Automating Document Processing with AI: Start-to-Finish Guide

Handling large volumes of documents manually can be time-consuming and prone to errors. Whether you’re dealing with invoices, contracts, or customer forms, sorting through paperwork takes time and is quite frustrating.

Luckily, AI has come to the rescue. According to a 2023 IBM report, 24% of companies already using AI said they use it to automate document processing [1]. With AI-powered intelligent document processing software, businesses can automatically pull and process information from unstructured documents. This helps improve efficiency, reduce errors, and stay compliant while also gaining useful insights from their data.

If you want to be next in line to use document AI processing, then here’s a comprehensive guide to get you started. We’ll walk you through how AI can automate document processing and how you can implement it step by step.

What is document processing AI, and how does it work?

Intelligent document processing (also known as IDP solutions) is the process of automating manual data entry tasks by automatically extracting data from paper documents, scanned images, or digital files and integrating it into other systems.

Intelligent document processing uses AI technologies like natural language processing (NLP), computer vision, machine learning (ML), and generative AI to identify, organize, and pull out important information while keeping data accurate. These tools are simple to connect with other systems, don’t disrupt existing business processes, and help automate digital tasks efficiently.

How does document AI processing work?

Intelligent document processing (IDP solutions) starts by recognizing and categorizing documents. It uses advanced AI technology to scan and understand documents, much like a human would. This AI can be trained to read up to 190 languages [2].

Once the document is classified, the intelligent document processing software extracts data that your business needs. It uses advanced AI tools to find important details in the document.

After gathering the important information, AI document processing organizes it and presents it in a simple, user-friendly format, making it easy to work with further.

Key benefits of automating document processing with AI

Here are the key benefits of document AI processing:

Streamline repetitive tasks

Intelligent document processing with AI helps businesses handle repetitive tasks faster and more efficiently. Instead of manually sorting, scanning, or entering data, automation does the work for you, saving time and reducing errors. This makes business processes like invoicing, form processing, and data entry quicker and more accurate.

Scalability

Manual document processing can lead to human errors, slowing down your business processes and limiting the number of documents you can handle at once. With IDP solutions, you can scan documents accurately at scale. Machine learning and document AI processing work together to process and classify documents accurately, helping you manage high volumes of work with better accuracy and efficiency.

Reduced paper waste

Document AI processing helps reduce paper waste. Instead of printing and storing physical documents, digital automation allows you to create, edit, share, and store files electronically. This means less printing, fewer paper files, and an eco-friendlier way to manage information.

Enhanced customer satisfaction

With IDP solutions, you can handle customer documents faster. AI document processing automates tasks like customer onboarding, bookings, and payments that require paperwork. By using AI to extract data from these documents, chatbots can give more personalized responses to customer inquiries. This faster and more efficient service improves customer relationships and boosts satisfaction.

Top use cases for document AI processing

Here are some of the top use cases for document AI processing that are transforming industries today:

Invoice processing

Using paper processes and email to collect, route, and post invoices leads to high costs, poor visibility, and increased risks of compliance issues and fraud. Your HR and accounts payable teams also end up spending most of their day on repetitive tasks like data entry and chasing, which causes delays and errors in payments.

With document AI processing, you can ensure that all captured information is organized in a structured format. The system will only extract data on the relevant information, making the process more efficient. From receipt to payment, intelligent document processing (IDP solutions) automates error reconciliation, data entry, and decision-making for the accounts payable team. By classifying documents and streamlining workflows, IDP solutions help your organization minimize errors and reduce manual intervention, making the entire process faster and more accurate.

Customer onboarding

Customer onboarding usually requires handling a lot of paperwork, like collecting forms, verifying documents, and extracting data. This can be slow and prone to mistakes. With document AI processing, you can automate the extraction of customer details, such as names, addresses, and account numbers, from documents like IDs, applications, and contracts. This automation makes the onboarding process faster, so customers can be set up quickly while reducing the chance of human errors.

Healthcare document AI processing

In healthcare, managing patient records, medical bills, and insurance claims can be a challenge due to the large volume of paperwork involved. Document AI processing can streamline this process by extracting data from medical forms, prescriptions, and insurance claims. AI can help categorize and validate the data, ensuring that patient records are accurate and up-to-date. This improves the efficiency of administrative tasks, reduces errors, and ensures that medical professionals have the correct information when making critical decisions.

