OCR vs AI OCR invoice processing
Manual invoice processing is not fit for purpose. AP teams drowning in paperwork and businesses spending up to $15 per invoice on inefficient processing methods, the pressure to automate is on. While traditional OCR invoice processing has been the go-to solution for digitizing invoices, AI OCR has emerged the champion. For businesses sitting on the fence, understanding their strengths and weaknesses is crucial for making the right investment decision.
Let us show you how to make the right investment decision with our AI OCR software.
Before diving in, look at what inefficient invoice processing costs your company. Manual data entry hits your pockets through multiple channels…
- Cost of manual data entry and error correction
- Late payment penalties and missed early payment discounts
- Hours wasted on low-value repetitive tasks
- Physical storage and retrieval expenses
- Compliance and audit preparation costs
- Time lost on sticky approval workflows
- Vendor relationships damaged because of payment delays
- Lost productivity from multiple invoice status inquiries
Enterprises handling thousands of invoices each month will see expenses spiraling out of control. Making automation not just appealing but essential for maintaining the competitive advantage.
Do you know how much it costs to process each invoice? That’s the expenses incurred by your AP team, divided by the number of invoices processed by the team over the same time period. If you’re processing manually, this figure can be scarily high.
The total AP team expense must include…
- Headcount of AP team
- Software, support, IT costs
- Penalties due to late payments/missed early payment bonuses
- Approval time
Total AP team expense / Total number of invoices processed = Cost per invoice
A high cost per invoice means inefficiencies within your AP department. Manual processes, low productivity, insufficient training, and invoice disputes can cause a high cost. Tracking this metric will hep you identify areas for improvement.
Check out our Document Processing Automation ROI Calculator. Looking at salary costs, our calculator will help you estimate how much you could save by automating your accounts payable workflow, on the operational side.
“Despite the ongoing challenges that are still being experienced, they are still yet to drive quick change with most businesses. Our data shows that those who are moving forward with automation are seeing a reduction in manual processing, and therefore a reduction in processing times.”
Sam Hitchen-Rae, Director at IFOL
How OCR invoice processing works
Optical character recognition – OCR – also referred to as text recognition, is a technology that converts printed or handwritten text such as scanned paper documents and PDFs into machine-readable digital data. It follows a process that starts with document digitization and ends with structured data output.
OCR technology kicks off with high-resolution scanning or digital capture of invoices. Patterns are then analyzed against character databases for text extraction, organizing the data into a usable format.
Businesses working with standard invoices and straightforward processing needs, will find that OCR offers several benefits…
- Fast deployment with minimal training requirements
- Quick ROI for basic digitization needs
- Seamless integration with existing workflows
- Immediate reduction in physical storage costs
- Basic automation of data entry tasks
- Searchable digital archives
OCR weaknesses
OCR’s weaknesses emerge in complex environments. The technology struggles with diverse invoice layouts and needs consistent document formatting to maintain accuracy. Poor image quality or unusual fonts will also impact performance. And the lack of contextual understanding means regular manual intervention for error correction is essential.
For industries with a high-volume of complex documents, like logistics, OCR falls woefully short.
These weaknesses highlight the need to complement OCR with more advanced technologies. For example, an AI-powered solution for workflows requiring adaptability, contextual understanding, and higher accuracy.
AI document processing solutions are able to understand and process a wide range of invoice formats without requiring manual intervention. They employ machine learning to continually improve accuracy, adapting to new data and evolving.
AI benefits | Beyond recognition
Artificial intelligence remodels invoice processing. Bringing intelligence beyond character recognition. Integrating machine learning and natural language processing, AI systems don’t just read text – they understand context and meaning, learning and improving with each document processed.
Top notch AI document processing solutions deliver capabilities beyond OCR technology…
- Automatic handling of multiple invoice formats from multiple channels
- Intelligent data validation and error detection
- Multi-language processing for global operations
- Real-time fraud detection and compliance monitoring
- Contextual understanding of invoice data
- Adaptive learning from historical data
- Automated three-way matching with purchase orders, receipts…
- Workflow routing based on content analysis
AI’s ability to learn and adapt makes it valuable for organizations with complex processing requirements. AI solutions can identify patterns across thousands of documents, automatically adjusting to new formats and improving accuracy over time.
Advanced features of AI-powered invoice processing
Advanced AI document processing solutions can transform the entire accounts payable workflow…
- Understand and extract data from unstructured documents, regardless of channel, format, layout, or language. Learning from each invoice processed. Continuously improving accuracy and reducing the need for manual intervention.
- Automatically route invoices based on predefined rules and learned patterns. Identifying urgent payments, route exceptions to appropriate personnel, and manage approval workflows.
- Maintain detailed audit trails and automatically flag potential compliance issues or fraudulent activities. Enforcing payment policies and ensuring regulatory compliance across multiple jurisdictions.
