What is Invoice Data Capture and How to Automate It?

accounts payable automation

What is Invoice Capture?

Invoice capture is the process of extracting important data from an invoice document and converting it into a digital format that can easily be stored and processed. This includes information such as invoice number, date, vendor details, line items, and totals. The automation of this process can save time and reduce errors which can lead to improved financial management and cost savings. OCR (Optical Character Recognition) technology is commonly used to extract the necessary data from invoices with the help of AI or machine learning algorithms. The captured data can then be used to automate accounts payable and accounts receivable workflows, informing decisions on payments and financial planning, and providing detailed insights into vendor transactions. Invoice capture is becoming an increasingly important process in modern business, as more and more companies look for streamlined and efficient methods of managing their finances.

Types of invoice capturing

 When it comes to invoice capturing, there are various approaches that businesses can take.

  1. Manual data entry is a well-known approach that relies on human labor to enter invoice data into the system. This is very time-consuming and prone to data entry errors. But, it probably is the most common.
  2. Outsourcing is a popular option, where businesses delegate the task of invoice capturing to third-party service providers. Where they would do the manual data capture off-site and transfer the data back to you. This is still a manual process that is error-prone.
  3. Another method is OCR, or optical character recognition, which uses technological advances in scanning to extract data from invoice documents. In this method, a template is defined for each invoice type. And zones or certain areas on a page are defined where data can be found. A template is defined for each style of invoice.  A single template may be able to be used for multiple vendors. This is what I call old-school automated invoice capture. It is cumbersome to define and maintain all of the invoice templates.
  4. EDI (electronic data interchange) is another method where invoices are sent in standard electronic format between partners. It is common for larger organizations that have a common pool of vendors the deal will. 
  5. Lastly, an intelligent invoice capture approach makes use of ai and machine learning techniques to automatically recognize relevant information from an invoice and process it accordingly. Using artificial intelligence (AI), a large sample of invoices of various types of invoices are fed into the software and the important data that is on each invoice. (Here is the image and here is the right answer). The software learns where on the page that data is found. This intelligent document processing can very accurately and quickly handle invoice data capture and processing. This is much better than the standard OCR invoice processing method.

These approaches offer distinct advantages and disadvantages, and businesses have to examine their requirements, budget, and organizational structure to identify the most suitable invoice-capturing process.

Why is Invoice Capture Important?

It is necessary to capture the important data off of invoices such as amount, invoice number, invoice date, PO number, vendor name, vendor ID, etc. This data needs to be entered into the ERP software to be the invoices paid. This can be a time-consuming process and staff in the AP department can provide your company with better value if this process is automated and they spend their time on other areas of your business.

The Benefits of Automating Invoice Data Capture

  • Reduce stress in your AP department
  • Reduce the cost per invoice
  • More accurate invoice processing
  • Reduce manual data entry errors
  • Reduce the time to get your suppliers paid


What are the Challenges of Invoice Capture?

  • Many invoice formats
  • Must be able to handle paper invoices and electronic invoice
  • Capturing invoice details ie line items 
  • Capture tools can be expensive
  • OCR software can be slow 
  • Invoice data extraction can be inaccurate

Must-Have Features for Efficient Invoice Capture

  • Accurate data capture invoice data
  • Captures all key data necessary to pay the invoices
  • Fast capture solution
  • Ability to tie into complete AP process
  • Integrate with your accounting software
  • Or allows you to invoice data captured to be imported into your accounting system


More information on this topic. Invoice data capture

If you are interested in learning more about an automated invoice data capture solution

please feel free to reach out to me.

Larry Phelps

612-382-4069 Cell


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