Unlock the full potential of your invoice processing with Invoice OCR Software – the ultimate tool for streamlining your workflow.
In this blog, we unveil 3 crucial factors you must consider when choosing the right software in 2025. Because, by itself, OCR will not get the job done!
From processing color scans to effortlessly handling multi-line items, we'll guide you through the essentials for maximizing OCR efficiency. Plus, discover why flexibility is key in adapting to your unique invoicing needs.
- 3 Important things you need in invoice OCR software
- What is invoice OCR?
- Benefits of invoice OCR software
- Limits of invoice OCR software
- How does invoice OCR work with machine learning?
- How does invoice OCR software work?
- Why choose Grooper for your AI invoice OCR?
3 Important Things You Need in Invoice OCR Software:
#1: Be Able to Process Color Scans
When you put invoices in a document feeder and scan them, does the software process color scans?
All OCR invoice software solutions say that they support color scanning. However, the lesser-quality solutions actually downgrade the image quality to grayscale or bitonal (black and white) images before performing OCR.
They do this because they haven't developed their technology enough to truly support extracting text from color images. Meanwhile, the best OCR invoice software does support color scanning and processing.
In this example, all these invoices were scanned in color. Click to enlarge:
Why is color scanning and processing so important?
Because of pixilation. All images are made up of pixels (small blocks of colors), and color images contain more and better-quality pixels for OCR engines to recognize what a letter or number is, compared to grayscale or black and white document images.
Basically, color images improve OCR recognition accuracy on invoices.
And a 1% increase in accuracy translates to a 10% decrease of your validation labor. That means only a 5% improvement represents 50% decrease of your data entry work.
But Color Images Require a Lot of Storage Room, Right?
Yes, color images have much larger file sizes than grayscale, and grayscale are much larger than black and white images. So if you stored color invoice images in your system, it would require a lot of room.
However, OCR and data capture is a temporary phase just for getting information off invoices. After OCR is complete, the best invoice OCR software can convert file formats to store images as black-and-white with small file sizes.
#2: Look for Invoice OCR Software that Can Easily Process Line Items on Multiple Lines
This is an important factor to look for, as virtually no other invoice OCR software can easily do this. Make sure that whatever OCR solution you buy can easily collect data from line items that span multiple rows, like Grooper can:
Many OCR technologies have difficulty with capturing multiple-row line item data. But the best solutions, like this one, have techniques to easily read and collect this data.
Make sure your solution can read multi-page tables as well. That's right, multi-line, multi-page tables. If you're manually entering data off these kinds of tables now, your data entry will be greatly reduced with a solution like Grooper.
That results in much higher text recognition accuracy, and once again, much less manual work you have to do to get this data in your system.
#3: Your OCR Invoice Software Needs to be Flexible
In this example, the OCR Accounts Payable software caught a math error in the invoice. The invoice said that 6.3 hours worked times $40 per hour equaled $260.00. So the OCR and math validation by the software is correct.
But the vendor contract allowed the vendor rounded 6.3 up to 6.5. Click to enlarge:
Here are two ways to fix this:
- You can easily fix this by writing a rule for that specific vendor in the software, such as Grooper, to allow a tolerance level for hours worked without flagging it as a problem needing human approval.
- Or you can set up a rule based on how your organization approves invoices that moves this invoice to a manager for their approval.
Every organization handles invoices differently, so it's important to choose software that is seamlessly integrated and flexible and can be tailored to your processes. Learn more about automated invoice processing.
Get the Secrets About OCR Invoice Software
With Our Cheat Sheet!
Not all Invoice OCR Software are created equal! Using the most efficient ones will save you significant time, money and effort.
This blog only showed you 3 factors about the OCR step, but there are many more you need to know about for all steps of the process. Get this free cheat sheet to discover 11 more things.
Get the info that other invoice processing companies won't tell you!
GET THE CHEAT SHEET:
What are the Limits of Invoice OCR Software?
Invoice OCR solutions present game-changing benefits to AP teams. Thousands of hours of hard manual work eliminated every year. Much better oversight for cost controls. Improved cash flow.
