White Paper: Invoice Scanning Software in 2022
Updated: Nov 30, 2022
In 2022 a digital transformation process is no longer an option and a hype wave. These days it is becoming a necessary and valuable part of any business.
Companies in many sectors, such as government, financial services, business analytics, legal services, and healthcare, are facing the complex task of importing, scanning, sorting, indexing, organising, and managing invoices. Physical documentation processing increases manual work, human errors, and the chance of losing valuable data. Due to this situation, technology-oriented companies change physical documentation work with digital solutions.
In this document, our experts provide a study of the invoice scanning software market in 2022: its state at the end of the year, forecasts for the next years, which companies use this software, what specific problems they solve using it, software selection criteria, software types, and core software functions.
2. Market overview in 2022 and forecast
3. Interview with the Graip.ai experts
What is the state of the invoice scanning software market in 2022?
Why do your customers start using specialised invoice scanning software? What problems do they solve with these solutions?
Which companies would benefit from invoice scan software and why?
What criteria do you recommend for choosing invoice scanning software in 2022?
What types of invoice scanning software are popular in 2022? What are the differences between them?
What are your forecasts for the invoice scanning software market in 2023?
Market overview in 2022 and forecast
Market analysis, forecast and main drivers
The worldwide market is predicted to cover 550 billion invoices in a year, considering the Billentis report. Analysts expect the worldwide e-invoicing market will reach € 18 billion in 2025.
The adoption of digital processes and solutions is high among businesses. Considering Europe, the multiple market fragmentation and high trade between countries drive the demand for fast and effective invoicing solutions. European countries are also working to create a common e-invoicing standard to increase digitalization in the European Union.
Meanwhile, the global document capture software market is predicted to reach € 17.73 billion by 2029, due to the Data Bridge report, with a CAGR of 12.65% in 2022-2029.
The main drivers for invoice scanning software adoption are cost savings, high accuracy, fast speed, increased use of big-data analytics, and the need to improve real-time forecasts. Moreover, a growing number of next-generation solutions make an essential base as strategic drivers. They create a way to change old technologies and processes with a modern approach.
THE CORE MARKET DRIVERS ARE COST SAVINGS, HIGH ACCURACY, FAST SPEED, INCREASED USAGE OF BIG-DATA ANALYTICS, AND THE NEED TO IMPROVE REAL-TIME FORECASTS.
At the digital transformation stage, invoice processing with many repetitive and rule-based tasks becomes the most affected field. Innovative companies face new opportunities when they are ready to take advantage of this technological shift. Progressive solutions like artificial intelligence (AI), robotic process automation (RPA), machine learning (ML), and cloud capturing may noticeably improve business process automation levels and reach the full savings potential.
What invoice scanning software is
Invoice scan software represents an accounting solution that can scan invoices (paper and electronic), capture all relevant data, recognize it, and present this data in a machine-readable format of automated systems. An invoice scanner provides a seamless and fast transfer of invoice data into automated workflows.
INVOICE SCANNING SOFTWARE IS AN ACCOUNTING SOLUTION THAT ALLOWS YOU TO SCAN INVOICES, CAPTURE RELEVANT DATA, RECOGNIZE IT, AND PRESENT DATA IN A MACHINE-READABLE FORMAT OF AUTOMATED SYSTEMS.
Modern invoice scan software uses some or all of the following technologies:
Optical character recognition (OCR) translates scanned images of text (printed or typewritten) and transforms these scans into machine-encoded text.
Handprint recognition or intelligent character recognition (ICR) processes invoices filled manually. This software studies and identifies handwritten fonts and styles. Also, it learns how to improve accuracy and recognition.
Advanced rules-based templates put common data elements on the right pages with different layouts and formatting.
Artificial intelligence (AI) takes user feedback to train recognition templates automatically.
Natural language processing (NLP) interprets paragraphs of text and extracts needed data from them.
Robotic process automation (RPA) provides back-office integration into the hands of experienced users instead of programmers.
Preconfigured form templates and business rules for invoice processing applications.
Invoice scanning software most commonly uses optical character recognition (OCR) technology. It provides electronic or mechanical conversion of typed or printed text images into machine-encoded text. The file can be a scanned document, a document photo, a scene photo (text on signs or billboards in a landscape photo), or subtitle text shown on an image (television broadcast).
Sometimes invoice scan software integrates with intelligent character recognition (ICR) to increase the efficiency. As an advanced type of OCR, highly technological ICR can effectively read and analyse handwritten characters. This system allows companies to learn handwriting fonts and styles by a computer during processing. As a result, it improves the accuracy and recognition levels of the invoice scanning process. Invoice scanner software is created with similar solutions as other data extractors. The difference is in a specific configuration to recognise invoices because they are the most usual documents organisations need to automate.
Invoice scan software offers the capability of automation in invoice scanning, identifying its relevant data parts (a date, a vendor, an amount, an invoice number, and line item data) and importing electronic files. This technology also allows companies to store, manage and access digital data systematically and securely.
