Invoice data capture is a process that extracts data from invoices and enters it into an accounting system. This process is important for organizations because it streamlines the accounts payable process and reduces errors. In this blog, we’ll explore what invoice data capture is, why it’s important, the challenges in invoice data capture, and the different types of solutions available. We will also cover must-have features for efficient invoice capture and automated invoice data capture with KlearStack.
Table of Contents
What is Invoice Data Capture?
Invoice data capture is the process of extracting data from invoices and inputting it into an accounting system. This data includes important details such as invoice number, vendor name, date, and line items. The purpose of invoice data capture is to streamline the accounts payable process and reduce the amount of manual data entry required.
Why is it Important?
Invoice data capture is important because it saves time and reduces errors. When done manually, entering data from invoices is a time-consuming and error-prone process. According to a study conducted by The Institute of Financial Operations, manual invoice processing can cost an organization between $4 and $20 per invoice, while automated processing can reduce the cost to as low as $0.50 per invoice.
By automating the process, organizations can save time and reduce the risk of errors. A survey by Levvel Research found that automation of invoice processing can lead to a 50-80% reduction in processing time, allowing organizations to reallocate resources to more strategic tasks. Furthermore, invoice data capture automation provides organizations with real-time data that can be used to make informed business decisions.
Challenges in Manual Invoice Data Capture
There are several challenges in invoice data capture, including the following:
Poor Quality Invoices:
Invoices that are scanned or faxed can be of poor quality, making it difficult to extract data accurately. Poor quality images can result in missing or incorrect data, leading to errors in the invoice capture process. This can be particularly challenging when dealing with handwritten invoices or documents with poor image resolution.
Varied Invoice Formats:
Invoices can come in various formats, including PDF, TIFF, and JPEG. Each format can present unique challenges for data extraction, as the software used to extract data may not be compatible with all formats. This can result in lost data or inaccuracies in the extracted data, leading to errors in invoice capture and processing.
Data Verification:
Extracted data must be verified to ensure accuracy. This process can be time-consuming if done manually. Verification involves comparing extracted data to the original invoice to ensure that the data is correct. This process can be particularly challenging when dealing with large volumes of invoices.
Inconsistent Data:
Invoices may contain inconsistent data, making it challenging to extract data accurately. For example, a vendor’s name may appear in different ways on different invoices, such as “ABC Corporation” on one invoice and “ABC Corp” on another. Inconsistencies in data can lead to errors in invoice capture, processing, and reconciliation.
Language Barriers:
Invoices may be written in different languages, making it challenging for software to extract data accurately. This is particularly true when dealing with non-standardized characters or scripts. Language barriers can lead to errors in data extraction and processing, making it difficult to accurately reconcile accounts.
Security Concerns:
The sensitive nature of invoice data makes it essential to ensure that data is captured and stored securely. Data breaches can lead to significant financial losses, reputational damage, and legal liability. Ensuring that data capture processes are secure can be challenging, particularly when dealing with third-party vendors or cloud-based solutions.
Types of Invoice Data Capture Solutions
1. Manual Data Entry:
Manual data entry is a traditional method of invoice data capture where data is entered manually into an accounting system. It involves manual keying of invoice data, such as the invoice number, vendor name, date, and line items, into a computer.
Advantages:
- Allows for manual validation and verification of data, which can help reduce errors
- Suitable for smaller organizations with a low volume of invoices
- Can be a cost-effective solution for organizations that cannot afford more advanced technologies
Disadvantages:
- Time-consuming and prone to errors
- Limited scalability, as it can’t handle a high volume of invoices
- Can be expensive in terms of labor costs for larger organizations
2. Traditional Invoice OCR:
OCR is a technology that recognizes and extracts text from scanned images of invoices. OCR can extract data from invoices and save it into an accounting system.
Advantages:
- Can process a high volume of invoices quickly and efficiently
- Reduces the need for manual data entry, which can save time and reduce errors
- Can be cost-effective for larger organizations that process a high volume of invoices
Disadvantages:
- Accuracy can be affected by the quality of the image, resulting in errors in the extracted data
- OCR requires the use of specific invoice formats, which can limit its flexibility and applicability to a wider range of invoice formats
- Can be expensive to set up and maintain, as it requires specialized software and hardware
3. Template-based Invoice OCR:
Template-based OCR uses pre-defined templates to extract data from invoices. These templates are created based on the structure of invoices, making it more accurate than traditional OCR.
Advantages:
- More accurate than traditional OCR, as it uses pre-defined templates to extract data
- Reduces the need for manual data entry, which can save time and reduce errors
- Can handle a higher volume of invoices than manual data entry
Disadvantages:
- Requires manual configuration for each invoice type, which can be time-consuming and expensive
- May require manual intervention to update templates when invoice formats change
- May not be able to handle invoice formats that deviate significantly from pre-defined templates
AI-based Invoice OCR:
AI-based OCR uses artificial intelligence and machine learning algorithms to extract data from invoices. It can adapt to invoice variations and doesn’t require manual configuration, making it a highly efficient and cost-effective solution.
Advantages:
- Highly accurate, even when the quality of the image is poor
- Can handle a wide range of invoice formats, without requiring manual configuration
- Can adapt to changes in invoice formats over time
- Reduces the need for manual data entry, which can save time and reduce errors
Disadvantages:
- Can be expensive to set up and maintain, as it requires specialized software and hardware
- Requires significant amounts of data to train machine learning algorithms
- May require some manual intervention to verify and validate extracted data
Automated Invoice Data Capture with KlearStack
KlearStack is an AI-powered invoice processing automation solution that can automate the invoice data capture process. KlearStack uses AI and machine learning algorithms to extract relevant data from invoices, verify and validate the data, and integrate with accounting software systems. KlearStack can streamline the accounts payable process, reduce errors, and save time. With KlearStack, organizations can focus on more critical tasks and make informed business decisions based on real-time data.
Benefits of using KlearStack for automated invoice data capture include:
- Time and Cost Savings: Automation reduces the manual effort required to process invoices, leading to significant time and cost savings for organizations.
- Increased Accuracy: With advanced OCR and machine learning algorithms, KlearStack improves the accuracy of data extraction compared to manual data entry, minimizing errors and reducing the risk of inaccuracies.
- Faster Processing: Automation enables faster invoice processing, eliminating delays associated with manual handling and improving overall workflow efficiency.
- Enhanced Visibility and Control: By digitizing and centralizing invoice data, KlearStack provides better visibility and control over financial processes. It allows for easier search, retrieval, and analysis of invoice information.
- Scalability: KlearStack is designed to handle high volumes of invoices, making it suitable for organizations with large invoice processing requirements.
Conclusion
Invoice data capture is a crucial part of the accounts payable process. It saves time, reduces errors, and provides organizations with real-time data for informed decision-making. While there are several challenges in invoice data capture, solutions like KlearStack can automate the process, making it efficient and cost-effective. By implementing invoice data capture solutions, organizations. Schedule a demo with our experts today to learn more how KlearStack can help streamline invoice data capture and processing for your organization.
