How to choose the best invoice data capture solution

As your business grows, invoice volume and complexity will grow right along with it. Is your AP department ready for the challenge?

In 2023, Stampli surveyed finance leaders across the US on their expectations for the future of accounts payable. 80% said they anticipate a rise in the number of invoices they’ll have to handle, and 53% said they expect the complexity of invoices to increase in the near future.

If your business is one of the 40% still receiving paper invoices, your headaches will grow, too. Unless your AP processes are easily scalable, you could quickly be overwhelmed. You need an invoice data entry solution that can help you capture, enter, GL code, and verify invoices quickly and easily – and you need it now.

Read on to learn more about how automating invoice data capture can benefit your business, your different options for invoice capture solutions, and how AI-powered accounts payable automation is the best way to optimize your invoice processing workflows.

The challenge: automating invoice processing

The invoice lifecycle starts when a vendor delivers a good or service your business ordered and sends you an invoice. Your AP team enters the invoice into your accounting, financial, or ERP software, assigns GL codes to line items, matches the invoice against the purchase and shipping receipt to verify the details, and then forwards the invoice for approval and payment.

Managing a growing volume of increasingly complex invoices poses a unique challenge for finance leaders. The problem is you can’t simply scale up processing capacity by hiring more AP clerks.

Inspecting, keying in, and coding detailed invoices is time-consuming and error-prone. Adding more clerks to enter and code more invoices might speed up invoice capture and data entry, but it doesn’t guarantee faster invoice processing. Speeding up these manual scanning tasks might move the bottlenecks down the line to the purchase order matching or approval stage.

Also, as invoices grow more complex, so do the skills required to capture, code, and validate them properly. It could take time to teach new clerks these skills. 

Finally, adding additional staff doesn’t change the other big problem with manual data entry – human error. More people means more chances for mistakes and more enforcing internal controls to keep everything running smoothly.

Moving to an automated invoice processing system improves invoice data capture and GL coding speed and accuracy. It reduces human error, helps prevent fraud, and reduces labor costs. It also frees up AP staff so they can be reassigned to higher-value tasks – like applying their detailed knowledge of your business costs to make it more efficient and competitive.

Options for automated invoice capture 

Invoice capture is the process of scanning a paper or digital invoice and extracting details like vendor name and address, invoice number, line items, pricing, taxes, and other information. There are three main ways to capture invoice data: digital scanning and capture, outsourcing, and AI-empowered accounts payable automation.

Digital scanning and capture

Invoice scanning solutions use optical character recognition (OCR) technology to scan and extract data from paper or digital documents. Scanning digital documents is relatively simple. Generally, you open the digital document with the scanning app, and it extracts the information automatically. Scanning paper documents requires a scanning device, either a desktop scanner, camera, or device like a smartphone or tablet. The scanner copies the paper document and converts it into a scannable digital format like a TIFF or PDF file, then extracts the data from the digital file.

Typically, digital scanning apps can’t interpret the data they scan, so they rely on pre-built scanning templates to extract data, meaning they need to be “taught” different invoice formats and fields. They may also not be designed to automatically sort and code invoice data, meaning accounting staff still need to process the scanned data manually.

Outsourcing

You can also outsource invoice scanning to a document scanning provider. The scanning provider will scan your paper documents, verify the scanned data matches the original document, and return the data to you in a digital file. You then upload the file into your accounting software. 

Outsourcing has potential cost advantages over in-house invoice processing, but it also has some disadvantages. Relying on a third party to capture your invoices means sharing sensitive business information outside your organization (and possibly the country). Additionally, if an invoice error is detected during the three-way matching process, you may need to track down the original paper invoice to confirm the information. This might be a challenge if the invoice has been destroyed or stored.

AI-empowered invoice capture software

AI-empowered accounts payable automation solutions like Stampli use artificial intelligence technologies to automate invoice data capture, coding, and verification completely. They use machine learning (ML) to automatically interpret invoice data and learn and adapt to your invoice management processes. 

Here’s how it works.

