What is AI Data Extraction?
AI-based data extraction or intelligent data extraction is the process of using artificial intelligence to automatically capture and organise key data from documents. Simply put, it's like giving your documents a brain to organise, understand, and extract relevant information for your finance team without breaking a sweat.
Every business deals with different volumes of documents, so you might wonder if AI-driven data extraction suits your business. The answer is yes—AI can benefit businesses of all sizes and industries by reducing manual tasks, minimising errors, and enhancing the accuracy and speed of financial operations.
How does it do that? Let’s take a deeper look.
The Advantages of Data Extraction Through AI
According to Gartner research, 86% of CEOs believe that AI will be pivotal in maintaining or driving revenue growth in 2024-2025. This is largely due to its ability to reduce administrative time, allowing teams to focus on more revenue-generating tasks.
AI can process and analyse large volumes of documents faster than humans, resulting in quicker invoice approvals and payments. A Forbes survey supports this, revealing that 64% of businesses expect AI to boost employee productivity by freeing up valuable time typically spent on mundane and repetitive jobs.
But the benefits don’t stop at faster processing. AI also plays a crucial role in reducing errors in data entry by ensuring the accuracy of the extracted information. In fact, WhiteWater reported that by using AI data extraction for their accounts payable (AP) tasks, they reduced the time spent reviewing data and checking for errors by 90%.
Moreover, 54% of businesses reported that implementing AI has resulted in cost savings. For example, take the time your finance team spends on manual data processing. AI can cut this time in half, freeing up your team for more strategic, value-driven tasks.
By introducing AI data extraction software, you can reduce the need for manual labour and save on labour costs. The result is a more efficient, cost-effective operation that drives both productivity and profitability.
Common AI Concerns With Data
Despite AI’s significant potential, PwC’s AI Predictions report revealed that only 28% of businesses have prioritised AI for information extraction.
Further research shows that some businesses hesitate to adopt AI, questioning its effectiveness or reliability. Companies fear that AI-powered systems could make errors or misinterpret data, leading to costly mistakes in critical financial processes.
Additionally, business leaders may be unsure about how to integrate AI into existing workflows. This fear of disruption and a limited understanding leads to many shying away from adoption.
In any case, if you aren’t automating data extraction in your business, you are overlooking a key opportunity to enhance your financial efficiency and boost your ROI.
Take a moment to think of the invoices that often pile up on your desk. Each one presents unique challenges—whether it's varying payment terms, different formats or multi-page documents. These challenges can create unnecessary friction and slow down your AP processes.
With AI data extraction software, you can eliminate these inconsistencies and automate the tedious work.
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AI Extraction vs OCR
Many people confuse AI extraction with Optical Character Recognition or OCR, but they’re not the same. Understanding the difference could transform how your finance team approaches automation.
The primary differences lie in:
- Functionality - OCR is like a smart scanner, which takes a picture of a document and turns the text into digital data that a computer can read. AI goes beyond that because it understands the context and meaning behind the data. This means it doesn’t need a structured document to extract data. It understands words such as “invoice date” and can extract this information regardless of where it lies on the page.
- Capability - Traditional OCR systems simply copy what they see without learning or improving. For example, if "INVOICE123" is misread as "INUOICE123," the mistake will recur. In contrast, if the AI-powered system learns that "INUOICE123" should be "INVOICE123" based on user corrections, it will apply this knowledge to future invoices.
- Complexity - OCR just recognises and extracts text exactly as it appears on a document. AI, on the other hand, adapts to varying document formats and categorises information like matching line items to specific codes or organising data for entry into a financial system.
For finance and AP teams, this means AI can automatically and accurately extract key information from invoices, receipts and expenses, reducing errors and saving time.
By eliminating almost all the manual input I used to do, Lightyear has both significantly reduced the time I spend entering invoices into my accounting system as well as minimised data entry errors.
What is the Best AI Data Extraction Software for Finance Teams?
While the core functionality of AI data extraction software remains similar across platforms, the real difference lies in how the technology is integrated into the broader system and the user experience it offers. The right solution not only captures data efficiently but displays it in a contextual and useful way. It also seamlessly integrates with your existing workflows, making the process effective for your finance team.
For example, Lightyear’s Smart Extract tool provides AI technology built to eliminate manual intervention and speed up invoice processing workflows for finance teams. Once extracted, the data is presented side-by-side with the original document for a quick comparison.
Lightyear’s touchless invoice processing doesn’t just read invoices—it learns and adapts to your suppliers’ unique formats, easily handling line-item data extraction. This means:
- More detailed data extraction (product codes, descriptions and quantities)
- Better reporting capabilities
- Auto-tax applied to line items
- GL and tracking categories applied to line items
- No need to wait for maps to be created
Additionally, its ability to automate coding on line items further streamlines the process. Smart Extract learns how line items are coded based on your previous invoices, or they can be set at a supplier level. Once Smart Extract understands the coding structure, it automatically applies rules you set, like categorising a specific supplier’s items under a particular general ledger (GL) code or associating a product code with a specific cost centre.
Smart Extract goes beyond basic data capture to offer your business a fully optimised, intuitive AP automation experience. This level of integration and intuitive design is what truly sets advanced AI data extraction software apart.
If you're looking for an AI data extraction tool tailored to meet the needs of your finance teams, Lightyear has you covered.
Where Do You Start?
AI data extraction is no longer just a "nice-to-have" but a necessity for finance teams looking to stay competitive. Whether you’re striving to cut costs or streamline AP operations, investing in AI data extraction software is a step towards a more productive team. Lightyear’s Smart Extract tool is here to help you make that leap and transform your financial operations.