Why optimising invoice processing with OCR technology is essential (and how it works)

Trish Toovey - Principal Content Manager at Payhawk - The financial system of tomorrow
AuthorTrish Toovey
Read time
3 minutes
PublishedOct 9, 2025
Last updatedOct 9, 2025
Invoice images graphic with backgrounf
Quick summary

If you want faster, more accurate invoice processing, OCR is your answer. This smart tech automates data entry, reduces errors, and saves your team hours. In short, it makes your process more effective and efficient — exactly what “optimising” should mean (and here's how).

Get a demo
Payhawk - G2 4.6 rating (600+ reviews)
Get fresh finance & AI insights, monthly.
Unsubscribe anytime.

By submitting this form, you agree to receive emails about our products and services per our Privacy Policy.

The manual invoice management process is riddled with clumsy errors (we’re human, after all). This means your data could be wildly inaccurate, making it difficult to make impactful business decisions that drive and support growth.

But there’s good news: AI is reshaping the entire back-office, and optical character recognition (OCR) is only the beginning. Powered by artificial intelligence, Payhawk's OCR instantly pulls every essential detail from your invoices — making processing faster, more accurate, and effortless. And because AI sits at the core of everything we build at Payhawk, even smarter automation is right around the corner. Here's how...

Scale smarter with powerful AI agent support

How Payhawk OCR works in invoice processing

So, how does it work? OCR technology improves the accuracy of invoice processing in various formats, using machine learning techniques to better analyse and interpret invoice data.

In a nutshell, it offers:

  • Multi-language support. Our OCR invoice processing tech can read invoices in over 65 languages, including ones based on the Cyrillic alphabet. So, you can effortlessly process invoices from all your entities without needing to translate them.
  • AI-powered data extraction. Our AI-powered OCR reads and extracts all invoice and supplier details, resulting in fully automated categorisation up to the very last custom field. This requires zero manual effort and ensures you never process a duplicate invoice again.
  • Simple drag-and-drop invoice upload. Simply drag-and-drop invoices in the Payhawk platform or leverage a smart, dedicated mailbox to capture invoices directly from emails. Want to save even more time? Use the bulk upload feature.
  • Machine-learning algorithms. Payhawk OCR uses machine learning to automatically fill in invoice data based on past entriesand other rules. It keeps learning from every interaction, so its accuracy improves over time.
  • Automatic categorisation. Our tech automatically distinguishes between invoices and receipts and categorises them accordingly. It removes manual sorting from the equation, so your documents land in the right place from the start.
  • Dynamic data automation. Beyond separating invoices from receipts, our AI applies the field-level rules you define. Think of it as automatic data automation — you can set up categories based on suppliers, for example, so expenses from Apple will always be suggested as CapEx. Configure it once, and every new document follows the right logic without you lifting a finger.

The data extraction process

Extracting invoice data is a five-step process:

  1. Document capture: Users can upload documents via the Payhawk mobile app (by taking a picture with our AI camera) or email them to a dedicated smart receipts mailbox.
  2. Text recognition: OCR converts the image or scanned document into machine-readable text.
  3. Data extraction from invoices: The system identifies and extracts key information, including:
  • Supplier name
  • Date
  • Due date
  • Country
  • VAT number
  • Amount
  • VAT amount
  1. Field population: Extracted data is automatically populated into the appropriate expense fields.
  2. Expense report generation: The system creates automatic expense reports based on the extracted data.

Seven benefits of using Payhawk OCR for invoice processing

Still have a few questions about introducing OCR into your invoice processing? Let’s start with what matters most — the benefits. Here are seven simple but powerful reasons to use Payhawk OCR.

  1. Ease of use
    Manual data entry is a drain on your resources. It’s old hat. But, with OCR, the way you process invoices dramatically speeds up, and faster processing means quicker payment cycles. And you can now handle larger volumes of invoices, too.

