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Automated Invoice Processing: Comparing RPA and IDP Solutions
Our last article Which Automation Technology Is Better for Your Operations: RPA or IDP? compared Robotic Process Automation (RPA) solutions with Intelligent Document Processing (IDP) solutions for processing transactional documents. Despite their differences, both solutions are often used for automated invoice processing and streamlining the accounts payable process. RPA uses software robots, also called bots, to mimic human actions and interactions with computer systems to execute repetitive tasks such as data entry, filling in forms, moving files, and communication with other systems without human intervention. IDP automation solutions orchestrate the entire invoice processing workflow including document classification, data extraction, data validation, and exporting to downstream systems.
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RPA and IDP Solutions: Where Are They Used?
RPA software robots are typically used in departments where there are high volumes of repetitive and rule-based tasks such as in finance, accounting, human resources, and customer service in industries like banking, insurance, healthcare, manufacturing, and retail.
IDP solutions are used in various departments including finance and accounting, supply chain, procurement, sales, and human resources in industries like banking, logistics, retail, pharmaceuticals, chemistry, mechanical engineering, and consumer products. Overall, IDP is a versatile technology that can be applied across various departments and industries to automate the processing and managing of different types of complex structured and unstructured transactional documents.
Both RPA and IDP tools are frequently used for automatic invoice processing.
3 Misconceptions of IDP solutions
IDP solutions are often misunderstood regarding several aspects.
IDP is just advanced OCR
While OCR is a component of IDP, true IDP involves a comprehensive process including data extraction, interpretation, validation, and integration with business workflows.
All IDP solutions offer equal capabilities
Some IDP solutions offer limited functionality and mainly focus on data extraction. A full-fledged IDP solution, however, offers a broader range of capabilities including deep learning models for comprehensive document understanding and integration with a variety of business systems.
IDP completely eliminates the need for human input
True IDP integrates a human-in-the-loop approach. The aim is not to replace human involvement but enhance and assist it, especially in complex decision-making and handling exceptions.
Two Real-Life Examples: Automated Invoice Processing
1. With an RPA document processing solution
Monitoring for new invoices
The RPA solution automatically scans the system for invoices. As soon as new files are uploaded, they are flagged and forwarded along for data extraction.
Invoice capture
The solution extracts the invoice and order data such as bank account info, order details, pricing, etc. The extracted data can then be automatically forwarded to an employee for verification to ensure that the RPA bot has captured the data properly.
Invoice processing
The automation solution evaluates invoices against order records along with other criteria to ensure their validity. This can include the following actions:
- Comparing invoices with purchase orders
- Looking for duplicate records
- Determining if there are any issues which require manual intervention
Once all the checks have been performed, the software robots will automatically send the invoice off for further processing.
Recording information
When an invoice has been processed, the RPA solution logs all relevant information in accounting’s database to create a record of it.
2. With an IDP solution
Invoice reception
The IDP solution receives incoming invoices through various channels, such as email, SFTP or API.
Data extraction and validation
The IDP solution extracts data from the invoice and validates it against predefined rules to ensure accuracy, significantly reducing errors and the need for manual checks through humans. It offers a broad range of extraction tools to flexibly extract data from any document format, for example PDF, images, csv, xml or excel files, guaranteeing a very high validation reliability.
Invoice processing
The IDP solution processes the invoice through customisable workflows tailored to specific business needs and matches it with the related purchase order.
A defined workflow for processing invoices could be: “Scan and categorise incoming invoices, validate tax identification numbers, match invoices with corresponding purchase orders, flag any discrepancies for manual review and calculate early payment discounts”.
If the system spots a deviation between the documents which cannot be resolved through data transformation, data enrichment or other data-validation rules, an exception is raised. This way, employees only need to check those invoices where discrepancies are identified by the software solution.
Exporting invoice data to downstream systems
Structured invoice data is integrated into the downstream systems and the invoice is automatically archived.
Key Differences Between Robotic Process Automation and Intelligent Document Processing
As these two real-life examples illustrate, RPA and IDP solutions are largely used for the same use cases and goals. Utilisied to automate invoice processing, the goal is to free employees from manual tasks, reduce errors, and to increase accuracy and productivity.
At the same time, there are some key differences between IDP and RPA software solutions.
IDP solutions are built for flexibility
IDP technology offers a robust solution to orchestrate the entire document processing workflow – from data extraction to data processing and the export of structured information to downstream systems like ERP or CRM systems. It is designed to understand the context and can adapt to different situations. For example, if a supplier sends the invoice in the mail body, or multiple invoices in one PDF, or they send the date in the wrong format, the IDP system can still handle the document and extract and process the data accurately.
RPA, by contrast, uses robotic software to mimic human actions on a computer interface. These bots interact with applications, websites, and systems just as a human would, using the graphical user interface to perform repetitive and routine tasks. This limits RPA to functions which are highly predictable and repetitive. Software robots are great when it comes to extracting and filing the same straightforward data repeatedly. Unforeseen changes, complex data sets, ambiguous information or exceptions, however, pose serious problems to bots.
RPA solutions do not eliminate manual tasks
As detailed in the above use case, team members still need to check the software robots’ work. Often, the extracted data needs to be automatically forwarded to a human worker for verification to ensure that the RPA bot has captured the data properly. This means additional workload for employees.
IDP solutions, on the other hand, combine several tasks. They extract data, recognise the document type, compare the data against the document definitions for that document type and check whether there are any deviances. If the software detects a deviance or exception, it automatically alerts the user.
Using an RPA solution, each of these tasks would need to be executed by another bot. More importantly, IDP solutions find exceptions, deviances and edge cases and automatically alert the user who can check the data. They ensure very high accuracy and reliability, thus significantly reducing errors and the need for manual checks through humans.
Efficient exception management with Intelligent Document Processing
The Netfira Platform is an IDP solution which provides an interface where team members can manage and resolve exceptions. This makes sure that errors are neither missed nor that documents are rejected. At the same time, the need for manual intervention is kept to a minimum, because users are directly guided to the cases where their human expertise is needed.
RPA’s limited ability to extract data from transactional documents like invoices without the need for human verification ties in with its inability to handle exceptions, errors or edge cases efficiently. For example, if there is an error in an invoice, the software robot does not provide any options to manage it and often needs to reject the document.
For complex processes several bots are needed
Processing invoices automatically is a multi-step process: The system needs to be monitored for incoming invoices, the data needs to be read out from the document, processed and then filed. Mostly, every step requires an own bot. Consequently, multiple bots need to be set up, managed and checked which brings a high workload for human staff.
This is not the case for Intelligent Document Processing solutions like the Netfira Platform. Providing end-to-end automation,it covers the entire document processing process. Once implemented, Netfira handles every step of the process, from data extraction to processing, exporting and archiving. Furthermore, SaaS IDP solutions operated in the cloud relieve internal IT departments as they are updated regularly and do not require maintenance.
Intelligent Document Processing for Automated Invoice Processing
As the practical examples illustrate, both RPA and IDP solutions are designed to handle the automated processing of invoices thus streamlining the accounts payable process. At the same time, there are some key differences between RPA and IDP technology. In direct comparison, Netfira’s IDP solution, provides a higher level of flexibility and cutomisabilty which make it a powerful tool not only for automating invoices but all transactional documents. Its use of state-of-the art technologies and customisable workflows enable it to reduce the need for manual intervention to a minimum while achieving very high data accuracy. Businesses that want a complete solution that can adapt to meet their operational needs now and in the future and are serious about improving efficiency and accuracy in their business processes should consider choosing an IDP solution like the Netfira Platform.
