Invoice Scanning Services: Save Time by Outsourcing Invoice Data Capture

The manual data entry required for Accounts Payable (AP) processing is a significant operational burden for many businesses. According to extensive industry research from Ardent Partners, this work represents a direct financial drain, with the average cost to process a single invoice standing at $9.40. Beyond the direct expense, this manual effort is also time-consuming and introduces a high risk of errors that can damage financial reporting and supplier relationships.

To solve this, businesses typically consider two main options. The first is to use an invoice scanning service, an outsourced solution where you send your invoices to a third-party provider. This company extracts the key data and returns it to you in a structured file, such as an Excel spreadsheet. The second option is to use automated software tools in-house, giving you direct control over the data extraction workflow.

This article provides a balanced guide to help you decide which approach is right for your business. We will cover what an invoice scanning service is, the benefits and potential risks of outsourcing, and how these services compare directly to an in-house, software-based approach.

Our goal is to give you a clear framework for evaluating these options against your specific operational needs and budget. We will begin by defining exactly how an invoice scanning service works.

---

What Is an Invoice Scanning Service and How Does It Work?

An invoice scanning service is a form of Business Process Outsourcing (BPO) where you hire a third-party company to manage the data capture from your invoices. Instead of your team manually entering data, an external invoice scanning company handles the entire workflow for you.

The process is designed to be straightforward from your perspective and typically involves four key steps:

1. Document Submission: You gather your invoices, whether they are paper documents sent by mail or digital files sent via email or a secure portal.
2. Processing: The document scanning service receives your documents at their processing facility.
3. Data Extraction: The provider uses Optical Character Recognition (OCR) technology, often supported by manual verification from human operators, to extract the key information from each invoice. This is the core of the automated invoice scanning process.
4. Data Delivery: The company delivers the extracted data back to you in a structured digital format, such as an Excel or CSV file, ready for import into your systems.

The primary goal of this service is to completely replace the time-consuming and error-prone internal task of typing invoice details into a spreadsheet or accounting software. By outsourcing this work, this process offers several clear advantages for businesses looking to save time and improve efficiency, which we will explore in the next section.

---

The Key Benefits of Outsourcing Invoice Scanning

Many businesses are looking to outsource non-core functions to improve efficiency. For companies buried in paperwork, turning to invoice scanning services for outsourced invoice processing is an attractive option for several key reasons.

The primary benefits of using these specialized Data Entry Services include:

• Significant Time Savings: The most immediate advantage is offloading the entire manual data entry task. Instead of your staff spending hours keying in information from paper or PDF invoices, they are freed up to focus on higher-value activities like vendor management, payment analysis, and financial reporting.
• Reduced Labor Costs: Outsourcing can be more cost-effective than hiring dedicated data entry personnel. You avoid the direct costs of salaries and benefits as well as the indirect costs associated with hiring, training, and managing additional staff. This also prevents overloading your existing accounts payable team.
• Potential for High Accuracy: Established service providers often have robust quality control systems in place. Many use a "human-in-the-loop" approach where human operators verify the data captured by software, which can result in a high degree of accuracy and reduce costly errors.
• Scalability on Demand: Your volume of invoices can fluctuate significantly, especially during peak business seasons. An outsourcing service can scale its operations up or down to meet your needs without you having to hire temporary staff or let employees go during slower periods.

These benefits make a compelling case for outsourcing. However, the choice between invoice data entry outsourcing vs automation is not always straightforward. Despite the advantages in time and scalability, businesses must also carefully consider the significant trade-offs in direct cost, data control, and security before committing to a service provider.

---

The Hidden Costs and Risks of Invoice Scanning Services

While outsourcing can seem like a straightforward solution, using an automated data capture service introduces significant risks and potential costs that are not always apparent upfront. Before committing to a third-party provider, it is critical to weigh these drawbacks against the advertised benefits.

The financial reality of these services can be complex. Many providers operate on a per-invoice fee structure, but there are often additional setup charges and minimum volume commitments that can make the total cost unpredictable. Calculating a clear return on investment becomes difficult when your expenses fluctuate with invoice volume or when you are locked into paying for a minimum number of documents, whether you use the service or not. This lack of cost transparency can quickly erode the expected savings.