However...there are several caveats to these solutions. Two things you need to keep in mind include:
1) OCR Can Only Do a Couple of Things
By itself, OCR can only recognize and extract data. For example, Invoice OCR:
- Can't organize your invoice documents
- Can't extract data from PDFs with digitized data or off electronic documents
- Can't send the data to other tools or databases
- Can't recognize handwriting
- Can't accomplish many other important tasks
Luckily, OCR is one of many tools in intelligent document processing platforms. This makes IDP systems perfect for invoice process automation.
Also, OCR software also can't improve image quality, which leads us to...
2) Low Data Accuracy
By itself, OCR actually makes a lot of data recognition mistakes. The things that make an invoice easy to read for humans (company logos, lines, boxes, columns of invoice data) really confuse OCR invoice software.
But document processing solutions do two things to help out Invoice OCR software:
- Using great image processing before OCR. All that stuff is temporarily removed from the invoice image. This drastically improves data recognition accuracy.
- Use creative OCR methods to get different sections of invoices. Some of these methods are so innovative that they are hold patents from the U.S. Patent and Trademark Office. Grooper is a great example of this.
Here is a great example of these tools increasing data accuracy:
Try Out Grooper's AI Invoice OCR
Contact us today to test out Grooper's AI Invoice OCR solutions. Our OCR is the best in the industry and will save you more time and money by extracting more invoice data than other solutions!
How Does Invoice OCR Work?
Several other technologies are needed to help OCR capture data off paper invoice documents and get it into business systems. Here are the technologies and invoice processing workflow steps involved:
Step 1: Invoice Scanning and Image Processing
Invoices and related paper documents are uploaded into Invoice OCR software through document scanners. (These document can also be imported via e-mail, API, or connecting to a content repository.) Scanners create digital images of the invoice documents that come out as JPGs, PDFs, or PNGs.
They are sent to Intelligent Document Processing software that include OCR technology. To drastically improve OCR accuracy, image processing is used to remove non-text artifacts like:
- Ink splotches
- Noise
- Hole punches
- Lines or boxes around data
Step 2: Text Recognition and Extraction
OCR is ran on all documents, and in the case of Grooper, several passes of OCR are ran to target different sections of text. This greatly improves accurate data extraction, which is converted into machine-readable text.
Extracted invoice data can include:
- Invoice number
- Invoice date
- Line items
- Quantities and descriptions
- Invoice due dates
- Tax amounts
- Totals
Also, Grooper is not template-based, so it doesn't matter where the data is located on the document. This saves hundreds or thousands of hours of work as you don't have to create specific OCR templates or zones for every kind of invoice.
Grooper Invoice OCR automatically extracts all data, including:
- All line item data, even if the line items are multiple lines or run from one page to another
- Vendor details
- Item descriptions
- Totals
Step 3: Data Validation
The software can classify documents by document type, vendor, or other parameters.
OCR systems, such as Grooper, can check extracted data against pre-defined validation rules to ensure accuracy and correct calculations.
For example, the solution checks that the invoice total matches the sum of line items. If there are mathematical errors in invoices or other discrepancies, those problems are flagged for a human to validate.
Following these steps, the digitized data and document images can be exported to an ERP, content repository, or accounting software.
How Does OCR Invoice Processing Work with Machine Learning?
First, it's important to know that machine learning is a subgroup of artificial intelligence. This means machine learning enables other software to solve ongoing difficulties by analyzing data with minimal human work.
When combined, machine learning can take invoice OCR software to another level. While OCR extracts data from invoices, machine learning looks through the data structure to find patterns or find differences in the data.
For example, they can understand the difference between an address number, sub-total amounts due, and the total amount due. From this point, software such as Grooper OCR Invoice software can use that information to correctly export that data into accounting or ERP systems.
Invoice OCR paired with machine learning has automated many manual tasks, like:
- Recognizing when invoices (and individual items) run onto another page
- Recognizing when item descriptions run more than 1 line and extracting the entire description
- Export all correct invoice data (like invoice number, supplier information, amount totals, item descriptions) into the automated AP system for processing payments
- Match the document's general ledger code to the correct transaction type or vendor
- Automatically route the digitized invoice to the correct approver(s) for review and signing
Also, machine learning empowers companies to quickly implement an automated invoice solution.
Prior to OCR invoice software, rule-based logic had to be set up and configured by a human developer for an automated accounts payable workflow to function. But now, machine learning takes care of this by enabling AP software to learn workflow logic as it processes invoices.
