E-invoicing vs Intelligent Invoice Data Extraction

“The global market is forecast to encompass 550 billion invoices annually. It is expected to quadruple in size by in 2019, only around 55 billion invoices are exchanged on a paperless basis. Global Estimate of Invoice volume in 2019 Type Estimated Volume in 2019 B 2 B 280 Billion B 2 C 270 Billion Total 550 Billion We estimates that the size of the global e-invoicing and enablement market in 2019 amounts to EUR 4.3 billion (USD 4.9 billion) and that it will reach approximately EUR 18 billion (USD 20.5 billion) in 2025”

The Need for Invoice Automation

An invoice is a document that is a record of the sale maintained by the supplier and is used as a payment collection request from the purchaser. Invoice is a legal requirement and the invoice document must comply with the standards as defined by the government of the region the company operates in. There are many hassles in dealing with invoices. Some of the main issues are:

  • Lack of standards: Each organization, each department can have its own invoice format and structure. Data extraction is challenging and costly due to the varying structures.
  • Manual Data-Extraction and Manual Data entry: Errors are introduced in transcribing the data onto intermediary files and in data-entry. Reworking these are an added resource burden and adversely impact downstream processes. Payments are processed late, and it is hard to keep up vigilance and prevent fraud.
  • Physical copies of invoices: Companies wait today to receive the physical copies of the invoice before processing them. These physical copies must be moved to the processing centers should there be a need to refer to the document again. They also must be audited and archived in compliance with the existing regulations.
  • Interoperability issues: Companies supply globally. There are different regulations, different tax codes, different customs duties, etc. Master data is maintained at the company level. Transcribing the invoice data and cleaning it to be consistent with the master data is also a time-consuming and costly exercise.

What are the next steps?

Converting invoices into electronic form can offset many of the disadvantages. Invoices can be transferred electronically which is cheaper and faster. Invoice Data-extraction can be automated. Data can be cleaned, processed, and stored. It can be converted into formats that easily can be ported to various applications. The benefits to the business are huge though we won’t be discussing much of that here.

Physical copies of invoices can be de-materialized by scanning it into electronic PDFs. The scanned PDFs are processed through Data-Extraction platforms that predominantly make use of Optical Character Recognition (OCR) systems.

Along with OCR, Artificial Intelligence and Machine Learning are used to better the efficacy of data-extraction. The extracted data can be validated automatically or through a human operator and processed into a machine-readable format like JSON, CS, XML that are readily consumed by a computer application. The data can be easily searched, retrieved, and presented as per business needs. It is available for analytics, reports, and business decisions.

“In 2025 already 80% of organizations will be forced either by legislation or important trading partners to exchange invoices just in electronic format As the electronic gaps from the taxation perspective will be closed, tax declarations, deductions, reclaims and the traditional audits will no longer be required in the future.”

E-invoicing

An e-invoice can be defined as structured invoice data issued in Electronic data interchange (EDI) or XML formats, possibly using Internet-based web forms. An electronic invoice becomes the official invoice avoiding the need to exchange paper documents. The most common format that can be used is the widely spread PDF document format, where digital signatures easily can be verified without the need for specialized software.

When Compared…

Final thoughts…

E-invoicing, at least on paper promises more benefits. But it easy to see that for e-invoices to succeed, it cannot be an Industry-consortium effort. It must be government-mandated. How and when the implementation efforts kick-off is a matter of speculation.

But, until then, firms can’t afford to take a backseat with a wait and watch approach. Data-extraction promises the best Return on Investment (ROI) for not just invoice data-extraction but also other document types; and document types are not limited to Accounts Payables but also for other functions. E-invoice serves a very specific purpose. With Data-extraction technology you can address a lot of problems and automate document-intensive processes.

Process large volumes of documents without human intervention with Intelligent Document Processing Platform — Neutron To know more, have a demo scheduled with us.

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Our Latest thoughts and Trends in Digital Business Transformation in Areas of Software Solutions and Technologies, Salesforce Applications, AI and Analytics, and Intelligent Document Processing.

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Rejoy Nair

Rejoy Nair

Business Analysis Practitioner

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