Have you ever wondered what if all your crucial business data gets lost and never recovered? It is a rational fear- unfortunately, 94% of companies suffering from catastrophic data loss do not survive; 43% never reopen and 51% close within two years. 7 out of 10 small firms that experience a major data loss go out of business within a year.
As a business professional, you must have some point, struggle to maintain track of critical information while drowning in a sea of paper files and folders.
Or wasting time looking for misplaced documents or correcting errors that are caused by negligence
And still manually handling your business documents, which is time-consuming and error-prone
And now it’s time to ask: Is there a better way?
Traditional document handling is not only time-consuming, but it can also be prone to errors, leading to costly mistakes and delays.
This is where AI-based document-handling solutions come into play. By automating these processes, businesses can save time and money, reduce errors, and improve overall efficiency. Both of these processes come with their own pros and cons. So, which approach should you pick?
Let’s weigh out both traditional and AI-based document-handling methods and understand which one is meant for your business.
Pros of Traditional Document Handling
Tangible Record:
Conventional document handling involves actual documents that may be handled and felt. This can add a sense of security and validity to digital records that digital documents may lack. Signed contracts or physical receipts, for example, might give a concrete record of transactions.
Easy Accessibility:
Traditional documents are easily accessible without the use of technology gadgets or software. This can be handy when technology is unavailable or when access to documents needs to be shared quickly.
Reduced reliance on technology:
Conventional document handling does not necessitate the use of complicated software or technology. This can be advantageous in situations where technology is untrustworthy or in businesses where data security is an issue.
Historical Record:
Traditional documents can serve as a historical record of an organization’s operations. Old employment records or financial accounts, for example, can provide insight into former corporate practices.
Cons of Traditional Document Handling
Prone to Damage:
Physical papers are susceptible to damage from a variety of sources, including fire, water, and pests. This can lead to the loss of critical information and be costly for organizations.
Space Requirements:
physical documents take up real space and necessitate storage facilities, which can be expensive for businesses. Furthermore, physical storage might pose a security concern because unauthorized access can result in the loss or theft of critical records
Limited Accessibility:
Physical documents can be difficult to access remotely or by multiple parties simultaneously. This can be a challenge for organizations with multiple locations or for documents that need to be accessed quickly.
Time-Consuming:
Manual filing, arranging, and retrieval of papers is time-consuming in traditional document handling. This might be difficult for firms with vast amounts of records or documents that must be accessed often.
Pros of AI-Based Document Handling
AI-based document handling promises to streamline the document management process and improve efficiency. But is it all sunshine and rainbows? Let’s take a closer look at the pros and cons of AI-based document handling.
Improved Productivity:
AI algorithms can organize, analyze, and manage documents at light speed. With their assistance, you can automate mundane and monotonous tasks, which will give you the bandwidth to focus on priority tasks.
Increased Accuracy:
Even the most basic AI-based extraction techniques require 40% fewer hours to process routine paperwork. The precision of AI algorithms is thus unrivaled. They have extraordinary precision in detecting and correcting problems such as typos and missing information.
Cost Savings:
According to a McKinsey Company analysis, AI-based document management can reduce processing costs by up to 50%. AI-based document processing has the potential to save enterprises a significant amount of money. Organizations can reduce their reliance on manual labor and lower expenses by automating the document management process.
Improved Security:
An IBM study shows that AI-powered security systems can cut the average time it takes to notice a security breach from 146 days (about 5 months) to only 7.5 days. This fast detection can lead to rapid resolution, which can save a ton of data from breaches.
By detecting illegal access and questionable activities, AI-based document processing can improve document security.
Cons of AI-Assisted Document Processing
Limited Contextual Knowledge:
AI algorithms lack contextual knowledge, which means they may not always understand the meaning behind particular words or phrases. This can be problematic in industries where contextual awareness is crucial, such as healthcare or law.
Heavy reliance on Training Data:
To improve, AI systems require a huge amount of training data. This can be difficult for firms without access to massive datasets. Furthermore, the algorithms’ accuracy is determined by the quality of the training data.
Exposure to Hacking:
AI-based document management, like any other technology, is subject to hacking. Hackers can get unauthorized access to documents by exploiting loopholes in the algorithms. Notably, global cyber-attacks increased by 38% in 2022, compared to 2021, therefore it’s crucial to opt for a software solution that provides an ample safety net for your precious data.
Absence of Human Touch:
While AI algorithms can improve efficiency and accuracy, they frequently lack the human touch required in industries such as healthcare or law. For example, they may not always understand the context in which certain information is delivered, resulting in the omission of critical information.
Traditional Document Handling VS AI Based Document handling
Let’s take a closer look at some of the key differences between traditional and AI-based document handling:
Data entry
Traditional document handling often involves manual data entry, with staff typing in information from invoices and other documents into systems. This can be time-consuming and prone to errors, causing it to be unsuitable for a longer duration of time and a large volume of data.
AI-based document handling solutions, on the other hand, can automatically extract data from these documents, eliminating the need for manual entry and reducing errors. This creates a productive system of document management without counting on human availability and errors.