Beyond the direct costs, outsourcing means giving up a significant amount of control over your accounts payable workflow. You become dependent on the provider's turnaround times, which can be several days, eliminating your ability to process an urgent invoice on demand. If errors are made during data capture, correcting them is often a slow process that requires back-and-forth communication rather than a quick internal fix. This loss of direct oversight can create bottlenecks and reduce the very efficiency you sought to gain.

Perhaps the most critical risk involves data security. When you use invoice scanning services, you are sending sensitive financial documents containing vendor details, banking information, and transaction amounts to an external company. This raises important questions: How is your data being stored and for how long? What security protocols are in place to protect it? Is your data used for other purposes, such as training AI models? In contrast, a secure software solution makes explicit commitments to data privacy. For example, a trustworthy platform guarantees that your data is never used for AI training and ensures all uploaded documents are automatically and permanently deleted from its systems within 48 hours of processing.

These factors of unpredictable cost, loss of control, and data security risks lead many businesses to seek an alternative. They need a solution that provides the benefits of automation without the drawbacks of outsourcing. This brings up a direct comparison: is it better to outsource to a service or to use in-house software for invoice automation?

---

Invoice Scanning Service vs. In-House Software: A Head-to-Head Comparison

Choosing between an outsourcing service and in-house software is a critical decision. To help you determine the best path for your business, this section provides a direct, head-to-head comparison based on the factors that matter most: cost, speed, control, and accuracy. For a more detailed analysis, you can also read our guide on invoice data capture services vs software.

Here is how the two approaches stack up:

• Cost Structure: Invoice scanning services typically charge a recurring fee or a per-invoice processing cost, which can become expensive as your document volume grows. In contrast, modern software like our purpose-built Cloud Service offers a more flexible model. You can process up to 50 pages every month for free and then use pay-as-you-go credits for any additional needs. This eliminates subscription fees and allows you to align costs directly with your usage. You can view pricing options to see how this model works.

• Speed & Turnaround Time: With an outsourcing service, your turnaround time is measured in days. The process involves collecting, shipping, and waiting for a third party to process your documents. In-house software gives you results in minutes. Our platform, for example, processes documents at a rate of 1-8 seconds per page, allowing you to convert a large batch of invoices into a structured Excel file almost instantly.

• Control & Flexibility: Outsourcing services offer a hands-off approach but provide little control over the process. You are limited to their predefined data fields and rigid workflows. With software, you have complete control. You can process invoices on-demand, handle large, mixed-format batches of up to 6000 files at once, and create reusable templates with natural language instructions to extract the exact data you need.

• Accuracy & Technology: Many providers use a generic invoice OCR service, which applies basic Invoice OCR technology to convert images to text. This can struggle with complex layouts or poor-quality scans. Purpose-built AI software goes further by understanding the context and relationships between data fields. This results in significantly higher accuracy, especially for documents with varied formats or detailed line items. If you want to test this for yourself, you can start for free and process your own documents.

While outsourcing offers a hands-off solution, modern software provides a powerful combination of speed, control, and cost-effectiveness. It puts the power of automation directly into your hands, giving you a more efficient and scalable solution for managing your financial documents.

---

Making the Right Choice: When to Outsource vs. When to Automate

Choosing between an invoice scanning service and in-house automation software depends entirely on your operational needs, budget, and long-term goals. This framework synthesizes the key factors from this guide to help you make the right decision for your business.

You should consider an invoice scanning service if your business:

• Deals almost exclusively with paper invoices and has no staff available for any part of the document handling process.
• Is not concerned with managing per-invoice costs or accepting turnaround times that can extend over several days.

On the other hand, in-house automation software is the definitive choice if you:

• Want to maintain complete control over your financial data and ensure its security.
• Need fast, on-demand processing for digital invoices, such as PDFs and images.
• Require a predictable, cost-effective solution that can scale with your business's fluctuating needs.

For most modern businesses, the software approach provides clear and significant advantages. You gain superior speed, processing documents in minutes instead of days. You have greater control over your data and workflows, which delivers enhanced security. This ultimately results in a lower overall cost and a more flexible, scalable process.

A purpose-built tool like Invoice Data Extraction is the ideal example of this modern approach. It provides all the benefits of powerful automation, and you can start for free, which eliminates any risk in trying it out for your business. The decision comes down to whether you want to simply delegate a manual task or empower your business with a tool built for efficiency and growth.