Intelligent data capture and extraction

AP automation solutions use intelligent OCR technology to identify, scan, and digitize relevant invoice data. Unlike traditional systems, AP automation solutions can extract data from different invoice styles and formats. They use machine learning and natural language processing (NLP) technologies to interpret, extract, and classify invoice details such as invoice numbers, vendor names, prices, PO numbers, and line item descriptions. If the AP solution is unsure of a data item, it will flag it for human intervention.

GL coding

When the AP solution has successfully extracted and classified the invoice details, it automatically assigns the correct general ledger (GL) codes to the invoice line items. The solution uses machine learning to determine which code to use based on your existing records and procedures.

Automatic invoice matching

After coding the invoices, the AP solution automatically checks the invoice details against the associated purchase order. If the invoice and purchase details don’t match, the system will flag the invoice for the AP team to investigate.

If the details match exactly, the system can either send the invoice forward for approval or skip the approval stage and forward the invoice for payment. Skipping the approval stage on exact matches speeds up processing and payment times and reduces approvers’ workloads. 

Most AP automation solutions allow authorized users to set maximum value thresholds to skip invoices. If an invoice value is above the threshold value the system automatically routes the invoice to an approver once it is verified.

AI-powered accounts payable automation is a revolutionary technology that’s always becoming even more versatile and effective. It can quickly and accurately capture data from any invoice, saving you time, money, and headaches.

Let’s explore how you can find the best solution for your business needs and take advantage of the benefits of AI invoice data capture.

How to choose an AI-powered invoice data capture solution

AI-powered invoice processing solutions replace manual invoice processes by automatically capturing and classifying unstructured invoice data. 

Here are some best practices to help you find and evaluate the best solution.

Check trustworthiness & security

Accounts payable automation systems manage sensitive information such as vendor data, prices, business terms, and financial data. Carefully vet AI-powered solutions to ensure they are transparent, secure, and compliant with regulatory requirements. 

Assess your current workflows

Look at your existing invoice processing workflows and identify areas where AP automation could improve efficiency and accuracy. For example, critical tasks such as invoice matching and approval routing are often good targets for process optimization to improve payment times and reduce errors.

Keep a human in the loop

While AI-powered AP automation can significantly speed up invoice processing workflows, it can’t take on jobs that require human decision-making. Identify tasks such as approvals, error checking, and vendor communications that are best done by an employee. You can prevent an expensive error by keeping a human in the loop..

Integrate with ERPs and accounting systems

When looking at an AI-powered AP automation solution, ensure it offers seamless integration with your ERP, finance systems, or accounting software to share invoice data and communications across your organization.

Choose the AI-powered invoice processing solution that best meets your needs. Look carefully at IT requirements, functionality, cost, and efficiency, but consider important factors like customer service, implementation time, scalability, and user-friendliness. Review-based rating sites like G2 can be a great resource in your search.

Stampli: Harnessing AI to transform accounts payable

Stampli is designed to meet the unique needs of Accounts Payable. It harnesses AI and machine learning to eliminate inefficient, error-prone paper-based invoice processes.  

Stampli delivers results by helping businesses optimize invoice capture, coding, verification, and approval workflows without reworking their existing business processes or ERP. Plus, Stampli features seamless integration with ERPs, finance systems, and accounting software to provide a single source of truth for transaction data across the whole organization.

Introducing Billy the Bot

Billy the Bot, Stampli’s AI assistant, helps you process invoices quickly and accurately, saving you time and money. 

Billy captures and codes transaction data from paper and electronic receipts. He understands all types of line items and invoice details like general ledger, charges, fixed asset lines, and resources. Billy learns as he goes. With every invoice he processes, he gets faster and more accurate. 

He can handle partial payment workflows and multiple POs and supports invoice management for multiple subsidiaries, locations, currencies, and tax structures. He can also identify potential errors and signs of fraud that might go unnoticed, such as slight changes to invoice details or inflated line items.

Billy facilitates smooth communication and collaboration across the invoice workflow by centralizing all invoice communications on the top of the invoice.

The bottom line: Contact us today for a free demo and see why Stampli is the ideal choice for optimizing your invoice data capture workflow.