Invoice Digitization: How to Digitise Invoices Better

Turning traditional paper invoices into digital ones with Optical Character Recognition (OCR) technology is an advanced but simple method that automates the transformation.

To digitize invoices using OCR, follow these three main steps:

1. Uploading the Invoice to the OCR Software

The first step is to upload an image or PDF file of the particular invoice to the OCR software.

This can be done through a mobile or web application. After the upload, the software performs an initial scan to optimise the image quality.

2. Converting the Image into a Text File

After the optimisation of the image, comes the next step of converting the invoice image into a text file.

This is achieved by analysing the light and dark patterns of the image to identify letters and numbers, transforming the visual data into editable and searchable text.

3. Parsing TXT into JSON

The last part of the OCR (Optical Character Recognition) process changes the text file into a structured format like JSON (JavaScript Object Notation). At this stage, the OCR tool sorts out and labels each detail on the invoice, like the invoice number, the total cost, and the date it was issued.

This organised data can easily be saved and stored in a database or an Enterprise Resource Planning (ERP) system, ensuring it's easily available for later access and handling.

Best practices for successful invoice digitization

To make an invoice digitization project successful, focusing on practices that boost efficiency, accuracy, and cost savings is important. 

Here are four key areas to concentrate on

Selecting the Best OCR Technology: 

The main idea of a successful invoice digitization is choosing an Optical Character Recognition (OCR) system that meets your business's needs.

Clear AP Automation software can help you with it. It can deal with different types of documents and conditions and accurately pull out data when required.

Automating the Accounts Payable: 

By making the entire invoice process automatic—from extracting, retrieving data and checking invoices to approving and paying them—you reduce manual tasks and errors. This speeds up the process and makes handling payments more accurate and efficient.

Data Security:

Invoices often contain some confidential details. So, we must focus on keeping these details as safe as possible.

Use strong security measures like encrypting data and controlling access to protect against unauthorised use and data leaks, keeping your financial information safe and sound.

Integrating with Your Current Systems: 

It is important that the digitised invoices that we work on are well-integrated with the ERP systems that we are currently using.

This helps you use financial information better, make smarter decisions, and avoid having to enter data more than once.

Future Trends in Invoice Digitization

The way we automate invoice handling is quickly evolving, driven by new technologies and changing business needs. Here's what to expect in the future of invoice automation:

Use of Advanced Technologies: 

Advanced technologies like AI and ML are becoming more integrated into automating invoices. They're improving error checking, smart data gathering, and future predictions. As AI and ML improve, they will make automation systems more advanced, making processing quicker and more accurate.

Using Blockchain for Security: 

Blockchain technology is becoming important for making invoice data safe, unchangeable, and clear. It helps businesses cut down on risks like data breaches and fraud.

Approving Invoices on Mobile: 

With everyone using smartphones, there are now apps that let you approve invoices anywhere, anytime. This makes it easier for managers and other important people to check, approve, or decline invoices quickly, improving how work flows.

Better Supplier Portals: 

Vendor portals are crucial to enable faster communication and invoice processing. Vendors can now submit invoices, track what's happening with them, and sort out issues themselves. This leads to better communication and teamwork, making the whole process smoother and more open.

Adapting to Local and Global Rules: 

As companies work more globally, automating invoices needs to respect different tax laws and rules. Solutions are being customised for different places to make sure invoices are handled right and follow local tax rules.

An example of this is electronic invoicing under the GST law in India, which demonstrates how invoicing solutions are customized to adhere to specific local tax requirements. 

This customisation ensures that invoices are correctly handled and comply with local tax rules, highlighting the importance of adapting invoicing processes to meet both local and global standards.

Technology can really revolutionise the management of invoices. This will be beneficial for businesses, and they can now process invoices faster, safer, and in a way that's better for the environment. 

The companies can now handle invoices better and can save money by avoiding manual mistakes.

Start digitizing your invoices with Clear

Clear leverages SaaS-fist technology, OCR and AI to automate invoice capture and digitization into the ERP. Further, it helps teams get real-time visibility on invoice approvals and cash flows. It allows to process invoices faster through touchless, digital approvals. Meantime, it ensures invoice/vendor compliance through extensive validation checks, while improving vendor relationships with timely payments.