In the past, data extraction from invoices was usually a manual task — even if you used, what was at that time, cutting-edge accounting software like QuickBooks.
Thankfully, times have changed. AI platforms make invoice data extraction as pleasant as getting a lollipop after another cavity-free trip to the dentist. AI can read, understand, and send invoice data to a spreadsheet or other destination with the simple click of a button.
In this article, we’ll cover:
- Fundamentals of invoice data extraction
- How AI-powered invoice processing works
- 5-step guide to automated invoice processing
- Top 5 platforms for invoice data extraction
What is invoice data extraction?
Simply put, invoice data extraction is taking any information from an invoice like the amount paid and placing it in another application like a spreadsheet. This means you can easily grab customer details, references, and line-item numbers, and use that data in your favorite database or accounting software.
Traditionally, most businesses had an accounts receivable team in charge of copying key information directly from invoices and pasting it into their bookkeeping software or other spreadsheets. However, those days are long gone now that advanced algorithms can help.
Why AI automation outperforms manual data extraction
With recent advancements in AI, invoice data extraction and organization can be automated.
AI uses a combination of Natural Language Processing (NLP), Optical Character Recognition (OCR), and machine learning (ML) models. NLP enables AI to interpret text-based data and extract key details — such as line items and vendor information — from invoices.
Most AI invoice data extraction tools also use OCR which scans and recognizes data from your invoice, whether it's a PDF, Microsoft Word file, or picture. AI then processes and organizes the extracted data based on user-defined requirements and prompts.
You can export your freshly parsed data into a spreadsheet, database, or document — configured just how you want it. Here are a few ways AI has elevated invoice data extraction:
- It provides very accurate results: Program your systems to follow your company’s exact standards and protocols, reducing the risk of human error and ensuring that data is processed legally and correctly.
- Fewer compliance issues: Your CPAs will more accurate and organized records for easier tax reporting and compliance. Additionally, most AI systems maintain detailed logs of all transactions and processes, which can also help for auditing purposes and regulatory reviews.
- Operational costs (should) drop: Adopting an AI platform reduces the need for extensive human resource allocation for invoice processing. Fewer team members will execute redundant processes, saving money. This opens the door for assigning team members to higher-value tasks, such as data interpretation and analysis.
- It’s adaptable: Each client has different payment terms, invoice line items, and other inconvenient requirements. Unfortunately, the one-size-fix-all manual invoice extraction tools of the past just won’t cut it. AI, on the other hand, understands precisely what data to extract and from which client, providing you with a multi-pronged and customizable approach.
Which industries benefit from AI-driven invoice automation?
Many businesses across several sectors are ditching manual methods and opting for AI-powered invoice processing. Here are a few industries that are doing so:
- Healthcare: AI-invoicing tools improve healthcare companies’ operations by accurately extracting and organizing vast amounts of data from invoices, thus reducing manual data entry.
However, not just any AI-invoice data extraction platform works for healthcare businesses: You’ll need to get one that’s HIPAA-compliant.
- Financial services: Financial firms engaged in complex, high-volume transactional processes where accuracy and compliance are critical. AI-driven invoice automation can reduce manual data entry, improve the accuracy of financial records, bolster fraud detection, and comply with financial regulations.
Just like with healthcare businesses, you’ll want to ensure that your chosen AI platform takes extra security precautions, such as granting access controls to specific workflows and being SOC 2 compliant, to ensure that data is securely stored.
Depending on your region and use case, additional compliance like PCI DSS (for payment security) or GDPR (for data privacy) may be necessary.
- Logistics: Logistics companies such as shippers and freight forwarders often deal with a diverse array of invoices from several parties: Ocean freight liners, warehouses, trucking companies, importers and exporters, and others.
Today, many logistics companies also use EDI (Electronic Data Interchange) to streamline invoice processing and ensure seamless data transfer. This simplifies the processing and organization of these varied invoices, reduces paperwork, and facilitates productive and accurate billing and payment cycles.
How to set up automated data invoice extraction: 5 steps
Let’s walk through the steps of setting up a data extraction system for your invoicing:
Step 1: Determine the data you want to extract
Before shopping around for AI workflow platforms, grab a pencil and some paper and jot down the tasks you want your automation to accomplish.
