With automated invoice processing powered by advanced machine learning, all your invoices can be automatically coded, assigned to the appropriate workflow, and routed electronically for approval – no matter how many you have. Once you approve, invoices flow directly into your accounting system for payment processing. When an imported invoice can't be submitted to workflow successfully, the system will remove it from further automated processing. An accounts payable clerk can review and edit the invoice before the automated process attempts to rerun the process for that invoice. Currently, unsuccessful invoices must be resubmitted for processing one at a time. This feature lets you restart processing for multiple invoices where the reason for the failure can be resolved by a single fix for those invoices. Invoice processing automation involves transforming paper invoices into electronic formats by using scanners that digitize the paper documents and apply optical character recognition (OCR) to enable the digital documents to be read, routed, manipulated, approved, and stored electronically. AI Builder Invoice Processing Automation Starter Kit is a reference implementation of invoice processing automation provided by Microsoft to bootstrap your implementation. This is an installation package including two Power Automate flows orchestrating the processing of invoices with AI Builder, several Common Data Service entities to store the information, a role and a Power App to customize the starter kit and monitor the processing and edit missing or inaccurate extracted data. Nanonets Invoice Automation allows AP teams and businesses to process invoices quickly and more efficiently. Supercharge your procurement process and strengthen relationships with suppliers. Here are some more reasons for going with Nanonets invoice automation: Smart 3-Way Matching.
Automated invoice processing is the process of seamlessly extracting data from invoices entering your system and pushing it into your ERP so that processing a payment is a process of a few clicks. This blog is a comprehensive overview of the latest technologies that can enable you to do that.
Processing payments for finance departments is a chaotic process with invoices coming from in every format possible: paper invoices, PDFs, scanned PDFs, emails, etc. The volumes also fluctuate with seasons where peaks become extremely hectic for finance personnel. Invoice capture using manual data entry into systems during these times lead to common issues like lost documents and tally mismatches.
In this blog we talk about what an ideal automated invoice processing system looks like and what are the pros and cons of such a system.
Want to build your custom Automated invoice processing workflow? Head over to Nanonets and get started for free!
The Procure to Pay cycle typically involves the following steps:
There are 3 steps in any invoice processing:
- Scanning the physical invoice
- Interpreting the invoice data according to business rules
- Filing of data into any ERP
Now there are two kinds of invoice processing softwares in the market :
The software should intelligently extract the required information and validate it according to business rules like mapping to a Purchase order number before pushing the final details into the ERP for payment processing. The rule-based systems don't scale well as businesses keep adding/churning vendors and writing new rules everytime is an inefficient process.
These softwares also offer integration with most ERP softwares like SAP, Oracle, Microsoft Dynamics 365.
Any automated invoice processing software needs to run a 3-way match purchase order generated, invoices received against purchase order and receipts generated against invoice. Each of these documents has a unique number which needs to mapped against each other.
Here is an example of an automated invoice processing flow:
Nanonets OCR API has many interesting use cases. Talk to a Nanonets AI expert to learn more.
Using the latest advances in artificial intelligence coupled with the reduction in compute costs, Nanonets invoice OCR solution is able to capture invoice data regardless of the format. You no longer need to setup rules
This is the phase where the information is extracted after the tables are identified. There are a lot of factors regarding how the content is structured and what content is present in the table. Hence it’s important to understand all the challenges before one builds an algorithm.
Evolution of the invoicing process
The process of reviewing invoices has evolved a lot over time. The growth in technology has seen the process of invoice processing move through three major phases.
Consider a use case where an organisation is going through it's process of reimbursing its regular vendors for the expenses of the month.
The following steps are followed to process invoices -
With the advent of OCR techniques, much time was saved by automatically extracting the text out of a digital image of any invoice or a document. This is where most organisations that use OCR for any form of automation are currently.
By using OCR and deep learning, we have enabled machines to perform as well and in some cases even better than humans.
