Talk About Inefficiency
If a Martian landed from outer space and wanted to see an example of what “inefficiency” looked like, here’s what you’d do: Take him to any company in the world that is manually processing invoice data into an ERP. That would probably be the best method of visually illustrating this concept.
To combat this long-standing issue, many companies implement an optical character recognition (OCR) scanning process to eliminate the amount of data that has to be entered manually.
The problem is that most OCR solutions garner somewhere between 40% and 60% accuracy. Even at its most optimal level, the accuracy rate is no better than 80%. That means that a significant amount of invoice data still has to be entered manually. It’s a better process than it was before, but not by much. With an OCR solution providing this middling level of efficiency, you still have to touch the majority of your invoices. That’s exactly what you purchased the OCR solution to avoid. You want to strive to touch ZERO invoices.
Any OCR solution you consider needs to completely eliminate manual validation. After all, the object of the accounts payable automation exercise in the first place is to eliminate both paper and manual processing.
The Benefits of Third-Party Validation
As we mentioned, you aren’t going to find OCR software that is going to come close to delivering 100% clean invoice data on its own. Significant validation will be required to produce the desired results, but you need to let your OCR solution provider handle that validation so you don’t have to manage it internally. If the solution provider handles the validation, they’re responsible for paying the staff it takes to ensure all invoice data is accurate, not you. This allows you to free your mind of this responsibility and move your employees onto other tasks.
In addition, third-party validation offers quick turnaround time, generally 24 hours or less. Unless you have an urgent request, there’s not really a business justification for needing electronic invoice data faster than 24 hours. In the event that you occasionally have an urgent need for a turnaround faster than 24 hours, like in the case of tax payments, make sure the vendor/partner has a way to manage such a request.
OCR should definitely be a part of your broader AP automation strategy. Just let a third-party do all the heavy lifting so your team doesn’t have to.