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What Is OCR in Accounts Payable and How It Can Improve Your Business

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OCR (optical character recognition) is an automation technology that helps digitize bill payments, streamline repetitive tasks, and improve your overall AP (accounts payable) management process.

When you automate AP workflows using OCR, you get to enjoy a smoother and more efficient accounts receivable process. Plus, you can prevent any delayed payments due to human error.

OCR can hugely benefit your business’s AP process. If you’d like to know more about this incredible technology and how it works, stick around because this article is for you.

What is OCR in Accounts Payable?

OCR (optical character recognition) is a technology that uses machine learning to distinguish print or handwritten texts in a digital file. It can tell apart from each text character in your scanned documents and images. Once it processes the data, it converts it into something editable and searchable.

With OCR, you can easily capture invoice details and digitize bill information for easy database entry. How easy? Well, it only takes about automate less than 30 seconds to extract essential data. These data could be anything, like invoice numbers, names, addresses, and prices.

Now, compare that to the minutes it will take to do manual data capture.

Because of its efficiency, OCR has had many use cases over the years. Applications range from newspaper digitization, loan processing, mail sorting, and maintaining patient records.

Manual data entry can take you up to 72 hours to process a vendor invoice. If you want to cut your invoice processing time by half, incorporate OCR into your AP process using robust accounts payable software. Peakflo provides the right tools to improve your accounts payable process using AI-powered OCR and seamless task automation. Try it now!

Why Use OCR In Your Accounts Payable Process?

Accounts payable automation is now becoming more prevalent than ever. Thanks to powerful accounts payable software, businesses can 2x their AP performance. Doing that can also have a significant positive impact on business cash flow.

Using accounts payable software featuring an OCR function is one of the best decisions to make for your AP department. Let’s look at a couple of reasons why:

1. Digitize Bills

An OCR solution lets you create a more seamless AP process by digitizing your invoices. It allows you to convert your scanned invoices into machine-readable files. And because the software can understand all the data, you can say goodbye to manual entry into your database.

OCR technology can be the answer for organizations experiencing difficulties with invoice capturing. Human error is prevalent with manual invoice processing. By eliminating the manual work, you can prevent mistakes and streamline your processes. This comes in handy when managing loads of invoices.

2. Get a Speedier Invoice Processing

When you digitize bill processing, you get to enjoy a much faster workflow via OCR invoice processing. Remember that it takes 1 to 3 days to process an invoice. Automating your process to eliminate monotonous work can significantly reduce this time.

There’s a reason why many companies, big or small, are turning to accounts payable automation. Implementing one into your business can decrease invoice processing time by 73%. No more delays, lengthy invoice approvals, and manual data entry.

3. Cut Costs

Invoice processing costs matter, especially if you want to improve your business cash flow. Manual, time-consuming processing can also incur additional expenses through human errors and delays. Did you know that the average cost for manually processing an invoice is $12.44? Companies with more complex processes can reach as high as $40 per invoice.

When you digitize bill processing, you get to cut time and effort. You also get to save a lot of money. Goldman Sachs reports that accounts payable automation can provide 60-70% savings in AP management costs.

4. Reduce Errors

Errors can contribute to higher average invoice processing costs. You can almost expect human errors to follow suit whenever manual work is involved, regardless of how experienced your team may be.

Errors like keying in the wrong invoice number or address can lead to delays. In worst cases, it can even affect vendor relationships. When you digitize bill processing with OCR, you can eliminate these errors from human intervention.

You can process invoices effectively without errors using a powerful automation tool to empower your finance team. You’ll also get notifications when your OCR invoice doesn’t comply with the standards.

5. Rely on Flexibility

Using OCR, you can quickly convert your physical and digital documents into editable and searchable content. Now you can edit your documents using different platforms like word processors, spreadsheets, PDF, or your custom database.

Thanks to OCR-enabled accounts payable software, you’ll gain an added flexibility that contributes a lot to your end-to-end payable process. 

How to Implement OCR into Your AP Process

Now that you understand the whys, you’re probably wondering how this technology integrates into your business. After all, wouldn’t it be helpful if you could confirm your invoices without repetitive tasks? 

Let’s look at how Peakflo’s OCR solution can work in your AP process’s day-to-day functions.

1. Get Your Bills and Receipts Online

You can easily get your bills and receipts on Peakflo’s platform without using a physical scanner. Just forward your receipts to a specific email address, and we’ll do the OCR receipt scanning for you. OCR software can provide 98 to 99 percent accuracy at the page level. So, you can worry less about slips and errors.

An example of an email with an invoice sent to Peakflo

2. Your Software Reads (And Even Helps Correct) Your Invoice

This step is when you start to digitize bill processing. As the OCR scans your email, you’ll be notified in case there are any errors, like missing details in your OCR receipt and invoice. 

Your OCR may be bound to find imperfections in the documents by isolating characters and smoothing out the pixels. Once that’s done, you’ll capture the rest of the correct information, adding them to Peakflo’s bill detail page.

The OCR feature in the bill dashboard in Peakflo

If the software can’t dissect a field, you’ll have to manually enter it into the system. Still, this is leaps and bounds better than if you’re doing manual entry altogether.

Additionally, modern OCR programs can identify characters by comparing them to familiar patterns. That’s one of the remarkable things about AI integrations. You can rely on them to learn from past mistakes. 

In this case, the software will attempt to remember your manual corrections. It will then link them to the relevant errors to know what to do when they happen again.

3. Your Software Gives You Actionable Data

Eventually, the software will finish populating the relevant fields. After that, the Peakflo system will automatically schedule the payment according to the date you’ve set up. This makes invoice processing effortless – allowing you to focus on growing your business. 

The bills and payment dashboard in Peakflo

You will also get editable data that you can save in your database. Whether you want to map the document over to an excel file or get that directly into your accounting system, exporting will be quick and easy.

Frequently Asked Questions about What Is OCR in Accounts Payable

What is OCR in invoice processing?

OCR invoice processing uses an OCR business solution to streamline invoice data extraction. You can quickly digitize bill processing using OCR, which typically comes with robust accounts receivable and accounts payable software. 

This banishes manual entries in your AP and AR processes. When you digitize bill extraction, you can save time, reduce errors, and speed up your invoice processing. 

Is OCR enough to achieve your automation goals?

OCR in itself isn’t enough to provide accounts payable automation. To fully automate your AP process, you’ll need to integrate all-in-one accounts payable automation software.

You can leverage a collection of other features besides AI-powered OCR invoice validation. These features include automated invoice approval functions, dashboars, and built-in payment tools.

Together, these features significantly improve operational efficiency, saving you time and money.

Ready to streamline your AP process? Start with Peakflo today!

Why automate accounts payable?

Automation helps increase efficiency and productivity, regardless of which business function you apply it. As you know, accounts payable management is no stranger to daunting and time-consuming manual processes which are prone to human error. 

With AP automation, you can smoothen and streamline day-to-day AP management functions, whether that’s tracking what’s owed to suppliers or capturing invoice details and organizing them into a coherent and intuitive database.