Digitizing invoices involves several human moderated steps :
Deep learning approaches have seen advancement in the particular problem of reading the text and extracting structured and unstructured information from images. By merging existing deep learning methods with optical character recognition technology, companies and individuals have been able to automate the process of digitizing documents and enabled easier manual data entry procedures, better logging and storage, lower errors and better response times.
Several tools are available in the market and the open-source community for such tasks, all with their pros and cons. Some of them are Google Vision API, Amazon Rekognition and Microsoft Cognitive Services. The most commonly used open-source tools are Attention-OCR and Tesseract.
All these tools fall short in the same manner - bad accuracy which requires manual error correction and the need for rule-based engines following the text extraction to actually be able to use the data in any meaningful manner. We will talk more about these problems and more in the coming sections.
The data extracted from any invoice needs to be verified to ensure proper sums, VAT rates, VAT IDs, currencies, seller details and more. Most companies have workflows of multiple levels of approvals to ensure that an error doesn't slip through it's cracks where reconciliation later is a very painful process. A good invoice processing automation software allows you to setup some of these basic rules and in case any extracted value violates that, it raises a flag for a manual review. So now you're adding a layer of Artificial intelligence led checks. In these redundant repetitive processes, machines have been said to been humans hands down.
In case there is a discrepancy in the information extracted against said business rules, one can create a resolution handling workflow where there is manual verification of this data. You can set confidence score thresholds to handle such automation - if a value is below a pre-decided confidence score number you route to a manual workflow, else push it to the automated payment workflow.
Nanonets is an artificial intelligence based OCR engine that helps business across the world automate manual extraction. Our AP Automation software makes monthly invoice processing a hassle-free process. Using invoice OCR API you can cut down upto 90% of manual tasks of data entry into your accounting softwares. We are a valued partner of over 20,000 businesses in 4 continents.
The Nanonets OCR API allows you to build OCR models with ease. You do not have to worry about pre-processing your images or worry about matching templates or build rule based engines to increase the accuracy of your OCR model.
You can upload your data, annotate it, set the model to train and wait for getting predictions through a browser based UI without writing a single line of code, worrying about GPUs or finding the right architectures for your deep learning models. You can also acquire the JSON responses of each prediction to integrate it with your own systems and build machine learning powered apps built on state of the art algorithms and a strong infrastructure.
Using the GUI: https://app.nanonets.com/
You can also use the Nanonets-OCR API by following the steps below:
Step 1: Clone the Repo, Install dependencies
Step 2: Get your free API Key
Get your free API Key from http://app.nanonets.com/#/keys
Step 3: Set the API key as an Environment Variable
Step 4: Create a New Model
Note: This generates a MODEL_ID that you need for the next step
Step 5: Add Model Id as Environment Variable
Note: you will get YOUR_MODEL_ID from the previous step
Step 6: Upload the Training Data
The training data is found in
images (image files) and
annotations (annotations for the image files)
Step 7: Train Model
Once the Images have been uploaded, begin training the Model
Step 8: Get Model State
The model takes ~2 hours to train. You will get an email once the model is trained. In the meanwhile you check the state of the model
Step 9: Make Prediction
Once the model is trained. You can make predictions using the model
Added more reading material about different approaches using OCR in automating invoice processing workflows
Start using Nanonets for Automation
Try out the model or request a demo today!TRY NOW-->
This topic describes the capability for automating your vendor invoice processing and the benefits of using an automated process. This capability consists of features that are turned on in Feature management. These features apply only to vendor invoices, not to invoices that are processed using the Invoice journal or Invoice register journal page.
Organizations often work with third parties to process paper invoices by using an optical character recognition (OCR) service provider. The service provider returns machine-readable invoice metadata. To help with automation, the Accounts payable automation features let you consume these artifacts from Accounts payable.
You can automate some Accounts payable vendor invoicing processes. These processes include submitting imported vendor invoices to the workflow system and matching posted product receipt lines to pending vendor invoice lines. The automated process shows information about the progress of a vendor invoice as it moves through each of the processes. This capability can help Accounts payable clerks and managers process vendor invoices more efficiently. It also helps reduce the errors and inefficiencies that can occur when information is manually entered and processed.
