In 2023 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 2023: 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.
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Market overview in 2023 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 2023-2029.
Global document capture software market by regions, 2023 to 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.
The process of scanning and converting a paper invoice to live data.
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.
Invoice Scanning vs. Invoice Data Capture
Invoice scanning and invoice data capture are two essential processes in modern accounting and financial management.
Invoice scanning primarily involves converting physical or digital invoices into digital images or PDFs using OCR technology. This process ensures that invoices are digitized and stored electronically for easier access and management.
Invoice data capture goes a step further by automatically extracting key data fields from scanned invoices, such as invoice number, date, amount, and vendor details. This automated extraction reduces manual data entry efforts, improves accuracy, and accelerates the invoice processing cycle.
The table below highlights the differences between invoice scanning and invoice data capture:
| Feature | Invoice Scanning | Invoice Data Capture |
| Key functionality | Converts physical/digital invoices to PDFs or digital images | Automates data extraction (date, invoice number, amount, tec.) from scanned invoices |
| Technology deployed | OCR | AI and ML, advanced OCR |
| Workflow impact | Simplifies storage, reduces paper clutter | Reduces manual data entry, accelerates invoice processing, improves accuracy |
| Scalability | Scales well for invoice electronic storage | Scales for processing larger volumes |
| Customization | Limited, with focus on document capture | Customization of data fields, rules, and workflows |
| Integration | Integration with document management systems | Seamless integration with accounting software and ERP |
| Cost Efficiency | Reduces costs related to physical document storage | Reduces costs through automation of time-consuming (data entry) tasks |
Together, these processes optimize accounts payable workflows and enhance overall efficiency in managing financial transactions.
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%.
Choosing the Invoice Scanning Software — Factors to Consider
Once you’ve decided to invest in the software, the choice of the best invoice scanning software might seem pretty challenging. To ensure that the solution meets your business needs efficiently, you should consider several factors, such as:
- OCR accuracy
- Integration capabilities
- Scalability
- Compliance with data protection regulations
- Ease of use
- Analytical and reporting functionality
- Vendor reputation (including customer support and training).
Thorough consideration of the above mentioned parameters will help to opt for the right solution that will optimize the workflow and help to achieve your business goals.
Learn more: How to Choose the Best Invoice Scanning Software?