Document sorting
Sorting and categorizing or processing invoice documents without AI technology can be a major headache. Traditional document handling often involves manually sifting through documents to find what you need.
AI-based systems can quickly and accurately sort documents based on criteria like date, vendor, or document type, making it easier to find the information you need. Up to 60% of invoice processing costs can be reduced when dealing with large volumes of data and documents.
Scalability
As businesses grow, it can become increasingly difficult to keep up with the volume of documents. Traditional document handling can be limited by the number of staff available to handle the paperwork.
AI-based solutions, on the other hand, can easily scale up to handle larger volumes of documents without requiring additional staff. This reduces the dependency on manpower which can help with the flexible expansion of the organization.
Accuracy
Manual data entry and document handling can be prone to errors, which can lead to delays and mistakes. Since its time consuming a lot of dependency on the personnel for the work, it is almost impossible to eliminate the factor of errors.
Using AI for document processing can render up to a 90% average accuracy rate. This can greatly reduce the likelihood of errors by automating these processes and ensuring accuracy.
When there are no errors in the system, data retrieving, and collection become effortless.
Processing time
With traditional document handling, it can take hours or even days to process a large volume of documents. It becomes humanly impossible to process the data manually causing delay and inefficiency.
AI-based solutions can handle this process in a fraction of the time, freeing up staff to focus on other tasks. A study by Aberdeen Group found that organizations using AI-based document-handling solutions experienced a 50% reduction in invoice processing times
Cost Comparison
Traditional document compiling and maintenance work can be costly as it requires personnel to carry out this task. These tasks can be monotonous and boring for any individual engaged in them. Although they are clerical in nature, they can still cost you a lot of money when compounded.
While AI-based document handling solutions can be costly to deploy, they can ultimately save businesses money in the long run by reducing the need for manual labor and improving overall efficiency. The right software can render you more ROI than any manual work could ever have in the long run.
A study by M-Files surveyed 400 professionals in various industries and found that organizations that implement AI-based document management solutions achieve an ROI of up to 300% within the first year.
Accessibility
Traditional document handling often involves physical documents that can be difficult to access remotely or share with others. Fetching the right paper when required can be big of a task whenever there is an urgent requirement, thus making it an inefficient system of functioning.
With AI-based solutions, documents can be easily stored and accessed in the cloud, making it easier to share and collaborate with others. It also prevents the receipts from getting lost or destroyed by any external entity, thus saving the business some valuable resources.
How to Implement an AI-Based Document Processing System in Your Business
Step 1: Identify your document processing needs.
The first step in implementing an AI-based document processing system is to identify your specific document processing needs. Do you have bills, purchase orders, contracts, or client feedback to process?
Do you require specific information extracted from these documents, such as names, addresses, or product details?
Once you’ve determined your requirements, you can start looking for AI tools and solutions to help you automate these operations.
Step 2: Choose an AI tool or solution
There are numerous AI technologies and solutions available on the market that can help you in automating your document processing. OCR (optical character recognition) software, natural language processing (NLP) software and document classification software are all popular options. OCR software extracts text from scanned documents, whereas NLP software extracts meaning from unstructured data. Document categorization software can assist you in categorizing documents according to their content.
While selecting an AI tool or solution, consider aspects such as usability, scalability, and cost. You should also decide whether you want to employ a pre-built solution or create your own from scratch.
Step 3: Train your AI tool or solution
After selecting an AI tool or solution, you must train it to recognize and process your specific documents. This usually entails feeding the tool or solution a large number of example documents so that it may learn to spot patterns and reliably extract information.
Training an AI tool or solution might take time and a certain level of competence. If you lack the required experience in-house, you must opt for a software service that offers to assist you in training your AI tool or solution.
Step 4: Integrate your AI tool or solution into your workflow.
Once your AI tool or solution has been trained and is ready to use, you must incorporate it into your workflow. Setting up APIs (application programming interfaces) to allow your AI tool or solution to communicate with other software programs you use, such as your document management system or accounting software, may be necessary.
Integrating an AI tool or solution into your workflow can be significant and may require the help of your software service provider or an IT professional. Nonetheless, the advantages of automation can be substantial, such as shorter processing times, fewer errors, and lower costs.
Step 5: Monitor and refine your AI-based document processing system.
Building an AI-powered document processing system is a multi-step procedure. To guarantee that your system is running successfully and efficiently, you must constantly monitor and adjust it. As your document processing needs grow, you may need to tweak your training data, adjust your algorithms, or add new features.
Following these steps will ensure a successful implementation that matches your individual demands and produces the desired results.
Make the Switch to AI-Based Document Handling
Artificial intelligence is a tool to help you. It can do things you can’t do; it can do things you don’t have time to do, and it will save you money.
AI-powered document handling is the future of information management. It is easily the best approach to streamline your document management procedures because it is simple to deploy and does not require any additional equipment or heavy instruments, making it a more cost-effective solution than traditional systems.
Businesses must select the best software that is suited to their needs and can serve as an all-around helper.