How invoice scan software works
The process of paper invoice scanning and converting to live data in an accounting system consists of some typical stages.
Step 1 - Input At this stage, the software scans paper invoices, non-scanned PDF files, or other types of files. Then it converts these files to high-resolution JPG images. The function of automatic separation splits multi-invoice PDF files and handles attachments. Step 2 - Invoice correction (preprocessing) The image preprocessing stage is needed to ease the task of the OCR software when it recognises a difference between a text and a background. The invoice correction stage goals are binarization, skew correction, noise removal, and skeletonisation.
Step 3 - Text detection After the preprocessing stage, the software leads to detecting data fields. At this stage, the system detects invoice aspects like tables and graphs.
Step 4 - Text recognition At this step, the software recognizes data and each data field like a product name, product quantity, an invoice date, an invoice number, etc.
Step 5 - Data validation OCR technology does not involve human interactions. Due to this, data validation appears to be a significant part of the whole process. At this time, the system provides the accuracy and quality of the recognized data by performing different checks. This stage of data verification helps approve the logical consistency of the data. The information can be extracted and put to use without any unexpected issues. This stage helps reduce possible OCR errors. AI can use corrections that occurred in validation to train and improve further software work.
Step 6 - Data extraction At this stage, the OCR software helps extract invoice data from different parts like tables, headers, footers, and other regions of the scanned document. Then the system uses the same data to fill relevant fields in electronic invoices and to feed this data into the requested accounting system. You can send exported final data to enterprise resource planning (ERP) software via API, database, or robotic process automation.
What sectors integrate this technology
All organisations that manage a large number of contractor paper invoices can receive noticeable benefits from invoice scanning software. As much invoice data you are hand-keying into your accounting software, as many working resources you can optimise by using an invoice scanner.
Invoice scan software becomes valuable when a company has over 100-300 invoices in a month. If a company manages smaller volumes, the potential return of investments (ROI) is not worth the expenses for an automation solution. Due to this, invoice scanning software can be useful starting for small and medium businesses that manage requested invoice numbers. The software helps digitalise and store scanned invoices.
Invoice scanner software is used in different industry sectors: government and public, financial services, business analytics, legal services, healthcare, and manufacturing.
Accounting firms and companies performing outsourced invoice processing or scan to invoice, expect to receive the most ROI from automation. Also, invoice scan software brings benefits on-shorting the data entry, giving extra security and care about your clients’ data.
Invoice scanning software advantages
Invoice scanning is an effective instrument for different businesses and brings many benefits from usage.
Time-savings. The invoice scanning process takes less time than manually printing, filling, and storing all paper invoices.
High accuracy. Invoice scanner software allows companies to complete their finance and accounting tasks accurately. It does not involve any possible errors in calculations, for example, how much money a company owes or is owed by customers or suppliers.
Reduced manual errors. An invoice scanner decreases errors in manually entering data into accounting systems. When an employee manually inputs data into system spreadsheets or databases, he can make errors like typos or others. Invoice scan software helps enter every piece of invoice data correctly each time during scanning. There is no possibility of errors because all information is transcribed automatically by an invoice scanner.
Increased effectiveness. Manual processing takes much time and energy of employees that are needed in other tasks like negotiations with clients. Invoice scan software helps reduce manual paperwork by 90%.
Interview with the Graip.ai experts
Graip.ai experts – product lead Karyna Mihalevich and business data analyst Elena Devyatkina – share their vision for invoice scanning software in 2022 and expectations for 2023. 1. What is the state of the invoice scanning software market in 2022?
Karyna Mihalevich: “Best-in-class enterprises have leveraged this technology and automated manual processes with significant results. Considering the Tungsten Network report, there has been a 3.2x higher rate of touchless invoices in 2022 that has become a technological advantage. Moreover, corporate invoice scanning software is evolving to foster income capabilities throughout the organisation.
Such areas as automated invoice data capture, automated reconciliation process, and automated matching of payment information to invoice are the main steps for account payable automation.
While at first, it may seem hyperbolic, finance automation and the software used to implement it have the great potential to change the trajectory of a company. They impact the most fundamental component of business – money.
By automating critical functions like reconciliation, finance departments don’t need to waste time tracking down coding information or receipts at the month-end close.
One of the most important benefits of invoice scan software is the ability to view data in real-time. Purchases are recorded automatically at the moment they occur. Business leaders and finance professionals can report in real-time on the health of a business. Also, how much money is coming in or out.
This level of transparency is critical in the finance sector that historically operated on a monthly schedule to measure performance against targets.
Today, more accounts payable (AP) departments use invoice scan software to process invoices. For example, optical character recognition (OCR) technology can convert an image or PDF into a machine-readable format. Also, business rules engines help execute company policies. They can route invoices to the appropriate people within an organisation for review and approval. Unfortunately, in many companies document processes are not fully automated. The recent survey by the Institute of Financial Operations & Leadership (IFOL) found that 54% of global AP teams are partially automated, and only 9% of AP teams are fully automated.”
