What is invoice automation?
Invoice processing is a process that starts with the transfer of invoices from vendors or suppliers to the accounting system and ends with payment approval and payment. Performing this task, which is carried out by the accounts payable team, not manually but by automation is called invoice automation. Invoice automation provides significant benefits to companies, as invoice processing involves multiple steps and is critical to the smooth running of various business processes.
To implement invoice automation, OCR and artificial intelligence-based software are generally used that perform several functions. We have prepared a glossary for you to better understand these software, which is very popular today, and invoice automation in general.
Key Concepts About Invoice Automation
Optical character recognition: OCR is the electronic conversion of images of typed, handwritten or printed text into machine-encoded text, whether from a scanned document, a photo of a document. It is a data extraction method.
Intelligent character recognition: In computer science, intelligent character recognition (ICR) is an advanced optical character recognition (OCR) or — rather more specific — handwriting recognition system that allows fonts and different styles of handwriting to be learned by a computer during processing to improve accuracy and recognition levels.
Cognitive Data Capture: It is a data extraction and validation function, performed by machine learning. Cognitive data capture technology replaces human skills such as; reading, understanding and evaluating any data type.
ERP Integration: Invoice processing can be fully automated only if a seamless ERP integration is possible. It means, outputs of invoice extraction should be properly and easily transferred to any ERP system through connectors.
Robotic Process Automation: RPA is a business process automation technology, that utilizes software robots (bots) or an artificial intelligence (AI) entity to perform repetitive digital tasks.
Accuracy Rate: Since we rely on software or bots to extract, validate, classify and deliver data for invoice automation, we measure the performance by accuracy rating. There are two types of accuracy in question: Data accuracy and judgement accuracy. First refers to outputs of extraction and second to decisions made with these outputs.