With invoicing inextricably tagged to cash flow and directly affecting bottom line numbers, it is critical to handle them well. But even now, about 90% of freight invoices are processed manually, slowing cash flow, increasing risk of bottom-line errors and incurring unneeded expenses.
Like most data entry jobs, invoice data capturing is a tedious, repetitive, and time-consuming process. What might look like punching numbers on the surface is a complex end-to-end process that requires multiple levels of validation to ensure quality. Capturing a typical manual invoice requires a staff member to understand the particulars and categorize the document before entering the data into the system. Approving invoices is complicated: often, accessorial charges and peak season surcharges contribute to an invoice amount varying from what was initially agreed upon. Invoices that flow out globally could also have the added burden of contending with currency fluctuations. Invoice numbers are also cross-checked by other departments, adding to the expected processing time. Such inherent complexity of processing freight invoices by manual means results in mistakes. Every extra step creates room for human error that directly affects the bottom line numbers.
In the past, businesses have witnessed significant errors in estimated numbers due to wrong particulars such as incorrect total or VAT, incorrect exchange rates, incorrectly calculated fuel surcharges, and wrong weights/parcel numbers. Even though the errors can eventually be reconciled, the time and money that goes into it ultimately add to the business cost. The indirect costs of invoicing errors are even more far-reaching. Negative knock-off effects from incorrect invoicing, such as late payment fees and delayed shipments, result in auditing problems, affect customer satisfaction, and lower the business’s potential for growth.
In a day and age when fast and accurate data processing is the need of the hour, automated invoicing technology comes to the rescue by bridging the gap between actual and expected invoicing values. Although OCR has been used for digitizing documents since the 1990s, it is only in the last decade that the logistics industry has come to reap its benefits.
By using image processing to capture data from invoices, OCR technology has eliminated the need for manual input while digitizing documents. Once the invoice’s image is uploaded into the system, OCR converts the image to characters. Advanced systems can then interpret the information semantically – either through templates, AI or hybrid – and extract necessary data, classifying and inserting it into necessary fields. Some systems also allow users to apply a single template to multiple recurring documents and multiple templates to a single document.
Inbuilt integration with TMS such as CargoWise helps automatically feed data into the database, and robotic processing algorithms (RPAs) can be designed and used to compare the pulled-in data to previously entered expected data and automate the decision-making process. This is done by checking if the numbers fall within the tolerance limit, which would ensure it gets approved for payment. If the numbers are outside the tolerance ceiling, it would be queued for review.
The integrity of data digitized using technology in this manner has proven to be higher than those handled by traditional means. Today’s automated software solutions such as Prompt are highly reliable, with more than 99% accuracy for typed text and 96% for handwritten text. Protected by SOC 2, ISO 27001, GDPR, and other data protection standards, the information seamlessly flows from one end to another without human intervention. This eliminates error occurrences and improves bottom line data accuracy. All this processing, which can be achieved with a few clicks, has allowed businesses to eliminate less-effective means of digitization and free up the valuable manpower that is otherwise engaged in laborious activities.
Today, the industry is inching towards digitization, reflected in how logistics firms and freight forwarders are increasingly adopting automated invoicing into their process and reaping benefits. Recent case studies demonstrate how OCR software for document capture decreases data entry FTEs by 90%. Large and complex invoices that took hours to enter into the system manually can now be digitized in a few minutes. Accurate data on the bottom line has led to more than 70% reduction in penalty charges for businesses, bringing in significant ROI for process automation.
Considering all these benefits, the number of global logistics firms using automated invoicing in their operations is only expected to go up. The rapid pace of logistics is going to accelerate, making paperwork and other back-office activities increasingly redundant in the future. If logistics companies are looking to grow, there is no better time than now and there is no better way than to harness the power of technology to do it.