Digitize invoices with OCR and AI

Mountains of paper are a burden on many a company, slowing down business processes considerably. Invoices and receipts of all kinds are particularly troublesome for the accounting department, as in many cases the retention period is up to 10 years. Here you can find out how to digitize invoices so that all documents are secure and retrievable at all times. Professional document management is now indispensable for this, as processing and archiving also need to be designed efficiently.

When invoices are digitized, it has a tremendous impact on the efficiency and effectiveness of your company's financial courses of action. Not only is manual data entry reduced and accuracy increased, but overall process speed, data management and and cost efficiency are improved.

In the long term, digitized invoices allow you to better scale your business by enabling you to process a larger number of invoices effortlessly and in a short time. 

How to digitize invoices and business letters

Digitizing invoices, receipts or other business letters can be done in various ways and in several steps. 

1. Digital scanning

• Through a mobile scanner
• Through an archive scanner
• Per app for a smartphone with camera

However, the work is not yet done, as the resulting digital formats are usually in optical form (e.g. PDF, IMG or JPG). This means that the documents are not yet fully processable, which is why the next step is also an important part of digitization.

2. Digital data acquisition

• With a document entry program
• With a tool for Optical character recognition (OCR)
• With a IDP Software

This involves extracting the relevant data and/or archiving the documents digitally in a suitable storage location. Different approaches are suitable depending on how you work in your company. For example, if you travel a lot, it is advisable to use the app to take photos. 

As many features as possible are often combined. IDP software usually includes all functionalities for digitizing, archiving and intelligently managing documents.

artificial intelligence provides e.g. in conjunction with OCR technology ensures that relevant information on invoices and receipts is recognized immediately after digitization and that the content can be checked automatically or semi-automatically downstream and correctly assigned to the order or delivery bill.

Different types of invoices 

Depending on the type of invoice, implementation and specifications also differ.

Paper invoice

When it comes to receipts in paper form, you need to pay attention to the following when accounting:

• Do you meet the specifications of the GoBD
• You can either keep paper invoices separately or throw them away
• The prerequisite for this is that the paper invoice is correctly digitized in the document management system (DMS)

Important: From 01.01.2025, paper invoices will no longer have priority in the B2B sector and e-invoicing will gradually become mandatory. You can find out more about this here.

Electronic invoice, XInvoice or ZUGFeRD invoice

The following guidelines apply to ensure that an electronic invoice, also known as an e-invoice, meets all legal requirements:

• From 2025, the e-invoice will take priority. Other formats are considered "other invoices" and will be abolished in the B2B area following a transitional arrangement.
• The e-bill must be available in a digital structured data format.
• The format must correspond to one of the syntaxes according to CEN standard EN 16931. 
• The choice of digital format is agreed between the invoice issuer and invoice recipient.
• A PDF file does not meet the criteria for an electronic invoice.
• The authenticity of the origin of the e-bill must be guaranteed, e.g. through an internal control procedure.
• The integrity of the e-bill must be guaranteed.

Incoming invoice

In the case of an incoming invoice that you have received from a supplier, for example, the following applies:

• GoBD compliant
• You must file the original on paper or, after digitization, as digital receipts Audit-proof archiving.
• If you have already received the invoice digitally, you must save it in the file format in which you received it.

Outgoing invoice

If you bill yourself, other points are important:

• You can send your invoices in paper or digital form. If the customer requests a paper invoice, you still have to comply with this until the e-invoice reform. 
• However, it is of course easier to send digital invoices and store them in your DMS
• Depending on the software used, this helps you by allowing you to send invoices already digitally, e.g. through an interface to the post office

Through the use of Document Management Software you can save a lot of time in all these processes, avoid errors and drive digitization in your company.

Advantages of digitizing invoices

Digitizing invoices and other documents has many advantages for your company:

• Low space requirement for archiving - Instead, you can simply store your invoices on the server.
• Audit-proof archiving of invoices - A DMS ensures that your digitized and archived invoices comply with the GoBD.
• High searchability - You can find information and the invoices you are looking for quickly and conveniently using a full-text search.
• Lower costs - Above all, you save on paper, postage and printer costs, but automation also reduces personnel costs.
• More time - By eliminating many manual tasks, your employees have more time to deal with more complex issues than invoice transmission and archiving.
• Location-independent access - Cloud-based applications allow you to access your documents from anywhere.
• Automation of workflows - Especially in combination with intelligent document processing (IDP) many steps in the invoice workflow can be digitized and automated

Digitize invoices - Here's what it can look like

Want to know if digitizing invoices fits your workflow? 

