IDP and OCR technology in AP processing: Benefits, Implementation, and future trends
Optical Character Recognition (OCR) and Intelligent Document Processing (IDP) technology have immense power to revolutionize the AP processes. Implementing OCR in AP processes can reduce processing time and cost by up to 75%.
OCR technology automatically extracts the data from invoices or purchase documents. IDP intelligently uses machine learning to classify and update this information in the desired format. These technologies provide real-time integration with the ERP systems. In this blog, you will study IDP and OCR technology in AP processing its benefits, implementation, and future trends.
In the blog
Understanding OCR and IDP technology
“Businesses are constantly striving for enhanced efficiency and streamlined processes. When it comes to accounts payable (AP) automation, Optical Character Recognition (OCR) and Intelligent Document Processing (IDP) technology is a game-changer,”
- Ben Johnson - Automation Expert
What is OCR technology, and how can it help in AP?
Optical Character Recognition (OCR) technology converts scanned or printed text into machine-readable data. OCR technology gets high accuracy in recognizing and extracting text from documents. It supports multiple languages, which makes it versatile for global organizations. OCR can also validate extracted data with predefined databases.
OCR invoice processing has many applications in automating accounts payable processes. Organizations can extract data from invoices, receipts, and financial documents; it eliminates manual data entry errors and accelerates processing times. You can integrate OCR technology with enterprise resource planning (ERP) software to help seamless data transfer. OCR also improves process efficiency.
ICD technology and its use in AP automation
Intelligent Document Processing (IDP) technology combines OCR with artificial intelligence (AI) and machine learning (ML) capabilities. It automates the processing and interpretation of unstructured data from documents. IDP understands the context, semantics, and relationships within documents.
IDP extracts relevant information from invoices, such as vendor details, invoice numbers, line-item details, and payment amounts. It classifies documents based on predefined rules and accurately extracts and validates data against reference data. IDP invoice processing can handle complex documents in different layouts and formats. It can also adapt to different invoice templates and structures.
Benefits of implementing OCR and IDP technology in Accounts payable (AP)
Accounts payable (AP) departments have seen a significant transformation in efficiency and accuracy with the implementation of OCR (Optical Character Recognition) and IDP (Intelligent Document Processing) technologies. 65% of businesses believe IDP and OCR are the best technologies to optimize their AP performance. These technologies have revolutionized the way invoices and other financial documents get handled. These technologies provide numerous benefits that drive efficiency, accuracy, and compliance. Here are some benefits of implementing OCR and IDP technology in AP.
Increased efficiency and productivity
OCR and IDP technology automates the time-consuming and error-prone manual data entry process. You can extract data from invoices and process it much faster. Automated data extraction reduces the chances of human errors and frees up valuable time for AP professionals to focus on more strategic tasks. It can reduce processing time and ensure faster turnaround for payments.
Reduce manual data entry errors
The total cost of manual invoice processing is over $2.7 trillion for the global business. A study found 4% of manual data entry errors, out of which 14% can considerably impact the business. OCR and IDP technologies eliminate these errors by accurately capturing and validating invoice data. IDP leverage machine learning algorithm to interpret and understand various document formats, fonts, and layouts. IDP invoice process ensures the accurate transfer of information, reducing the chances of expensive mistakes and potential financial discrepancies.
Accelerated invoice processing and payment cycles
The manual AP process involves reading invoices, updating data, and routing documents for approval. OCR and IDP technology automate these repetitive tasks to reduce invoice processing time by >40%.
"OCR and IDP technology have revolutionized invoice processing and payment cycles. Our clients have reduced their processing times by 40%. Clients capture early payment discounts and have strengthened their relationships with suppliers."
IDP can quickly validate invoices matched with purchase orders and routed for approval. The streamlined AP process facilitates 3-way matching and faster invoice processing. It can shorten payment cycles and improve vendor relationships. You can use early payment discounts, negotiate better terms, and avoid late payment penalties.
Enhanced data accuracy and compliance
Maintaining data accuracy and compliance is crucial in AP operations. IDP and OCR technology can give you 99.99% accuracy in invoice data processing and validation. You can automatically validate data against predefined rules and business logic. By integrating with enterprise resource planning (ERP) systems, you can ensure that invoice data gets seamlessly transferred without manual intervention. OCR and IDP reduce the risk of errors during data entry. It can also provide an audit trial and comprehensive reporting capabilities. You can track invoice processing, monitor compliance, and meet regulatory requirements.
Improved transparency and reporting capabilities
Hermes found that 87% of organizations using OCR and IDP technology reported improved visibility into their AP processes. Additionally, 75% of our clients stated that these technologies provided better reporting capabilities, enabling them to track key metrics and make data-driven decisions.
Do you need assistance in OCR and IDP technology implementation?
