Is your company dealing with a large number of invoices on a daily basis? And is your team still processing them manually? Then you know the struggle; this old way of processing invoices comes with a lot of bottlenecks that impact the efficiency of your company.
Problems that result from the manual process include high costs, long processing times, and as a result, long turnaround times. Moreover, it’s almost impossible to detect fraudulent invoices and avoid human errors.
Luckily, you now have possibilities to automate your invoice processing and reap the benefits of automated invoice scanning software.
This article is here to introduce what invoice scanning software is, and how it works. You will also find the five main reasons and benefits of using invoice scanning software.
What is invoice scanning software?
Invoice scanning software reads, scans, and extracts data from invoices. In order to process the submitted documents, it uses Optical Character Recognition (OCR) and AI.
OCR is a technology that extracts data, such as text, from images or scanned documents. To do so, it uses its capacity to recognize and identify individual characters. Then AI helps the software determine which part of the invoice is what. For instance, it can recognize and extract VAT amounts, line items, merchant details, and invoice numbers.
Combined with AI, the software reaches a high accuracy rate in detecting and extracting data. All desired information can be extracted from the invoice based on your needs, including:
- Merchant addresses
- Merchant names
- Line items, including description, quantity, and prices
- Purchase order numbers
- Methods of payment
- Delivery dates
- Invoice numbers
You may receive invoices that vary in shape, language, or format. With invoice scanning software, you are able to process them in no time, no matter the language, shape, or format.
Using such software to scan invoices and automatically extract data is a big step towards automated invoice processing. Now that you know what invoice scanning software is, let’s have a look at the 5 reasons to use such a solution.
Why should you use invoice scanning software?
Using invoice scanning software will enhance your document processing in multiple ways. Here are the five benefits of using such a solution:
- Reduces costs
- Shortens turnaround time
- Limits human error
- Automates fraud detection
- Increases scalability
1. Reduces costs
One of the first reasons to turn to automation is to reduce costs. With an automated solution, you can reduce your invoice processing costs by between 40-70%. Why? Because now invoices can be processed way faster and in a less expensive way.
2. Shortens turnaround time
Whether you’re processing invoices to pay your providers or to reimburse business expenses, your main goal is a fast and reliable payout. Automation with invoice scanning software helps to reduce your turnaround time.
While it takes on average 10 days to manually process an invoice, with invoice scanning software it requires only 3 to 5 seconds to extract all data. During this time, the invoice is scanned, and all data is detected and extracted into your accounting program or database for further use. Because extraction time is drastically reduced, the processing time is also much shorter.
In concrete terms, invoices can be processed on time, hence risks of late payment penalties are drastically reduced. Business expenses can also be reimbursed faster, leading to happier employees.
3. Limits human error
With an error rate ranging from 0.55% to almost 4%, manual data entry is prone to errors. These errors can vary from mistyping one letter or number to processing an invoice twice. The impact of such errors on your business can be serious.
With invoice scanning software, the accuracy rate of data extraction can get up to 99%. Since all data is detected with OCR and AI, typing errors and mismatches are minimized.
You can also decide to include one of your employees in the automated process, so-called Human-in-the-Loop automation, and reach as close to 100% accuracy as possible. This improves the quality of processed data and gives a real overview of the financial state of your company.
How does Human-in-the-loop work? With Human-in-the-loop automation, you include one of your employees in the process by setting rules that define when an employee should assist the software. For instance, you can choose to have a manual check for every invoice from a certain supplier, or for every invoice from a specific amount and above.
Combining invoice scanning software with Human-in-the-Loop helps you reach the highest accuracy possible.
4. Automates fraud detection
Fraudsters are becoming more and more sophisticated. Fraudulent invoices can come in all sorts and sizes. They can be altered, duplicated, or completely made up. That’s another reason to go for invoice scanning software.
Some invoice scanning software help you avoid fraud by detecting fraudulent documents. Was an invoice submitted twice? Then the automated invoice scanning can send you a warning. Was a character altered? The software can automatically detect it thanks to EXIF analysis and Photoshop detection, and sends a warning.
5. Increases scalability
Manually processing a few invoices per day is manageable. But with your business growing, you may face hundreds if not thousands of invoices to process. Will you hire 20 new employees? That’s not scalable. But an invoice scanning software is. With the software, you can easily scale processing capacity up and down, depending on document volume.
Thanks to these five benefits, processing invoices will never be the same again!
The best scanning software for your invoices
The best invoice scanning software for you may be different from the software for another company. You might be looking for an app that scans your invoices. Or maybe you have an app yourself, that you want to enhance with OCR and invoice scanning capabilities.
In that case, Klippa has the ideal solution for you. Klippa’s invoice scanning software takes care of the invoice scanning and allows you to extract, validate and process all the data you need. It can easily be integrated into your existing software via the Klippa API or SDK.
What is the difference between Klippa’s APIs and SDKs?
Our API is the service of sending a document to our OCR software and receiving a structured data format back within seconds. It is well documented, so it is not too difficult for a developer to implement it. You do need to have an invoice-capturing solution, such as a mobile app, which can capture the invoice.
Our SDKs are a better option if you are looking for an end-to-end solution to scan invoices. Our Camera SDK, for example, is a complete camera module that ensures a good picture of the invoice is captured. It gives real-time feedback to the user, enhances the image quality (e.g. by optimizing the brightness), and thereby improves recognition accuracy.
It is possible to link the Klippa Camera SDK to our OCR API. After scanning the invoice, a request is automatically handled through the API and structured data is returned to the application.
The main advantage of the SDK is that your developers don’t have to build all the components themselves. They can easily “use” other people’s work. This leads to huge developing costs- and time savings.
How does it work?
Automation is the best way to help you avoid many – if not all – of the drawbacks of manual invoice processing. It streamlines your process and makes it easier and faster.
There are only a few steps to be taken. The video below shows how invoice scanning with Klippa works:
- To start the process, you submit the invoice to the invoice scanning software. You can do so by scanning the invoice with your phone, forwarding an email, or uploading a PDF document.
- Within just a few seconds, the OCR software processes the invoice. It scans and detects the invoice and improves the image quality to increase accuracy. Then all data is automatically extracted and structured.
- You get the extracted data back in a structured format, such as JSON, CSV, XLSX or UBL.
- You can now store the data in your database and use it for further processing.
Automate your invoice scanning with Klippa
Throughout this article, we have discussed the benefits and functionalities of invoice scanning software. But understanding how it can be adapted to your specific use case and smoothly integrated into existing operations is another thing.
This is where we can help you out. Our product specialists are happy to think along with you and answer all the questions you have. Get in touch with us by filling in the demo form below or contact us directly.