- Optimize payment scheduling by analyzing historical data, identifying early payment discount opportunities and maintaining vendor-specific processing rules.
Decision time | AI OCR vs OCR invoicing processing
Choosing between OCR and AI OCR must not be based purely on cost. Businesses need to consider several key factors when choosing an automation solution…
- Current invoice volume and complexity
- Growth projections and scalability needs
- Available IT resources and infrastructure
- Compliance and security requirements
- Budget constraints and ROI expectations
- Integration requirements with existing systems
- Global operations and language requirements
- Vendor diversity and invoice format variation
Organizations handling diverse invoice formats across multiple global entities should seriously consider AI-powered solutions. Yes. The initial investment will be higher. But the long-term benefits of improved accuracy, reduced manual intervention, and advanced automation capabilities justify the cost.
Your implementation strategy
Successful implementation needs painstaking planning and analysis of your organization’s specific operational requirements…
- STEP 1 – A comprehensive analysis of your current processes. Documenting pain points and establishing clear automation objectives. Establish success metrics and draw up a detailed implementation timeline.
- STEP 2 – Technical preparation will ensure your infrastructure is able to support the new system. This includes…
- Integration requirements with existing systems
- Data migration and security protocols
- Employee training and change management needs
- Performance metrics and success criteria
- Backup and disaster recovery plans
- STEP 3 – Get the ball rolling with a coordinated rollout to a specific department or invoice type. This helps you…
- Test system performance in a real-world environment
- Collect user feedback and identify issues
- Refine workflows and processes
- Build confidence in the new system
- STEP 4 – Scale the solution across your organization, maintaining clear communication and support channels throughout the process.
The smart alternative to traditional OCR invoice processing
By combining AI with OCR, Rossum goes way beyond traditional solutions. From handling diverse invoice formats to automating approvals and ensuring compliance, our AI-powered platform streamlines AP document processing.
Intelligent data extraction
Unlike OCR invoice processing, which struggles with unstructured data and diverse formats, Rossum’s solution adapts to diverse invoices. Automatically extracting essential invoice information – invoice number, vendor name, date, and complex line items – from both structured and unstructured invoices. This cuts out manual intervention and improves accuracy, even with non-standard layouts or multilingual documents.
Automation for end-to-end invoice management
Our platform integrates with your existing ERP and accounting systems – no hiccups – offering a solution that automates the entire accounts payable process. A mix of advanced AI capabilities with OCR functionality, we simplify invoice capture, validation, and approval processes. Enabling real-time monitoring, to help your AP team stay on top of pending approvals and avoid late payments.
Instant Learning for 276 languages
With our AI engine – Rossum Aurora – our proprietary large language model has been trained to capture data in 276 languages. Able to learn instantly from documents annotated by users and use gathered knowledge to predict values on documents in the future. Bonus, our platform can also capture handwriting in 30 languages.
“Aurora has made handling complex Japanese documents so much easier for our clients. Previously, we needed large amounts of training data, but now, Aurora’s instant learning requires minimal input and delivers fast, impressive results.”
Toru Fujimori, Senior Financial Engineer at MTEC
Centralized and scalable
For businesses managing invoices across multiple legal entities, we provide a unified platform that consolidates all AP tasks. Its ability to handle diverse invoice formats – including PDFs, paper invoices, e-invoices, etc. – ensures scalability, making it ideal for businesses looking to grow without increasing admin costs.
Data matching and compliance
Rossum’s AI engine automatically cross-validates your document data with your master data hub. Our transactional document automation platform supports complex business logic to ensure only valid transactions end up in your downstream system.
Workflow approvals
Rossum automatically triggers multi-step approval workflows to get the go ahead from appropriate approvers. Speeding up the process, and bringing visibility of potential bottlenecks. Ensuring only approved transactions are recorded maintains the integrity and accuracy of your system of record.
Ensuring compliance, operational efficiency, and a full audit trail. Automating the approval process mitigates risks associated with duplicate payments or unauthorized transactions.
Reporting and audit compliant
Detailed view of key document metrics, trends, and performance insights with built-in reporting and dashboards. Rossum maintains a detailed audit trail and logs for each document. Including sender communication, data extraction, approvals, and more.
AI invoice processing for the win
While OCR invoice processing does offer basic automation, intelligent document processing solutions combining AI and OCR provide the capabilities that companies increasingly need. Automation for end-to-end transactional document processing. Choosing between these technologies has to align with your organization’s scale, complexity, and future growth plans.
The question isn’t whether you should automate invoice processing. It’s how to implement the most effective solution for your organization’s specific needs. As technology continues to advance, businesses that embrace AI-powered solutions position themselves for greater efficiency, accuracy, and competitive advantage in the evolving digital economy.
To succeed, businesses must stay ahead of the technological curve while making wise investment decisions. Evaluating current needs, future growth plans, and available resources, means you can choose the invoice processing solution that best delivers your organization’s long-term success.