Invoice Forms Data Entry: Should You Outsource or Automate the Process?

Invoice forms data entry is the essential business process of extracting key information from paper or digital invoices and transferring it into a structured digital format. To accomplish this, businesses typically follow one of two paths: outsourcing the work to a third-party service or using software to automate the process.

When faced with high volumes of invoices, many businesses immediately consider outsourcing the work. However, a powerful modern alternative exists in automation technology, which can fundamentally change how you handle this workflow.

This guide will help you determine the best approach for your specific needs. We will first explore how traditional outsourcing works, then examine the modern automated approach. To help you decide, we will provide a direct comparison based on critical business factors like cost, accuracy, and speed, and conclude with clear guidance on choosing the right path for your company.

The goal is to provide a clear, unbiased comparison to help you make an informed decision.

Understanding Invoice Forms Data Entry

Invoice forms data entry is the process of extracting specific data points from varied invoice documents and entering them into a digital system, such as a company spreadsheet or an Enterprise Resource Planning (ERP) system. This essential business function, a core part of form processing, ensures that critical information like vendor details, invoice numbers, dates, line items, and totals are accurately captured for accounting, payment processing, and financial analysis.

When your team handles this process manually, it often introduces significant operational challenges. The primary issues with in-house manual data entry include:

High risk of human error. Manually transcribing information from an invoice form to a digital file is prone to mistakes. A simple typo, a misplaced decimal, or an incorrectly entered date can compromise your data integrity, leading to incorrect payments and inaccurate financial reporting.
Time-consuming and inefficient. Your staff must spend hours manually keying in data from a constant stream of documents that arrive in multiple formats, from paper copies and scanned images to various PDF layouts. This repetitive work is slow and diverts skilled employees from more strategic activities.
Operational bottlenecks. The combination of slow processing speeds and data entry errors creates serious bottlenecks in your accounts payable workflow. This can result in delayed payments, which may damage relationships with your vendors and cause you to miss out on early payment discounts.

Faced with these challenges of inefficiency, cost, and risk, many businesses logically begin to search for a better method. The most traditional solution they explore is to outsource the entire process to an invoice form data entry service, which we will explore next.

The Traditional Approach: Using an Invoice Form Data Entry Service

When faced with a high volume of invoices, many businesses turn to a traditional invoice form data entry service. The process is straightforward: your company gathers its physical or digital invoice forms and sends them in batches to a third-party provider. The provider's team then manually transcribes the data from these forms into a digital format, typically a spreadsheet.

This practice is a specific type of BPO (Business Process Outsourcing), where a company contracts an external vendor to perform an essential business function. Providers of invoice forms data entry services and other form processing services promote several key benefits:

Frees up internal staff to focus on core, higher-value business tasks instead of repetitive data entry.
Leverages the provider's expertise and established infrastructure for managing high volumes of documents.
Reduces the need for in-house management of hiring, training, and supervising a dedicated data entry team.

Outsourcing is a widespread business strategy. In fact, 52% of executives said they use external service providers for business functions (including Finance), according to Deloitte’s global outsourcing survey. While this approach can seem like a simple solution, it often comes with significant drawbacks and hidden risks that businesses must consider before committing.

The Hidden Costs and Risks of Invoice Forms Data Entry Outsourcing

While outsourcing can seem like a straightforward solution for managing high volumes of invoices, it introduces several hidden costs and operational risks that are important to evaluate. Before committing to an invoice forms data entry outsourcing service, you must consider the potential drawbacks that can impact your budget, efficiency, and data security.

The most immediate concern is cost. The advertised per-invoice price often doesn't account for the full picture. Your invoice volume may fluctuate, leading to unpredictable monthly expenses that make budgeting difficult. Furthermore, there are indirect costs to consider, such as the time your team spends managing the vendor relationship, preparing batches of documents for shipment, and handling exceptions or disputes. These activities add up, and the total cost can often be higher than initially anticipated.

Turnaround time is another significant factor. The process is inherently slower than an in-house workflow. You must collect, package, and send your documents to the service provider. They then need time to process the data and send it back to you. This built-in delay can slow down your entire accounts payable cycle, potentially leading to missed early payment discounts and delayed approvals that can strain relationships with your suppliers.

Outsourcing also means giving up direct control over the process. If an error is made, you can't simply walk over to a colleague's desk to resolve it. Correcting mistakes involves a chain of communication with an external team, which can be slow and inefficient, especially if they are in a different time zone. This lack of direct oversight can undermine the very efficiency you were hoping to gain.

Perhaps the most critical risk involves data security. Your invoices contain sensitive financial information, including vendor details, pricing, and payment terms. Sending these documents to an external third party introduces a significant security risk. You are entrusting another company to handle your confidential data, and you must be certain their security protocols meet your compliance standards.

These combined risks related to unpredictable costs, slower processing speeds, a lack of direct control, and serious security considerations have led many businesses to seek a more modern and controlled alternative for managing their invoice data.

