cost between $6 and $50 per invoice. Extracting that same data using an automated solution costs a little over $2 per invoice. That kind of cost saving is difficult to ignore.
Slow invoice turnaround times
Trying to capture invoice data without the assistance of automated tools is simply much more time consuming. Tasks such as manual data entry, sorting through outdated spreadsheets or physical files, and tracking down invoices from multiple departments within your organization all eat up a huge amount of time, which in turn means that it takes longer to turn around each invoice.
Duplicate payments and human errors
Duplicate payments are one of the biggest risks associated with slow turnaround times and an overwhelming volume of invoice documents. Manual processing creates more human touch points, which increases the risk of human error. Those errors frequently lead to invoices going unpaid, or to multiple payments being issued for the same invoice. Additionally, a vendor who has been waiting on payment for an inordinate amount of time may reissue an invoice, which again raises the risk of duplicate payments.
Strained vendor relationships
Maintaining a healthy relationship with valued vendors and suppliers is one of the most important roles an accounts payable department plays within an organization. Repeated errors and delays in payments can sour a vendor relationship in a hurry, especially if the vendor gets the impression that the mistakes are due to poor organization and inefficient processes.
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What Are the Benefits of Automated Invoice Capture Solutions?
Investing in an automated system to handle invoice data capture simply makes sense for any organization that processes a high volume of invoices each month, or that receives invoices from a wide range of sources. Specific invoice capture needs will vary by organization, but generally speaking, it pays to seek out a solution that can:
Handle multiple invoice formats
Invoices and purchase orders reach your AP team in a number of formats, often depending on which tools your vendors prefer. That could include emails, PDFs, spreadsheets, SMS attachments, paper documents, faxes, and many other formats. A quality software solution should be able to consistently receive, validate, and process both structured and semi-structured data submitted in any and all of those formats.
Include optical character recognition
Optical character recognition (OCR) software is a must-have for any modern invoice processing system. OCR software uses artificial intelligence to extract data from forms of all kinds, even handwritten documents. An OCR system can also employ machine learning to recognize key data even in an unfamiliar format, helping to ensure that your AP team catches every relevant data point the first time through.
Generate end-to-end reporting
One of the great advantages of automated invoice processing is increased visibility into every step of the process. End-to-end reporting creates a reliable audit trail for future reference, and makes it much easier to pinpoint where errors and data omissions occurred when issues do arise. This in turn makes it easier to correct those mistakes and identify inefficiencies in the process.
Capture line item details
Line items can be one of the trickier fields of data extraction, largely because they can vary so widely from invoice to invoice. Processing line items manually is a repetitive and time-consuming task that can contribute to burnout in AP employees. Automating data extraction processes takes that tedious task out of the hands of employees, creating a more engaging work environment while also ensuring that vital data doesn’t go overlooked.
Allow easy training and maintenance
Extracting data manually means training new employees in complicated and repetitive processes every time someone leaves your AP team. By automating your data capture and extraction processes, you can cut down that training time significantly and free up your employees to focus on more productive and fulfilling areas of the accounts payable process.
Ready to learn more about the many ways automated solutions from MHC can revolutionize your invoice data capture processes? Contact us today to schedule a demonstration of our industry-leading AP automation solutions!
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