AI invoice processing or automated invoice processing is no longer a sci-fi dream but a present reality. It is reshaping the way businesses manage their accounts payable (AP).
PwC's Global Artificial Intelligence Study expects AI's potential contribution to the global economy by 2030 to be close to $15.7 trillion. The rapid evolution of artificial intelligence (AI) and machine learning (ML) is pushing the boundaries of what's possible in business automation.
From automating invoice recognition and data capture to identifying invoice discrepancies, AI-based invoice processing is making accounting and spend management operations smoother, faster, and more reliable. So, what exactly is AI-based invoice processing, and how does it work?
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AI-based invoice processing, also known as AI for invoice processing, uses machine learning (ML), optical character recognition (OCR), natural language processing (NLP), and workflow automation to automate the capture, extraction, recognition, validation, and processing of invoice data and route it through the appropriate channels and tools for approval and payment.
AI invoice processing leverages several key technologies to automate and streamline the accounts payable workflow:
Machine Learning: Machine learning invoice processing uses ML algorithms that learn from historical invoice data to identify patterns, extract relevant information, and make accurate predictions.
Natural Language Processing: NLP allows the AI system to recognize, interpret, and extract fields like vendor names, invoice numbers, and payment terms, even from unstructured d0cuments.
Optical Character Recognition: OCR technology converts text on invoice images into machine-readable text, capturing and digitizing paper invoices or converting scanned invoices into editable formats. It enables AI invoice data capture.
Workflow automation: Connect various technologies to create a seamless end-to-end process that automates invoice routing, triggers approval notifications, and integrates existing accounting systems.
Traditional invoice processing workflows often involve data entry, approval-chasing, and manual reconciliation, which can be time-consuming and error-prone. AI-based invoice processing automates these tasks, reducing the need for manual intervention.
It supports various invoice formats, including scanned images and PDFs, automates invoice coding, and auto-fills and validates entries. AI invoice recognition enables these systems to accurately identify and extract relevant information from invoices, regardless of their format or layout.
Companies with fully automated AP processes handle more than double the workload. They process 18,649 invoices per full-time employee annually, compared to just 8,689 for those relying on manual methods. [Source]
Did you know that AI and automation-based invoice processing can reduce average costs from $40.70 to $3.34 and the turnaround time from 16.3 days to 3.8 days?
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