The process can look like this, for example - but the details will of course vary depending on the software:

1. Receipt of invoice by mail or digitally: Paper documents are digitized as PDF documents via the local or network scanner. If the invoice is already received in digital form, it is transferred directly to the software.
2. AI-based invoice recognition and data extraction via OCR: The relevant information, such as header, footer and item data, is automatically read from the invoice.
3. Machining and visual inspection: After recognition, the read data is checked and edited if necessary. You are supported by the AI, which continuously learns from the entries and corrections.
4. Checking, booking, release: You can define the digital approval workflow and document review conditions yourself, ensuring the correctness of all documents.
5. Audit-proof archiving: The invoices are stored in the digital archive in an audit-proof manner. There you can retrieve them at any time and from any location.

You will find digital invoice verification in practice in a Use Case of our customer iflow.

Use Cases - Have invoices digitized by AI-OCR with Konfuzio

Konfuzio is an IDP software with AI-based OCR that allows you to Invoices digitize easily and efficiently. Below you will find various concrete application examples for Konfuzio in practice.

How to automate invoices through OCR 

If invoices, receipts or other documents are analyzed using OCR, all relevant data from scanned invoices or invoices in PDF format are converted into a format that...

• ...machine readable,
• ... searchable and
• ... is editable.

Via interface, companies can integrate the data obtained from this into all other business processes.

Other possible applications of Konfuzio include:

• Insurance policies
• Vehicle documents
• E-mail box organize

Accounting - Digitize incoming invoices with AI

The OCR can recognize over 100 fields in the invoices and thus extract data for digital invoice processing. The information is recognized in a simple and structured way and automatically transferred by the software.

They support your accounting by reading out the following data, for example:

• Header data of the invoice
  • Invoice date
  • Invoice number
  • Payment terms
  • Cash discount
  • Gross total
  • VAT rates
  • Total net amount
• Vendor
  • Company
  • Street 
  • House number
  • ZIP CODE
  • Location
• Debtor
  • Company
  • Street 
  • House number
  • ZIP CODE
  • Location
• Contact
  • Name
  • Phone number
  • e-mail
• Order reference
  • Order number
  • Delivery note number
• Account details
  • IBAN
  • Swift / BIC
• Line item
  • Quantity
  • Item number
  • Unit price
  • Total price

A Application example for digital invoice verification you can find here.

AI in claims management

You can use OCR to efficiently read and process invoices not only in companies. The use of the technology is by no means limited to invoices in accounting. Specialized requirements such as those of primary insurers and reinsurers can also be met with intelligent character recognition. This applies to the following documents, among others:

• Workshop invoices
• Proof of purchase of e-bikes, bicycles & co.
• Cost notes
• Court cost statements
• Medical bills
• Billing of physiotherapists

The focus of the AI here is on the line items that require special human attention. 

Area AI security and DSGVO

Industries that place a particularly high value on security and compliance with the GDPR benefit especially from Konfuzio, as the platform's architecture is multi-client capable.

This allows you to use Konfuzio for invoices in separate data rooms and in defined user groups. The deletion concepts are DSGVO-compliant and suitable for data of professional secrecy holders who are subject to the legal duty of confidentiality.

Security and DSGVO precautions of Konfuzio

Learning ability as the biggest advantage of Konfuzio AI.

The AI's ability to learn is its great advantage. It learns through the contents of your documents and, after just a few invoices, recognizes exactly which fields are relevant. At the same time, it always remains adaptable.

Other advantages of the Konfuzio AI are:

• Export of the invoice information as digital formats such as CSV, JSON or via Python SDK.
• Compatibility with many Integration
• OCR API: Intelligent text recognition for over 70 languages including handwritten notes.

Conclusion - digitize invoices quickly and without errors

If you want to optimize your invoice management and minimize errors, a suitable OCR software is a good choice.

In this way, you ensure that everything concerning payment management is protected against careless errors and, at the same time, you are always on the safe side with regard to legal requirements, such as DSGVO.

If you opt for a provider whose OCR is optimized by AI, you can train it for your specific use cases and thus digitize large parts of your accounting and optimize your business processes.

Are you planning to digitize receipts, invoices or other documents? Feel free to send us a message to receive individual advice from experts.