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The Modern Alternative: Automated Invoice Data Extraction Software

While outsourcing has been a traditional solution, a modern alternative now offers greater speed, control, and accuracy: automated software. This technology represents a fundamental shift from simply hiring people to perform a task to deploying a purpose-built tool that executes it instantly. Modern invoice scanning software leverages intelligent document processing (IDP), a technology that goes far beyond basic OCR software. While you can learn more about the role of OCR in invoice data extraction, the key difference is that OCR merely reads characters, whereas IDP understands the context of the data, distinguishing an invoice date from a due date or a unit price from a total.

This contextual understanding gives automation powerful capabilities that directly address the weaknesses of outsourcing. The core function is digital invoice capture, which can handle a wide variety of formats. Whether your invoices arrive as native PDFs, are part of a PDF invoice scanning workflow, or are even just photos from a mobile phone, the software can process them. For a deeper look at this capability, you can read about how to extract invoice data from scanned images.

Purpose-built tools like our Invoice Data Extraction platform are designed to handle real-world complexity. You can upload large batches of up to 1,500 mixed-format documents (including PDF, JPG, and PNG files) in a single job. The AI automatically processes diverse layouts and supports all major languages, consolidating everything into a single, structured Excel file without requiring manual sorting. It can even interpret data from low-quality scans. This level of data capture automation delivers accurate results in minutes, not the days or weeks typical of an outsourcing service.

Getting started is also significantly more straightforward. Many platforms are offered as an invoice data extraction offered as a service (SaaS) solution, eliminating the need for complex setup, long-term contracts, or extensive training. You can often upload your documents and get results almost immediately, and many tools let you start for free to validate the process with your own files.

These capabilities position automation as a strong competitor to traditional outsourcing. The next step is to directly compare their respective strengths and weaknesses to help you decide which approach is the right fit for your business.

Outsourcing vs. Automation: A Head-to-Head Comparison

To help you decide between an invoice forms data entry service and an automated tool, here is a direct comparison of the key factors that matter most to your business operations.

Speed & Turnaround Time Outsourcing your invoice forms data entry is a multi-step process that typically takes several days. You must package your documents, send them to the vendor, wait for their team to perform the manual entry, and then receive the data back. In contrast, automation delivers results in minutes. You simply upload your documents to a software platform, and the AI extracts the data almost instantly. Purpose-built tools can process documents with incredible efficiency, often achieving speeds of 3-12 seconds per page.

Cost-Effectiveness Invoice forms data entry services usually charge per hour or per invoice, which can become expensive, especially for high volumes or if a retainer is required. Automated software solutions are typically more cost-effective, with a lower cost per document. Many modern tools offer a free tier of 50 pages/month and a flexible pay-as-you-go model, allowing you to avoid large upfront costs. You can View pricing to see how this compares to traditional service fees.

Accuracy & Control With outsourcing, you are dependent on the accuracy of human data entry operators, which can vary. You also have little visibility or control over the process until the final file is delivered. Automation provides consistently high accuracy, with purpose-built software achieving a near-100% accuracy rate on standard financial documents. You retain full control over the workflow and can easily verify the results. Features like an error-flagging feature automatically highlight any data points the AI could not read with high confidence, allowing for quick review.

Data Security Invoice forms data entry outsourcing requires sending sensitive financial information to a third-party vendor, introducing a potential security risk. Using a secure software platform keeps your data within a controlled environment. Leading platforms are built on encrypted infrastructure where user data is never used for AI training and is automatically and permanently deleted after 48 hours. This ensures you maintain complete ownership and control over your company's confidential information.

While outsourcing simply offloads a task, automation empowers your business with far greater speed, control, and security over your financial data processing.

How to Choose the Right Invoice Forms Data Entry Solution

Making the right choice between outsourcing and automation comes down to your specific business needs. To help you decide which of the available invoice forms data entry solutions is right for you, consider these key questions:

What is your invoice volume? If you process a small number of invoices each month, outsourcing might seem manageable. However, for growing or high-volume operations, automated software scales far more cost-effectively, handling thousands of documents without the linear increase in cost that comes with human-led services.
How critical is speed to your business? Consider your Accounts Payable workflows. If you need immediate access to financial data for cash flow management or timely vendor payments, the near-instant turnaround of automation is a clear advantage over the multi-day processing times common with outsourcing.
How important are data control and compliance? For any business concerned with security, keeping sensitive financial data in-house with an automated system provides a level of control and privacy that is difficult to guarantee when sending documents to a third-party service.

While outsourcing was a traditional solution for manual data entry, the landscape has changed. For most modern businesses, automation software now offers a more efficient, secure, and cost-effective path to digitizing invoice forms.

The best way forward is to evaluate these modern tools for yourself. We encourage you to explore the automated solutions available to see how they can directly impact your workflow. Click the options below to learn more or get started for free.