Antiquated physical filing systems can get out of control quickly, especially for small and medium-sized businesses facing space limitations and a lack of time or support to keep up with the sheer volume of paperwork. Misplaced or lost documents can turn simple accounting tasks into all-day ordeals.
AI-powered document management systems (DMS) are equipped with advanced technologies to store documents digitally. Enlisting the help of cloud-based or virtual filing offers small business owners numerous benefits, including expanded storage capacity, enhanced document security, mobile accessibility, faster document locating, and the ability to automate workflows.
Let’s take a closer look at how this seemingly simple task works.
Document Digitization and Classification
To do away with cumbersome and complicated filing systems, the first step is getting rid of physical paper documents. An AI-based document management system integrated into accounting software allows for efficient document digitization and classification. Instead of manually entering data from stacks of invoices and receipts, physical documents become digitized by features like Optical Character Recognition (OCR) or by uploads, email transfers, or secure file transfers.
Once a document is digitized, the software employs various forms of artificial intelligence, including machine learning (ML) and natural language processing (NLP), to accurately classify its purpose—e.g., receipt, invoice, or bank statement.
Digitization and classification set the stage for documents to be automatically categorized, eliminating the time-consuming and error-prone process of manual data entry.
Data Extraction and Capture
The next step is extracting the data from the digitized document and making it useful. AI technology captures the data and stores it in logical, structured databases for simple future access. Of course, not all digitized data is formatted in the same way. Three forms of data – structured, unstructured, and semi-structured – are possible candidates. While structured data is easy for the software to use as-is, unstructured data often presents as disorganized information that needs to be defined before it can be used in a meaningful way. As the name implies, semi-structured data is a combination of the two.
While AI makes light work of capturing structured data-formatted documents, more advanced versions, like generative AI, are necessary to convert unstructured data into a usable format. This advanced capability enables the software to categorize and detect anomalies intelligently, even without past data to base it on.
To a business owner, an AI DMS’s ability to accurately extract and capture data minimizes both the time required and the potential for errors inherent in the manual data entry process.
Document Storage & Retrieval
Virtual document storage has eliminated overflowing filing cabinets filled with paper documents, but how do you use them? Firstly, in cloud-based storage systems, documents are easily accessible anytime and from anywhere. This is especially advantageous for smaller businesses that may not have the physical space for traditional storage methods or need to access data from multiple locations. Additionally, with the help of artificial intelligence, locating a specific invoice from months ago is as simple as typing a few keys.
Enhanced Document Security
AI DMS also assists businesses in safeguarding digital documents and shielding sensitive information against unauthorized access. Through AI-driven solutions, businesses can efficiently manage and regulate access to confidential files and data, guaranteeing that only authorized individuals possess the appropriate permissions.
Document Workflow Optimization
AI-based document management systems excel in automating routine tasks such as task assignment, notifications, and routing. For instance, in a scenario where multiple approvals are required for an expense, an AI-enabled DMS can automate the identification of document types and route them to the appropriate people based on predefined rules. The system also allows for automatic reminders, speeding up the approval process and providing real-time tracking. Implementing AI ensures a streamlined document workflow, significantly reducing manual efforts and expediting task completion while maintaining accuracy.
AI-powered document management has dramatically improved financial processes. With automated workflows and intelligent reminders, you can effortlessly stay on track with payables and receivables. In addition, invaluable insights resulting from optimized financial workflows allow for better financial decisions that are essential for your business’s ongoing success and stability.
How Docyt Fits In
Docyt offers sophisticated document management through Docyt AI, a combined power of Precision AI and Generative AI. Through this advanced technology, Docyt will digitize, classify, and categorize your invoices, receipts, and bank statements securely and seamlessly. The result? With SOC2 Type II compliance, Docyt provides secure data that informs automated workflows in expense management, revenue accounting, and real-time financial reporting. Ultimately, Docyt gives small and medium-sized business owners fast and accurate data along with peace of mind.
Bottom Line
AI-based document management systems are much more than a fancy feature in accounting automation software. For small and medium-sized businesses, it revolutionizes document management, streamlining tasks like scanning, storing, and overall financial processes. As a business owner, you now have a powerful tool at your fingertips that saves time, minimizes mistakes, and offers crucial insights into your financial standing. Embracing this technology isn’t just a move toward modernization; it’s a significant stride toward achieving a more efficient and perceptive financial future.
