Hand taps on tablet, inscription Invoice, digitize invoices

Digitize invoices with OCR AI - advantages in use

Janina Horn

You can quickly and easily bypass stacks of paper invoices and documents when you Digitize invoices.

Professional document management should be used in every successful business. This includes the digitization of invoices and receipts. 

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 run, digitized invoices allow you to better scale your business by processing a larger number of invoices effortlessly and in a short period of time. 

Learn how to digitize your invoices and improve your business performance in this article.

Laptop on white background, digitize invoices How to

How to digitize invoices and business letters

If you want to digitize your invoices and business letters, there are several ways to do so:

  • Via software or hardware, e.g. an archive scanner or a IDP Software
  • With a program, e.g. document entry program
  • Per app for a smartphone with camera
  • Through a scanning device, e.g. a mobile scanner

Depending on how you work in your company, different approaches are suitable. For example, if they are on the road a lot, the option of taking photos via app is advisable. 

Often, however, the features are combined. For example, you can use IDP software to optimize your document management and feed it with the invoices you have photographed or scanned.

artificial intelligence e.g. in the form of an AI-learning system. OCR software ensures that relevant information on the invoice is recognized immediately after digitization and that the contents can be checked automatically or semi-automatically downstream and correctly assigned to the order or delivery bill. 

You will learn later in the article how to do this concretely.

Different types of invoices 

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

Paper invoice

With a paper receipt, you need to pay attention to the following:

  • 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)

Electronic invoice, XInvoice or ZUGFeRD invoice

So that a electronic invoice, also called e-invoice, can be recognized by the tax office as absolutely equivalent to a paper invoice, you must comply with the following guidelines:

  • The invoice recipient must agree to the electronic invoice
  • The e-bill must be issued, sent, received and processed in an electronic format, e.g. as a PDF. Then it can also be sent as a mail attachment.
  • It must be readable by a human
  • The authenticity of the origin of the e-bill must be guaranteed, e.g. by 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 should either file the original on paper or destroy it
  • If you already receive 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 must comply with this
  • Of course, it is easier to send the invoice digitally and store it 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

You can enable these processes individually by using various apps. However, it is recommended to look for a suitable Document Management Software to look around. This will also help you to digital transformation in your company.

Digitize invoices hand writes on laptop

What are the advantages here?

AnalogDigitalInterface
Incoming invoiceAutomation potential through automatic scanningBPA potential through automated workflowComplete dark processing, therefore high initial investment
Outgoing invoiceCost savings due to less letter mailUse of XInvoice and ZUGFeRD helps customers with the order-to-pay process and makes the company particularly exciting as a supplier; in addition, XInvoice is mandatory for public contractsCan be particularly exciting for customers to already offer such an interface

Advantages of digitizing invoices

Digitizing invoices has many benefits for your business:

  • Low space requirement for archiving: Instead, you can simply keep your invoices on the server.
  • Easy 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: Through cloud-based tools and softwares, you can access your files from anywhere.
  • Workflow automation: Especially in combination with BPA software, many steps in the invoice workflow can be digitized and automated
Symbols invoice paper and invoice digital

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 of course the details differ from software to 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 extraction of data via OCR: The relevant data, such as header, footer and item data, are automatically read from the invoice.
  3. Machining and visual inspection: After recognition, the data read out is checked and edited if necessary. You are supported by the AI, which constantly learns independently from the units 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.

Konfuzio Use Cases Digitize Invoices

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 

When invoices are analyzed by OCR, all relevant data is extracted from scanned or PDF invoices and 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:

Accounting - Digitize incoming invoices with AI

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

It's not just in the enterprise that you can efficiently digitize invoices with OCR. Pools, primary insurers and reinsurers can also use intelligent text recognition. The following document types are possible, for example:

  • Workshop invoices
  • Receipts of purchase of e-bikes, bicycles
  • 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 need to place particularly high value on security and compliance with the DSGVO benefit from Konfuzio because the platform's architecture is multi-tenant.

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.

More about the Security and DSGVO precautions of Konfuzio can be found on the linked website.

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:

  • Professional feedback simply bring in training that also trains the AI to classify and extract other invoice types.
  • Export of the invoice information 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 and use 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 choose a provider whose OCR works with AI, you can train it for your specific use cases, digitizing your entire accounting system and streamlining your business processes.

What do you think about the possibility of digitizing invoices? Feel free to write me your opinion on this topic in the comments.

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