You can enable complete transparency and high reporting capabilities using the best OCR software for accounts payable. These technologies enable real-time monitoring of invoice status, payment approvals, and exceptions. You get access to comprehensive dashboards and reporting tools, and your AP teams can analyze key metrics such as invoice processing times, approval bottlenecks, and vendor performance. These insights empower you and your team to optimize your AP operations. You can identify process bottlenecks and make informed decisions based on the reports to drive continuous improvement.
Implementing OCR (Optical Character Recognition) and IDP (Intelligent Document Processing) technology in accounts payable automation is no longer a choice. Successful implementation of these technologies needs careful consideration of key factors to ensure seamless integration, optimal solution selection, data security, and user adoption. If you plan to implement OCR and IDP technology in accounts payable automation, here are your implementation considerations.
Integration with existing accounts payable systems
Compatibility and seamless data transfer are crucial when integrating OCR and IDP technology into existing accounts payable systems. You should evaluate the integration capabilities of your chosen solution with the current AP systems to avoid data loss and miss out on the optimized automation benefits. With smooth integration, you can streamline your invoice processes and leverage the full potential of OCR AP smart automation and IDP technology.
Choosing the right OCR and IDP solutions
Selecting the appropriate OCR and IDP solutions is critical in the implementation process. You can consider the following factors when choosing an AP automation software solution that leverages OCR and IDP technologies:
"Business should choose a solution that can handle document types, adapt to evolving AP processes, and provide modern features like data validation and automatic document classification. It is important to conduct thorough research before taking the decision."
Accuracy and performance
You should evaluate the accuracy rate of the OCR and IDP solutions. To ensure reliable performance, look for proven track records, speed, and customer testimonials.
Data security and privacy
Ensure that OCR and IDP solutions comply with industry regulations such as GDPR or HIPAA. Your AP automation solution should have data encryption, role-based access, and a thorough assessment of vendor security practices.
Flexibility and scalability
Your OCR AP smart automation solution should handle a wide range of document formats and adapt to the changing needs of your AP processes. It should accommodate future growth and increased invoice volumes.
Check for additional features such as data validation, exception handling, and automatic document classification. These AP automation software features increase efficiency and accuracy in invoice processing.
Vendor support and reputation
Research customer support services provided by the OCR and IDP solution vendors. Reliable support and timely assistance are crucial during implementation and ongoing usage. You should also check the reputation of the OCD and IDP invoice processing solution before making your automation decision.
Future trends and outlook
The global IDP market size will grow with a CAGR of 37.5% by 2027 to generating revenue of $5.2 billion. The future of accounts payable automation holds immense potential with the advancements in OCR and IDP technology. These technologies will continue to evolve, enhancing efficiency, accuracy, and compliance in invoice processing. Integration with other emerging technologies, such as AI, machine learning, and RPA, will further propel the transformation of AP processes.
Digital immune system
With increased innovation, OCR and IDP technologies could detect and prevent system failure. You can increase business performance and user experience with AP automation solutions. System failure detection is highly important due to increased cyber fraud and malware attacks.
IDP and OCR technology plays an important role in digital immune systems. You can get the highest data privacy, compliance, and security by leveraging smart AP automation.
Adaptive AI is the capability of the system to enhance learning and change behavior according to varying real-world circumstances. Adaptive AI can seamlessly enhance traditional AI systems and work with modern innovations.
Accounts Payable is a complex process with a wide range of documents (invoices, bills, policies, and contracts) requiring high precision. Adaptive AI in IDP and OCR AP solutions helps you increase the accuracy and speed of documents. It can also enhance workflow and pre-processing of documents.
Industry cloud platforms
Cloud platforms help you store and access your data from mobile devices. It offers the highest level of security and scalability. More than 40% of tech and global leaders plan to increase their investment in cloud automation.
Calpion's cloud IDP and OCR platforms offer all industries adaptable and powerful AP automation. It helps you manage documents like invoices, licenses, policies, agreements, etc. You can become more compliant, resourceful, and compliant with Hermes – AP automation solutions.
Smart OCR and IDP AP solutions help organizations balance environmental protection and human needs. It offers decision-making technology to deliver responsible and balanced solutions. Sustainable technology aids you to reduce waste, decrease energy consumption, and improve the organization's overall efficiency. Future technologies would be less harmful and highly useful to organizations.
Implementing OCR and IDP can save 30% of their time. As organizations embrace these AP automation advancements, they can expect streamlined operations, improved data insights, and increased accuracy. By staying updated with the latest trends, you can unlock new opportunities, drive innovation, and achieve greater success in your AP automation journey.
How can Hermes help with AP automation?
Hermes is the best OCR software for accounts payable developed by Calpion. Our team has over 18 years of experience helping businesses streamline their accounts payable process. We have developed smart IDP and OCR AP automation solutions that can help you save 90% of your costs.
Our solutions work with only 10% human intervention and reduce AP processing time from 5 minutes to 20 seconds. Hermes can help you 77 hours weekly, equivalent to four FTEs. Don’t miss out on this amazing opportunity to stay ahead in the business. Automate your invoice processing with our IDP and OCR AP automation software.