How OCR Improves Invoice Management
Grooper's OCR technology improves invoice management more than any other document capture software. With its patented OCR technology and advanced AI integration, many AP processing tasks are being improved.
Here are just several ways that AP departments are leveraging OCR solutions to improve their processes:
Workflow Automation
- Invoice approval processes
- Procure-to-pay
Invoice Management
- Three and four-way matching
- Invoice document organization and digital storage
Reporting and Analytics
- Financial visibility and insights
- Compliance with tax regulations
System Integrations
Why Choose Grooper for Your AI Invoice OCR Software?
What this actually means is 'What makes Grooper unique from other OCR invoice solutions?' Here are several important features Grooper has over other software:
Highest Data Extraction Accuracy
Put simply, the higher the accuracy, the more that human intervention is greatly reduced.
Grooper can consistently deliver invoice data capture accuracy of over 99%. It does this by using patented OCR methods unique to only Grooper, great image processing, and many other tools.
Extract All Data - Handwriting, Tough Fonts and Table Data
Grooper's ability to access the Azure OCR API means it can easily recognize handwriting on invoices and other financial documents. Then combine that with Grooper's method of using multiple layers of OCR to target different fonts, and it's game-changing ability to extract table data.
With AI Invoice OCR, you then have a solution that can automate a vast amount of invoice data entry work.
Improved Productivity
Improving extraction accuracy by one percent means many hours of manual data entry saved every week. With automated data entry, this valuable time can be spent on work that is more valuable to the organization.
Any Invoice Data — from Any Format
Grooper can extract data from virtually any data source. These include: paper, microfilm, scanned image files, digitally created documents, electronic files (like EDI CSV, XML), and many others.
With this ability you can streamline any invoice extraction workflow. So an organization can cut costs and work time in many different applications with Grooper.
Frequently Asked Questions
What are the benefits of invoice OCR processing?
The advantages of using OCR for invoice processing are significant and the ROI can be seen soon after deploying the solution. These benefits include:
Scalability
Many OCR solutions are included within intelligent document processing software. These solutions (like Grooper) are capable of automating invoice processing — and many other documents like purchase orders, receipts, and shipping documents.
These solutions are very capable of automating document workflows and easily scaling up to larger volumes in other departments within the same organization.
Greatly Decreased Errors
Invoice OCR processing is highly accurate when combined with IDP tools like image processing and advanced OCR methods. These high rates of extraction accuracy lead to correct data, a significant reduction of errors due to most manual data entry being eliminated, and decreased risk of human error.
For example, this credit union has eliminated 97% of manual data entry work for several daily tasks.
Improved Compliance
OCR solutions streamline compliance by automating data extraction, reducing errors, and enabling efficient audits. This ensures adherence to financial and regulatory requirements, which safeguards your business.
Efficiency
Invoice OCR software automates data extraction from invoices, significantly speeding up processing times. This efficiency allows businesses to prioritize strategic tasks, improve cash flow, and reduce manual errors.
Cost Savings
OCR reduces the need for large amounts of manual labor off invoices, helping companies cut costs. Additionally, this invoice data is available days or weeks faster, translating to invoices being paid on time.
This means companies avoid late payment penalties and can meet early payment discounts, which saves more money.
This also leads to more intelligent 3 and 4-way invoice matching. So companies can catch billing errors (or human errors) faster, or notice if they receive fewer items than what they paid for.
What is Invoice OCR?
Invoice OCR, an application of Optical Character Recognition (OCR), is a technology that automates the data extraction from invoices and related financial documents. It uses uses technologies like image processing and artificial intelligence to convert scanned paper documents, PDF files, or images captured by a digital camera into searchable and editable data.
Invoice OCR eliminates the need for manual data entry of invoice data into databases or accounting systems. They do this by converting scans of invoice documents (PDFs or images) into digital text that machine-readable. This digital text is also searchable and editable for humans.
OCR invoice systems empower businesses to automate accounts payable processes. Several of the many benefits that invoice OCR systems bring are: accurately extracted data, reduced manual errors, complete financial records, and big time and cost savings.
The biggest benefits of invoice OCR systems is that they help businesses pay suppliers quickly to benefit from early payment discounts and avoid late payment penalties.
Invoice OCR solutions don't care about different layouts or structures of invoices. They can easily transform unstructured invoices, or invoices of varying structures, into structured data.