Data is automatically extracted, removing the need for manual intervention. All you need to do is drag and drop your invoice into the platform, and your part is done.

  1. Improved data accuracy
    89% of CFOs are making important decisions based on inaccurate data. But by leaning on OCR, your data becomes more accurate. You’re minimising errors associated with manual data entry. Say goodbye to typos and transpositions and hello to more informed financial decisions.

Optical character recognition technology automatically flags discrepancies between bank charges and invoice amounts, as well as duplicate invoices. This means payments to suppliers are accurate and never duplicated. And consistent data extraction ensures your financial records are always reliable.

  1. Instant 2- or 3-way matching
    One of the most important benefits of Payhawk OCR is instant 2- or 3-way matching. Purchase orders, invoices, and receipt notes are automatically matched and cross-referenced to identify and alert for discrepancies in volume or price.

This feature helps prevent costly mistakes, ensures purchase accuracy, and catches issues before you issue payments to suppliers.

As described on Payhawk’s Procure-to-Pay webpage: You can prevent costly mistakes with automatic 3-way matching. Ensure purchase accuracy and identify discrepancies before issuing payments to suppliers by matching purchase orders, receipt notes, and invoices.

  1. Cost savings
    By decreasing your reliance on manual processes, you reduce labour costs. The time once spent processing invoices manually can now be redirected to forecasting or budget planning.
    You can also avoid late payment penalties and take advantage of early payment discounts because faster, OCR-driven data capture gets invoices to the approval stage sooner, giving you plenty of time to schedule payments.

  2. Enhanced data accessibility
    Once you convert your invoices with OCR, they’re in a searchable format, making invoice data instantly accessible to everyone in your organisation. You can now create reports on the fly, track and analyse spending patterns, and gain insights into vendor performance.
    All this puts you in a great position to start streamlining your procurement process and optimising your purchasing strategies. OCR unleashes the power of true workplace efficiency and data accessibility.

  3. Better compliance and record-keeping
    By digitally recording invoices, you ensure a clear audit trail, reducing the chances of accounts payable fraud and enhancing compliance with tax requirements. Having digitally accessible invoice documentation also makes it easier to prove compliance when needed.

OCR allows real-time reconciliations by immediately syncing data, making it quicker and easier to spot discrepancies and compliance issues before they escalate. The automated nature of OCR ensures consistent and accurate data capture — vital for compliance.

  1. Streamlined workflows
    By automating key parts of the invoice process, you strip back complex, manual-heavy processes, freeing your finance team to focus on higher-value work that drives growth and innovation.
    Your team will finally be able to see more by doing less. Finding automated invoice management software that truly adds value to your organisation transforms how you and your team work.

“Fewer mistakes — all they need to do is choose the right category.”

After experiencing frustration with payment tracking and reconciliation, high-end IT recruiters at Mindquest (formerly Club Freelance) turned to Payhawk to make managing their finances as efficient and effective as possible.

Finance Director Alessandro Lupo explains:

The Payhawk app is so smart and intuitive. The team loves the app because it's easy and straightforward for everyone to use. We've also seen fewer mistakes now that the built-in OCR tech captures all the receipt data once someone uploads a receipt. So, all they need to do is choose the right expense category, etc.

Integrating OCR into your invoice processing is a must

Introducing optical character recognition into your invoicing process should be high on your priority list. Without it, you’re not only in danger of making mistakes you have to rectify (time-consuming), but you’re also limiting access to important information. With OCR in your toolbox, you can improve operational efficiency and financial workflow accuracy.

The end result? You’ll be better equipped to stay ahead in your field, focusing your energy on understanding spend and resource allocation to drive smarter, faster business decisions. Request your personalised demo, and we’ll show you how our solution (complete with app and OCR can drive your business forward with better insights, smarter cost control, and more).

Trish Toovey - Principal Content Manager at Payhawk - The financial system of tomorrow
Trish Toovey
Principal Content Manager
LinkedIn

Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

See all articles by Trish

Related Articles