First, identify the essential information that needs to be organized from your invoices — include vendor names, dates, invoice numbers, item descriptions, quantities, unit prices, taxes, and total amounts due.
Additionally, note any data not directly related to accounting that you’d like to compile to create KPIs, graphs, or other visualizations that can elevate your operational productivity.
Importantly, consult with your team, especially those who will be using the invoice data extraction platform. Prioritizing these folks’ opinions is a good idea — they’ll work with the new workflow daily.
Step 2: Pick an AI automation platform
With your notes by your side, it’s time to start shopping around for AI automation platforms. There are loads of them on the market, but we’ve narrowed them down to the following 5 excellent platforms:
- Lindy: Lindy is an AI platform for organizing, parsing, and delivering invoice data to other applications — but it also executes many more automation tasks. Its pricing models make it attractive to small and medium businesses, and it’s HIPAA and SOC2 Type 2 compliant.
- Azure Document Intelligence: Brought to you by Microsoft, Azure Document Intelligence is built to accelerate document processing. It’s designed to meet larger organizations' and enterprises' high-scale data extraction needs.
- Docparser: Docparser is for automating data extraction for small and medium-sized businesses from various document formats, including PDFs, Word documents, and images.
- Nanonets: This platform leverages cutting-edge AI designed to help enterprises streamline the process of converting messy, unstructured data into readable information.
- Astera: Astera is an enterprise AI-building platform crafted for large organizations handling enormous volumes of invoices and other documents — it’s designed as an all-around automation solution.
We’ve provided a more detailed description of these tools below.
Step 3: Configure your workflow
After you’ve chosen your AI platform, it’s time to put in some elbow grease. Configuring your workflow correctly is critical as it will capture, process, and integrate invoice data across your business operations.
You’ll get the ball rolling by creating a new workflow template on your building interface. Follow these steps:
- Connect your AI platform to email or messaging platform: Most AI platforms will take your invoice data directly from your email, Slack, or WhatsApp channel. Instead of manually opening emails and downloading the invoices, you can get the AI tool to execute this task.
- Prompt your AI platform: Describe in detail the precise data you want to extract from the invoices. For instance, you can say, “Only take the date, client name, and payment amount,” so your AI tools know what to fetch.
- Connect third-party applications: By doing this, you tell your AI where you want your data to live. Most AI platforms come fully integrated with third-party platforms that will serve as the final destination for invoice data, including QuickBooks, Google Sheets, Airtable, and many others.
Most AI platforms, including Lindy, let you customize the workflow to fit your process or even create one for a busy client, making it easier to manage distinct invoicing requirements. For instance, if you have specific clients who buy separate products or operate under different payment terms, you can tailor-make unique and agile workflows for each.
Step 4: Test and revamp your workflow
Once you’ve set up your invoice data extraction AI workflow, you’ll want to ensure it works. Most AI platforms come with a “test” function that lets you execute one instance of data extraction.
This step is crucial — you’ll want to dedicate some time to testing to ensure your system is flawless. Testing confirms that your invoice data extraction automation captures all the required data while sending it to the correct third-party application.
Test out a single instance of invoice data extraction and ensure it collects the precise data you need. More importantly, ensure the invoice data is transferred to its intended location, and is organized as you want it.
After you’ve ironed out all the wrinkles, pick 1 or 2 clients and begin automating their invoice data extraction processes. Starting small like this puts your process under a microscope, allowing you to detect and solve issues rapidly.
When team members believe that adding or subtracting specific steps to your workflow or prompt could help, give the new idea a shot. If the new method is fruitless, adjusting your automation is usually as simple as clicking your mouse.
Step 5: Slowly deploy and continuously monitor
After your system has proven to work like a well-oiled machine for those first 1 or 2 accounts, add another, monitor the progress, and then add yet another. Gradually deploying your system across all accounts ensures that your invoicing system works and that your entire team is familiar with the new processes.
Once you’ve entirely phased out your old system, monitor your new one to ensure you’re getting the right data. While automating many email details will save time in the long run, some complex tasks might require human intervention, so keep an eye out for these.