2. Why do your customers start using specialised invoice scanning software? What problems do they solve with this solution? Elena Devyatkina:
“Customers use specialised invoice scanning software mostly because they want to automate internal end-to-end processes to make them more efficient and accurate.
Invoice scan software brings companies the following benefits:
minimise manual routine work of accountants and increase their motivation;
reach better accuracy of financially sensitive data recognition;
speed up the invoice processing cycle;
reduce the risk of critical human errors, risk of late payment penalties, and negative relationships with customers, vendors, or suppliers due to missed payment deadlines;
reduce the risk of erroneous payments thanks to automatic financial reconciliation or 2-way/3-way matching opportunities;
help to focus on other higher-value accountant work;
provide faster changes in the process as well as training of new employees;
make an audit process easier.”
3. Which companies would benefit from invoice scan software and why? Karyna Mihalevich:
“Various businesses – big corporations, small and medium-sized enterprises (SMEs) – can benefit from intelligent document processing (IDP).
SMEs that operate at least 100-300 invoices per month will also benefit from automated invoice processing software. With this volume savings offset an invoice scan software cost.
AP automation can help SMEs to increase cash flow and solve such challenges as:
slow and manual document processes;
the ability to scan files but being unable to search for specific data in them;
invoice data that you cannot match to purchase orders or received documents;
human errors due to manual data input.
It seems that AP automation is expensive for a one-person accounting firm. On the other hand, it can be constructive for small companies that process enormous amounts of invoices.”
4. What criteria do you recommend for choosing invoice scanning software in 2022? Karyna Mihalevich:
“Here are some of the most important features to pay attention to while you are looking for invoice scan software:
Easy to use. You need to consider No-Code or Low-code platforms.
Customisation options. Every business has its specific requirements. The resistance to new technology adoption will be lower if you can customise this solution to your needs.
Integration with other software. You should think not only about your current IT landscape. It is crucial to keep in mind your IT strategy.
The cost of invoice scanning software. Choose an appropriate pricing model based on the number of documents you process during the month or year.
Level of security. Incoming invoice processing is subject to strict legal requirements.
Well-organised informative dashboard and analytics.
Updates and upgrades. Find out in advance what support the solution developers provide with updates and upgrades.”
5. What types of invoice scanning software do exist in 2022? What are the differences between them? Elena Devyatkina:
“1. There are account payable solutions that require manual data entry. 2. There are various invoice processing solutions that capture invoice data, set up verification, support document matching, and approve workflows. Also, you can integrate them into accounting or enterprise resource planning (ERP) systems. There you make final payments and go through data management stages. 3. There exist account payable solutions and platforms that serve end-to-end AP process automation. They work with invoice data capturing and recording, verification, purchase order matching, vendor and supplier lists, general ledger (GL) accounts, setting up custom workflows to make payments, data storage or archive, and reporting. 4. There are intelligent document processing and OCR solutions. They capture invoice data and have integrations with accounting software and account payable solutions where recognised data goes for further processing.”
6. What features are clitical in invoice scanning software? Elena Devyatkina:
“In our opinion, the most important features of invoice scanning solutions are:
high data security approved by certificates;
high accuracy of intelligent data capture;
classification of invoices among other incoming documents;
identification of document types;
high scalability of invoice scan software;
recognition of specific information like sender or receiver credentials and other industry-specific data;
recognition of digital burn or scanned documents;
work in a team landscape with various access permissions;
setting up validation rules and flag anomalies;
setting up approval workflows;
integration with accounting systems.”
7. What are your forecasts for the invoice scanning software market in 2023? Karyna Mihalevich:
“The invoice processing solutions market is expected to be worth € 5.6 billion by 2023. The market growth can be attributed to the increasing adoption of invoice processing solutions by small and medium-sized companies. Artificial intelligence technology will be at the center of many AP improvements.
IDP solutions will allow AP departments to reduce the amount of manual work. Routine task reduction may help AP teams focus on higher-value activities, such as investigating anomalies.”
Summarising our study, invoice scanning software became the most relevant and necessary technology for business development in 2022. It optimises various document processes – from data capture to payments – inside a company.
It is important to note that invoice scanning implementation is effective for companies that work with at least 100-300 invoices per month. As a result, companies starting from small and medium sizes can receive savings even after a month of software usage.
Invoice scanner software is the most useful for companies focusing on document processing. The lines of businesses that actively implement these solutions are accounting, legal, logistics, banking, insurance, retail, and even manufacturing.
There are different types of invoice scanning software which you can choose depending on your business needs and abilities. They start from solutions that still require manual data entry and end up with fully automated intelligent software. The advanced software works in 6 main steps that can be customised considering your technological capabilities. The technology benefits are time-savings, high accuracy, reduced manual errors, and increased effectiveness.
Noticeable income expectations for the invoice scanning market are based on the previous years results. Artificial intelligence will be the key technology worth keeping an eye on for the next few years.