Claims processing

Insurance companies relying on paper-based systems face challenges with data processing due to unstructured data and varying formats such as PDFs, emails, scanners, and physical paperwork. Manual paper processing also leads to complicated workflows, delays, higher costs, increased errors, and potential fraud.

On the other hand, AI document processing enables insurers to quickly analyze large volumes of structured and unstructured data and detect fraudulent activities more efficiently. By using AI technologies like OCR and NLP, insurers can automatically classify documents, validate, and integrate data, leading to faster claims processing and quicker settlements.

How to implement document AI processing: A step-by-step guide

Here’s how intelligent document processing works:

Step 1: Collection

First, you collect data from different sources in various formats. Before processing, the data needs to be prepared. This might mean combining or separating documents, checking for mistakes, and improving low-quality images. Some systems even allow people to label or correct the data to make sure everything is accurate.

Step 2: Classification

Next, the documents or information are grouped into categories. The system uses smart technology to figure out what categories the documents belong to. It can process large amounts of documents, sort them, and send them to third-party systems for further action. Humans help categorize the documents and confirm that the data is accurate at this stage.

Step 3: Extraction

The system then uses machine learning to identify specific fields in the documents and extract data. At this point, humans may help train the system to find exactly what needs to be extracted.

Step 4: Feedback and validation

After extracting data, it checks it against other internal and external data sources for accuracy. People are involved in reviewing and fixing any unusual cases, improving the extraction quality, and helping the system learn from these situations.

Step 5: Integration

Finally, the verified data is sent to other systems where it can be used. This might include customer service tools, data analysis platforms, or automated systems that handle tasks for you. The data helps you make better decisions and improves how your business processes are run.

Future of document AI processing: Trends and innovations

The future of document AI processing looks great. This technology will be driven by several exciting trends and innovations that will continue to transform how businesses handle, process, and analyze data. Here’s what you can expect:

Improved AI and ML capabilities

AI and Machine Learning (ML) are constantly getting better at analyzing data and identifying patterns. AI and ML will be central to the next generation of IDP solutions, bringing major improvements in how documents are handled and processed. As intelligent document processing (IDP solutions) systems advance, your document processing will become faster and more precise.

Enhanced user experience

Document AI processing will make it easier for users to find, retrieve, and manage documents. The technology will also allow for a more personalized experience, adjusting the process to meet each user’s specific needs.

Improved security

As AI-based document processing grows, stronger security will be necessary to protect sensitive data. AI-driven security features, such as detecting unusual activities and analyzing user behavior, will be used to stop unauthorized access to documents.

Frequently asked questions about document AI processing

What is document AI processing IDP?

AI document processing IDP uses artificial intelligence technologies, such as machine learning (ML) and optical character recognition (OCR), to classify documents, extract data, and process information from documents. This reduces manual efforts, speeds up workflows, and improves accuracy.

How can AI automate document processing?

AI document processing IDP can process documents, extract data from them, and even analyze document content. By using algorithms and models trained on large data sets, AI can handle these tasks more efficiently and with fewer errors compared to human processing.

What types of documents can AI process?

AI can classify documents and process a wide range of document types, including invoices, contracts, tax forms, medical records, customer communications, and more. The system can work with structured documents (e.g., spreadsheets) and unstructured ones (e.g., scanned images, handwritten notes).

Can intelligent document processing IDP handle handwritten text?

Yes, intelligent document processing can read handwritten text using intelligent character recognition (ICR) technology, which helps interpret even difficult-to-read handwriting.

Final thoughts on document AI processing

Document AI processing not only saves you time but also reduces errors and improves efficiency. By following these steps, you can streamline your workflows, enhance accuracy, and focus on higher-value tasks. Whether you’re in finance, healthcare, legal, or any other industry, document AI processing can transform how you work.

Sources
[1] Newsroom.ibm.com, IBM AI Global Adoption Index 2023, https://newsroom.ibm.com/2024-01-10-Data-Suggests-Growth-in-Enterprise-Adoption-of-AI-is-Due-to-Widespread-Deployment-by-Early-Adopters, Accessed on February 5, 2025

[2] Mirosoft.com, Intelligent Document Processing,https://www.microsoft.com/en-ca/power-platform/products/power-automate/topics/business-process/intelligent-document-processing , Accessed on February 7, 2025