Bill and receipt data extraction is a straightforward concept: it refers to the process of technology automatically reading bills and receipts (and other source documents), taking the important information (supplier name, amount, invoice date, due date, etc.) and entering it in a usable format and place, for your use in bookkeeping.
Given the manual and time-consuming nature of collecting, sorting, and storing client receipts, and entering each document’s data into an accounting software, automating any and all of these tasks can improve the quality of your bookkeeping work, and the speed at which you do it. When data extraction happens automatically, you save time and resources, helping you focus on more meaningful aspects of your business.
Hubdoc’s bill and receipt data extraction
One of our founding principles here at Hubdoc was improving the monthly bookkeeping experience through automation. Based on experience co-founding a previous company, Hubdoc’s co-founders Jamie McDonald and Jamie Shulman knew that spending countless hours each month collecting and sorting documents, entering the data into a ledger, cross referencing that with a bank feed, then finally clearing out each transaction took far too long to be a sustainable practice.
As a result, automated data extraction is a primary function of Hubdoc. Through machine learning-powered technology, and when needed, human quality assurance, Hubdoc extracts key pieces of data from every bill, receipt, and invoice that is either auto-fetched or uploaded, and optimizes the data into usable information for transaction coding and reconciliation.
The benefits of automated bill and receipt data extraction
Everyone stands to benefit from automatic bill and receipt data extraction – seriously! In the bookkeeping industry, clients, firm owners, employees, and anyone else involved in the process will experience the advantages that come along with automating this otherwise manual and tedious task.
As Hubdoc partner Stephanie Pettitt from Equation Accounting Ltd. notes, “Hubdoc takes things to the next level in efficiency, phasing out hours of time manually collecting and organizing documents. Plus, it has the capability to extract data from invoices and input it digitally, directly into our accounting software, Xero. This saves hours of time."
For both bookkeeper and client, automatic bill and receipt data extraction can lead to time savings and reduced document touches, which both lead to the goal of seamless reconciliation. Let’s examine this path.
When considering time savings, a bookkeeper need only ask: “How much time am I spending working through bills and receipts each month?” The answer to this will allude to the value of automatic data extraction from bills and receipts.
When information such as supplier, date, total amount, and due date (when applicable) are automatically extracted from the bill or receipt and placed into software in a usable way, it saves a person from having to do that manual data entry. If you’re dealing with hundreds of receipts each month from multiple clients, that can add up to dozens of hours saved – time that can be reallocated to non-administrative tasks.
Fewer document touches
In a manual bookkeeping process, it’s typical for a receipt to go through four to six “touches”. That is to say, a bill or receipt may change hands, be reviewed, or be moved up to six times before it is reconciled.
For a bookkeeper working with several clients every month, multiple document touches can increase the risk of error and lost bills or receipts (as well as add significant time to your reconciliation process). When client bills and receipts are centralized and automatically organized in one system that also extracts all necessary document data, you remove several document touches.
The number of document touches can be further reduced when you’re collecting source documents digitally, because a client can simply email, scan, or snap a photo of a receipt and send it to you. Since the data is being extracted automatically, all this can be done in just one or two touches, which can expedite your bookkeeping workflow.
When compliance work becomes efficient, and happens like clockwork each month, you’ll be better positioned to provide additional value to your small business clients through services such as advisory. Seamless reconciliation is a recommended step to preparing for advisory, and automated data extraction is needed for achieving efficient and timely reconciliation.
With automatic data extraction, the information from each document is usable, and ready to be matched to a client’s bank feed for reconciliation. Depending on the software you use, this can be accomplished with one or two clicks, making the entire process quick and efficient.
Automate manual tasks to facilitate growth
As you grow and expand your client base, your firm will naturally receive more receipts and bills to manage. Consequently, the first hires at small bookkeeping firms are usually meant to help with data entry and document management.
“This manual process [of document management] was so time-consuming, we had to hire an additional staff member just for document sorting and data entry!” noted Chris Macksey, Operations Manager and Small Business Advisor at Prix Fixe Accounting, in a recent Hubdoc Partner Success Story.
When you eliminate tedious data entry, you can either forego this initial hire, allowing you to increase capacity by yourself, or hire an employee to help with more client-facing tasks and projects. For more established firms, eliminating bill and receipt data entry frees up existing employees’ time, so you and all staff can focus on faster, more accurate reconciliation and providing additional services to clients.
With the time savings gained from automated data entry, you can focus on growing your firm or improving your services. Plus, your clients tend to be happier because their advisors can spend more time working with them on business insights and improvement. Data extraction is truly a bookkeeping win-win!
See Hubdoc’s data extraction in action – watch our on-demand webinar!
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