How does AI read invoices, purchase orders and forms?
Written lesson · about 3 minutes to read
The short answer
AI reads the document, turning a scan or photo into text if needed, picks out fields such as supplier, date, lines and totals, and checks them against the purchase order or price list. Anything that does not match goes to a person, so start with one high-volume document type.
Three things to remember
- 01The tool reads the document, picks out the fields, checks them against your records and flags mismatches.
- 02Clean PDFs read well, photos and handwriting less so, so check the figures that turn into money.
- 03Start with one high-volume document type, and keep a person on every exception.
How it reads a document
First it gets the text. A PDF made by a computer already contains text. A scan or a photo is only a picture, so the tool turns it into words with OCR, which stands for optical character recognition: software that reads text from an image.
Then it picks out the fields: supplier, invoice number, date, purchase order number, each line with its quantity and price, the total and the payment terms. Modern tools can do this even when every supplier lays out an invoice differently. Forms work the same way: the tool reads the boxes and fills the matching fields in your system.
Checking it against what you expect
The reading is only half the job. The value is in the checking. A supplier invoice is matched line by line to the purchase order and the goods receipt: quantity invoiced against quantity received, price invoiced against price ordered. A customer's purchase order becomes a draft order in your system, with part numbers matched to yours and prices checked against the agreed list.
A match within the small difference you have agreed to accept goes through for approval. A mismatch goes to a person with the documents side by side and the difference highlighted, so they see at a glance what needs deciding.
Where it struggles
Clean PDFs and typed forms read well. Photos taken at an angle in poor light, a folded delivery note and handwriting read less well. A misread digit arrives looking as confident as a correct one, so totals, quantities, account numbers and part codes deserve a look.
Better tools show the piece of the image beside each figure and flag the ones they are least sure of. Keep a person on the exceptions: the invoice with no purchase order, the customer the system has never seen, the amount above a limit you set. A person also releases the payment run.
Where to start this week
Pick one document type that arrives often in a fairly steady format, such as invoices from your five busiest suppliers. Write down how many arrive each week, how long each takes to enter and how many errors or queries you had last month. That is your starting number.
Check whether your accounting or ordering software already has a reading feature. Then run twenty real documents through it beside your normal entry, note where it went wrong, and agree the exception rules before you switch it on.
More in part 7
- 1Can AI answer your phone?
- 2What is speech-to-text?
- 3What is text-to-speech?
- 4Can AI transcribe and summarise your calls?Written
- 5Can AI translate for your customers?Written
- 6What is document parsing (OCR)?
- 7How does AI read invoices, purchase orders and forms?WrittenYou are here
- 8Machine vision vs. AI vision
- 9What is AI image generation, and can you use it for marketing?Written
- 10What is AI video, and where does it help a small business?Written
Next step
Where does this fit your business?
Six quick questions about your business, then your AI plan: what to start with, what a person still checks, and the lessons that go with it. Or bring it straight to a free thirty-minute call.