Key features to look for in AI invoice data extraction software
When shopping around for your AI data extraction tool, ensure that you select a platform with the following features:
- Automatic real-time data extraction: Your platform should allow for automatic data transfer as soon as you receive it. This means you won’t need to fumble through your inbox and manually download invoices — a good AI invoice extraction platform can organize attachments and send the data to where it belongs.
- Customization: Client requirements and invoicing data constantly change. You’ll need to be able to rejig and alter your workflows to adapt to these changes. Pick an invoice data extraction AI platform that facilitates simple workflow reconfiguration so you’ll have the power to make rapid, on-the-fly adjustments.
- Lock-down security: Select platforms that employ robust data encryption so sensitive financial information remains protected from unauthorized access. Systems that comply with standards like ISO 27001, SOC 2, and HIPAA will guarantee the maintenance of stringent security protocols, keeping sensitive data encrypted safely and allowing for secure transfer from invoice to storage location.
Additionally, the software should offer role-based access control (RBAC), allowing administrators to set permissions for different users and limit access based on their roles to minimize risk. Multi-factor authentication (MFA) should be a standard feature, adding an extra layer of security by requiring users to verify their identity in multiple ways before extracting sensitive invoice data.
- Integrations: You’ll probably want to send your data to various places, like CRM, accounting, or other software platforms. Ensure that the automated invoice extraction AI you choose can integrate with all the third-party applications you currently use.
How the top 4 invoice extraction platforms compare with Lindy
Above, we mentioned some of the leading invoice data extraction platforms. Now, we’ll discuss how each platform compares with Lindy in terms of performance, integrations, and pricing:
#1 Lindy: For data extracting agents and more assistance
Lindy allows you to create your own AI agents — called Lindies that can extract invoice data and execute many more tasks. The platform features a simple drag-and-drop workflow editor, allowing you to create Lindies without technical skills.
Features
- Use Lindy’s premade template for handling email attachments, and then command your Lindy to scan data from invoices. Then, prompt your Lindy to transfer and organize this data to another application like Airtable, Google Sheets, or accounting software through a Webhook connection.
- However, Lindy’s capabilities go beyond data extraction. Create an automated Lindy that will send personalized follow-up emails, letting the invoice sender know payment is coming. You can also trigger a notification via Slack or email that informs your accounting department to begin the payment process for the invoice you just received.
Ideal Users
Lindy is no-code, meaning it’s easy for non-technical users. It’s also HIPAA-certified and SOC 2 compliant, making it an excellent fit for medical professionals and others with sensitive data.
Pricing
Start using Lindy for only $49.99/month.
The Bottom Line
Lindy is a great AI platform for extracting invoice data, sending emails, and performing many other automated functions. While it’s an excellent fit for small and medium businesses, it’s also adaptable enough to scale to the invoicing needs of larger organizations.
#2 Azure Document Intelligence: For Enterprises using Microsoft
Microsoft’s Azure AI Document Intelligence lets you use advanced AI to extract data from invoices, receipts, and even unstructured documents and creates highly organized and clean information.
Features
- Automated data extraction for document creation: Remove text, key fields, tables, and document structure from files automatically. Then, prompt it to convert this data into new forms like receipts, new purchase orders, or any other document, saving even more time.
- Streamlining accounts payable for long-term vendors: Extract line items and totals from invoices, then instruct the AI to send them to your accounting software so you can make payments automatically, reducing errors and keeping your trusted vendors happy.
Ideal Users
Because the product is HIPAA and SOC 2 compliant, medical, insurance, and finance companies should shortlist it. The platform is also designed for high-volume document processing, catering to large enterprise companies.
Pricing
Pricing for Azure Document Intelligence is broken into 2 groups: Pay as you go and Commitment.
The Commitment tier starts at a monthly fixed rate of $540 for 20,000 pages, which allows for your own custom extraction.
Pay as you go starts as low as $1.50 per 1,000 pages of documents, for up to 1 million pages. But you’ll need to pay for separate AI features like customized extraction ($30 for 1,000 pages), query fields ($10 for 1,000 pages) and other services. Check out the website for a detailed pricing list.
