Artificial Intelligence (AI) is a revolutionary technology that has changed the way we work, catapulting us into an era of highly advanced technology that is often more efficient than we could ever have imagined. And the best thing is that it’s everywhere - from our homes to our cars and airports.
However, data from the European Commission suggest that about 80% - 90% of invoices are physical, and processing these invoices is often a manual task that is time-consuming and prone to human error.
This is where AI steps in - to simplify the workflow and improve efficiency. Using neural networks and deep learning, the AI can understand contents of an invoice and what each term means, making it possible to extract and efficiently compile this data with minimal errors.
Let's take a look at how AI-based invoice processing methods are helping businesses streamline their AP workflow:
How AI-Based Invoice Processing Helps Your Business
Training artificial intelligence to perform automatic invoice processing operations means greater efficiency and a much higher task completion speed. It would take several hours and even days for a manual operator to do the same amount of work that an AI can do in a matter of minutes. And that’s just the tip of the iceberg! Using AI to improve and maximize the efficiency of the work flow has a plethora of benefits:
1. Accounts payable automation can make your workflow up to 7 times faster!
There is no debate about whether AI-based cognitive data capture solutions are faster than manual data entry. We don’t want to have to state the obvious, but the fact is that AI-based methods are several times faster than manual data entry could ever be.
When compared, it takes about three and a half minutes on average to manually process a single invoice, while AI could do it in about 30 seconds. That’s a whopping 7 times faster! AI also becomes smarter and faster with the number of invoices it processes.
2. Automation gets more accurate over time
Cognitive data capture methods use artificial intelligence models that are self-learning and get smarter with the amount of data they process.
This will eventually lead to the AI being self-reliant and being able to process large datasets with practically no human intervention required.
When dealing with financial data, such as invoices, accuracy is of the highest priority, and that is exactly what AI-based data capture solutions are trained to be good at. The continuously-trained machine learning algorithms, working in tandem with templates, can produce highly accurate extracted data at anywhere from 80% - 99% accuracy that only gets better over time.
3. AI can reduce costs significantly
The cost of manual data entry can range anywhere from $2 to$4 per invoice! That adds up to several hundreds of thousands of dollars over time. Considering the cost of processing a single invoice using AI is about $0.45 on average, implementing AI-based solutions in your accounting and bookkeeping processes can cost a few thousand dollars up front but will save several hundred thousand in the long run.
4. AI can help your workforce maximize their productivity
A major portion of this increase in cost savings that we spoke about comes from the reduced need for typists and managers for your accounting department. This brings us to our next key benefit of implementing AI in accounting – productivity.
By taking the tedious and monotonous job of manual data entry off of the hands of your workforce, you are allowing them to focus on other important aspects of their jobs that need attention, such as financial planning, budget planning, analysis of insights and performance, and working on relationships with customers.
5. Better efficiency is passed on to other related processes
Using AI solutions maximizes the efficiency of not only the accounting process but also other departments such as procurement and distribution that work closely with the accounting department. This streamlines the entire process and helps these inter-connected processes achieve higher productivity while working in tandem.
Other benefits of using AI include being able to analyze and budget your capital and spending in real-time, as well as clearing dues faster and, thereby improving working relationships with the vendors.
How AI Invoice Processing Works
There are two primary methods involved in AI-based invoice processing, here's how they work:
The first step in digitalization starts with scanning physical invoices and turning them into digital files in PDF or TIFF format.
Template-based OCR Method
Computers have been able to recognize text from images for awhile now, using Optical Character Recognition (OCR) technology. Template-based OCR technology cannot process the data by itself and requires manual creation of templates for each format of the invoice. This can be a cumbersome and time-consuming process when dealing with invoices of various formats from different vendors.
Each template can take anywhere from 10 minutes to an hour to be made and only work as long as the format of the invoice isn’t changed by the vendor. The creation of templates involves demarcation with respect to where the data is to be extracted from and what that data means.
Cognitive Data Capture Method
By adding artificial intelligence to the mix, you can simplify the workflow and automate the entire process, thereby not requiring the manual creation of templates. This data processing method is called cognitive data-capture, and, as the name suggests, it uses machine learning and deep neural networks to simulate human thought processes.
Cognitive data capture is a self-learning technology and becomes increasingly accurate with the number of documents it processes. Instead of having to create templates and defining what the data in each field corresponds to every time, the AI will do it for you, and eventually, require little to no human intervention. This is because it will learn to identify and work with various kinds of invoices. All in all, artificial intelligence and cognitive data capture methods have changed bookkeeping and accounting for the better.
Let's take a look at the differences between the two methods at a glance:-
Docsumo’s invoice processing solutions bring you the best of both worlds with a hybrid software that makes template-based capture methods smarter with artificial intelligence and machine learning.
The Docsumo Advantage
To sum it up, using hybrid AI-based invoice processing solutions like the one offered by Docsumo can -
- maximize efficiency,
- reduce costs and
- boost the productivity of your AP processes by automating them to the point where minimal operator intervention is required.
Both template-based OCR and cognitive data capture methods are better than manual data entry in every way - right from accuracy to cost of implementation. However, the sweet-spot is a software that combines both these technologies to make a versatile smart solution that can address all your invoice processing needs.
With a simple pay-as-you-go pricing scheme, no hidden charges, or commitments, Docsumo is an obvious choice for businesses of any scale. Setup a free demo to see Docsumo in action and how it can help your business.