How to Level Up Your AP with OCR for Invoice Processing

Posted by Rich Arminio on Jun 30, 2021 1:52:03 PM
Rich Arminio

Think for a moment about all the time your AP staff spends keying and rekeying invoice data.

A single invoice typically is handled multiple times before it is ready for payment. And at each stop along the way, the chances are good that someone must key information from the invoice.

  • Invoice numberOCR for Invoice Processing
  • Invoice amount
  • Invoice due date
  • Supplier name and number
  • Remit-to address
  • Purchase order number
  • Product quantities
  • Unit prices
  • Sales tax
  • And more!


This is just the tip of the iceberg when it comes to the invoice data that AP departments must key.

All that keying increases labor costs, delays the approval of invoices, invariably results in payment errors, and keeps AP staff from focusing on higher-value activities such as data analysis.

While most businesses are receiving more invoices via e-mail, many of those businesses lack the technology they need to automatically extract and validate the information from invoices.

So, they process invoices that arrive via e-mail as paper.  And that means more keying.

How OCR for Invoice Processing works

OCR or optical character recognition offers an alternative to manual keying.

The OCR technology built into some AP automation solutions and invoice processing software can extract any header or line-item that is printed anywhere on a paper or electronic invoice. Users can configure rules for the information to be captured from each supplier’s invoices. Captured OCR data is validated using technology and human verification, ensuring a high degree of accuracy.

Accuracy of data is just as important with OCR as it is with manual data entry. In some cases it is more important with OCR due to the fact that OCR introduces false positives. With data entry human intelligence can easily manage the variations in invoice formats. With OCR, not so much. So achieving a guarantee of 99.95 percent data capture accuracy with an OCR solution can be elusive, but it is attainable. So as you pursue OCR it is critical to understand the ability for the system to provide highly accurate data.

Once captured, accurate invoice data can be matched against purchase order or delivery information residing in an ERP. Matched invoices can be posted directly to the ERP without operator intervention.

The benefits of OCR for Invoice Processing

AP automation solutions and invoice processing software deliver lots of benefits to businesses.

But OCR can be a game-changer in taking AP and invoice processing to the next level.

  • Better staff utilization. Staff will spend less time keying and more time on fulfilling tasks.
  • Fewer errors. OCR solutions use technology and humans to verify data capture accuracy.
  • Less rekeying of invoice data. OCR data can be used across the invoice processing cycle.
  • Instant access to data. Digitizing invoices and capturing data via OCR eliminates the need for AP departments to store paper invoices in filing cabinets or off-site. Data from invoices can be seamlessly uploaded to any ERP or accounting system. And invoice images and data are instantly available to users, making real-time reporting and analytics a possibility.
  • Eliminate information latency. OCR for invoice processing helps speed the delivery of information downstream to ERP systems such as those from SAP, Oracle, NetSuite and Sage
  • Reduced risk of payment fraud. Fewer paper invoices laying around and fewer people handling paper invoices means tighter chain of custody and segregation of duties control
  • Greater scalability. Capturing data via OCR means accounts payable departments won’t have to hire additional staff as their business grows or their invoice volumes seasonally spike – a key consideration at times when it is hard to attract and retain good employees.


OCR can provide some great benefits, but it’s also important to understand the limitation of OCR and understanding that it is not the complete resolution to all your data entry challenges.

The Challenges of OCR for Invoice Processing

  • Template Based. Virtually all OCR engines require a learning process that can be timely and inhibit you from taking advantage of any manual data entry, delaying ROI for months if not years.
  • Imperfect Data Capture. Some of the top OCR engines can deliver at best, 80% data capture accuracy; but most organizations will tell you that they have not been able to achieve more than 25% - 35%.
  • Technical Management. If you decide to invest in an OCR engine, it’s very likely that someone from your team will have to manage the servicing of the tool moving forward.
  • Document limitations. Colored backgrounds, blurred texts, or handwritten documents almost always throw off any OCR process.


So, the hard truth is that AP departments will never achieve high performance until they automate their manual processes.

While optical character recognition can reduce the laborious and error-prone keying of information from supplier invoices, be mindful of the limitations of OCR. There are plenty of AP automation providers out there that use a combination of different technologies to ensure the end-user is delivered a guaranteed result when it comes to data capture.

If your AP department is automating for the first time or planning to refresh its existing AP automation solution or invoice processing software, look for a solution that offers intelligent data capture and speak with an expert who understands the various methods to ensure clean data into your process.

Want help selecting the right invoice processing software?

Contact us to chat with one of our automation experts about your needs today!



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Tags: AP Automation, AP Automation Solutions, Accounts Payable Automation, Invoice Automation, Invoice Automation Solution, Invoice Processing Automation, Invoice Processing Software, OCR for Invoice Processing