Final Verdict
If you need a powerful data extraction platform to process 1,000s of documents rapidly, go with Azure Document Intelligence. However, pricing can add up quickly, so it could be too expensive for smaller companies.
#3 Docparser: For simple invoice data extraction needs
Docparser is a parsing (data extracting) and automation tool that can handle recurring files like PDFs, Word documents, and even scanned images.
Features
- Extract info from scanned documents: Docparser’s powerful OCR accurately extracts text from scanned PDFs or images, so you won’t need to manually enter those pesky invoice screenshots sent to you by that certain vendor.
- Advanced detection capabilities: You’ll be able to detect barcodes/QR codes to identify document types or tracking numbers, helping you organize and classify documents in one simple step.
Ideal Users
The barcode detection tool makes Docparser an excellent platform for companies that deal with physical goods, like those in the logistics, warehousing, e-commerce, and retail industries.
Pricing
Docparser starts at $39/month and allows you to extract data from up to 100 documents with a maximum of 5 pages.
Final Verdict
Docparser is a great choice for businesses that deal with physical goods — however, service businesses and those that need HIPAA and SOC 2 compliance should seek other platforms.
#4 Nanonets: For enterprises with raw data
While it’s great for extracting invoice data, Nanonets is also able to take raw data from APIs or other programs, clean it up and send it to where it needs to go.
Features
- Use Nanonets to streamline order fulfillment by extracting and validating data from purchase orders. Match these against corresponding packing lists and your pre-existing inventory database. Then, use Nanonet’s analytics features to predict future demand trends.
- If you deal with enormous sets of intimidating and messy data, fear not: Use Nanonets to classify and organize your data, extract key insights, and even detect sentiment or trends from raw text.
Ideal Users
Nanonets is a top platform for large companies that deal with more than just invoice data extraction — it provides analytics, raw data organization, and more. In fact, around 34% of Fortune 500s have leveraged the platform to organize their diverse data needs.
Pricing
Nanonets employs a usage-based pricing model based on the number of workflows you execute — pricing can start at around $0.30 per extraction (although it’s a bit complex). For more information, contact sales.
Final Verdict
Nanonets is geared toward the needs of large organizations and multi-national corporations, and its features are beyond the scope of small and medium businesses.
#5 Astera: An all-around enterprise AI tool
Astera provides a unified, all-in-one platform that lets you build customized data extraction workflows through a simple no-code drag-and-drop interface.
Features
- Data integration and business intelligence: Use Astera to consolidate data from multiple sources into a single location. For example, you can combine sales reports by integrating databases, cloud apps, and files into one location for easy team access.
- Working on an older, legacy system? Astera helps migrate and modernize legacy data systems. Design workflows to help upgrade outdated systems by moving data onto your cloud platform, facilitating a smooth transition, and bolstering productivity.
Ideal Users
Great for growing organizations experiencing rapid system overhauls and established enterprises, Astera provides a no-code interface that allows anyone on your team to build data extraction tools and customizable workflows.
Pricing
Astera doesn’t publish its pricing — you’ll need to visit the website and contact the sales team for more information.
Final Verdict
Offering more than just invoice extraction tools, Astera provides a versatile solution that allows you to automate processes like sending emails, payments, and more. Yet, it’s most likely out of the budget range of small and medium businesses.
Lindy: Your partner for invoice data extraction and much more
Lindy offers more than just invoice data extraction solutions. While it will handle your email attachments and extract the specific invoice data you require, the platform is engineered to let you create an army of collaborative AI assistants.
These Lindy agents can work together, share data, automate tasks, and more. Here are just a few use cases to illustrate how Lindy operates:
- Email response: Lindy answers customer queries using company knowledge that you feed it, allowing for rapid resolutions and more satisfied customers, 24/7.
- Multilingual: Lindy understands dozens of languages, allowing you to take your services global.
- Chatbot features: Add a Lindy chatbot to your website, so visitors can get answers about your products or services in a snap.
- Organize your email: Tidy up your inbox by creating a Lindy that prioritizes urgent emails as they land.
These are just a small piece of the pie. Check out the list of templates and try Lindy today for free.
