What Kind of Invoice Volume Do You Need to Justify Going Digital?

In previous articles, I've outlined the benefits and challenges with going digital and moving your paper to the network. When you transform your paper invoices into digital format, you gain easier and faster access to data with lower processing costs. In this column, I go a step further and examine the dynamics around data extraction, with its ability to reduce or eliminate manual data entry and support key accounting processes, like prioritizing payment and check processing schedules.

What is data extraction, how is it done and who is using it? 

Simply put, (Articlesbase.com August, 2008) "Data extraction can be defined as the process of retrieving data from an unstructured source in order to further process it or store it. Data Extraction is extremely useful for large organizations who deal with huge amounts of data on a daily basis..." Data integration occurs after paper is scanned, as the indexed files are matched against the Microsoft Dynamics ERP transaction. Data can be stored in a static or regularly updated database or document repository.

Data extraction is done through optical character recognition (OCR). When OCR is applied to the Accounts Payable department, it becomes an effective tool for eliminating manual data entry because as invoices are scanned, the OCR reads, classifies and distills the invoice data. Many studies have been conducted around invoice processing with the goal to define the associated costs. Depending upon process you choose, the standard cost to process a single invoice can range from $8 to $80.

Since so much of this cost is labor, i.e. the time spent on manual processes such as entering data, data extraction methods can significantly improve internal processes and data accuracy, while minimizing labor costs.