The automation processes can be used to perform these tasks:
As part of a touchless Accounts payable invoicing process, you can have the system automatically submit an imported invoice to the workflow system. The process will run in the background, at a frequency that you specify (either hourly or daily). The capability to automatically submit imported invoices to the workflow system requires that your process begin with an imported invoice. To ensure that the invoice can be processed from start to finish without manual intervention, an automated posting task must be included in the workflow configuration.
Invoices that are related to purchase orders (POs), and invoices that contain a non-PO procurement category and non-stocked lines, can automatically be submitted to the workflow system. Invoices that are manually entered and invoices that are created using the Vendor collaboration invoicing workspace must be manually submitted to the workflow system. Prepayment application processing must be performed manually for imported invoices. You can manually apply prepayments before or after posting the imported invoice. You can manually apply prepayments to unposted standard invoices using the Vendor invoices page. After posting, the settled prepayment will be available to manually apply to other invoices from this vendor on the Vendors page (Accounts payable > Common > Vendors > All vendors > Invoice tab > Apply).
The automation feature provides a flexible framework that lets you define company-specific rules for submitting imported vendor invoices to the workflow system and matching posted product receipt lines to pending vendor invoice lines.
The system can automatically match posted product receipts to invoice lines that a three-way matching policy is defined for. The process will run until the matched product receipt quantity equals the invoice quantity. As part of this process, you can specify the maximum number of times that the system should try to match product receipts to an invoice line before it concludes that the process failed. The process will run in the background, either hourly or daily. You can run the automated matching process as part of the process for submitting invoices to the workflow system. Alternatively, you can run it as a standalone process.
Posting simulation completes the validation steps that are done during the posting process for vendor invoices, but no accounts are updated. To run the process, you can select either a single invoice or multiple invoices on the Pending vendor invoices page.
An easy-to-read view of vendor invoice workflow history is provided. Vendor invoice workflow history can be accessed directly from the vendor invoice. Therefore, fewer clicks are required to find that information. If your organization has enabled the ability to automatically submit imported vendor invoices to workflow, the automation history is provided for the imported invoices. The automation history helps you identify the current process step, as well as the steps that have already been completed. When a step is unsuccessful, the system provides detailed information to help you understand the reason for the failure.
The Vendor invoice entry workspace lets you focus on vendor invoices that didn't make it through the automated process. Tiles on the workspace list information about vendor invoices that weren't successfully submitted to the workflow system, imported, or matched to product receipts. Microsoft Power BI metrics are also provided to give Accounts payable managers insight into the efficiencies of vendor invoice automation.
When an imported invoice isn't successfully submitted to workflow using the automated process, the system will remove it from further automated processing. An accounts payable clerk can review and edit the invoice before the automated process resubmits it to workflow. When a failure reason can be resolved by the same fix for multiple invoices, you can restart the automated process on the Resume automated invoice processing page.
The Invoice received date value indicates the date when the company received the invoice from the vendor. It provides a starting point for tracking the invoice's progress through the automation processes. This value can be included in the imported data for a vendor invoice. For invoices that were manually created, you can specify the date. If no value is entered, the current date is used by default.
The Imported invoice amount and Imported sales tax amount values for vendor invoices can be provided in the vendor invoices import file. Typically, these values are from an invoice that was scanned by an outside provider and included in the import file. As the invoice is processed in Accounts payable, the system calculates values based on the invoice data. The invoice can be posted only if the imported values match the calculated values. Matching values ensure that the invoice accurately reflects the amount that is due to the vendor. If your organization allows imported invoices to be submitted to the workflow system automatically, you can optionally require that the imported totals match the calculated totals before the invoice can be submitted to the workflow system.
When an imported invoice isn’t submitted successfully to workflow through the automated process, the system will remove it from further automated processing. An accounts payable clerk can review and edit the invoice before the automated process resubmits it to workflow. When a failure reason can be resolved by the same fix for multiple invoices, you can restart the automated process on the Resume automated invoice processing page.