Document automation democratizes information access, enabling diverse teams to communicate and collaborate more efficiently.

People are clearly hungry for these efficiency gains — a study commissioned by Salesforce found that over 90% of companies reported an increase in the demand for automation over the course of two years.

When executed correctly, automation works hand-in-glove to fuel growth trajectories for businesses.

So, how can you best automate document processing and achieve the highest ROI?

Keep reading to learn how intelligent document processing automation works, how to measure costs and benefits with respect to ROI, challenges to keep in mind, and potential use cases.

Key takeaways

  • Automated document processing (ADP) leverages AI, machine learning, and robotic process automation to make working with documents faster and smarter.
  • Cloud technologies empower ADP platforms by enabling scalability, cost savings, and a collaborative approach to document management.
  • Adopting ADP solutions can significantly boost workflow productivity, maintain data integrity, and free up time for employees to focus on other tasks.
  • The core challenges with ADP are data privacy concerns, software limitations, and implementation barriers — which professional ADP solutions can help resolve.

What is automated document processing?

Automated document processing, or ADP, is the use of AI, machine learning (ML), and robotic process automation to automatically capture and/or extract data from documents or forms with minimal manual input.

How does this apply to you? Well, let’s cover the basics.

Blending human ingenuity with robotic precision, ADP revolutionizes the management of business documents through generative AI, ML, natural language processing, and robotic process automation.

This means that handling paperwork is faster and easier, as ADP teaches computers to “read” and understand documents the way a person might.

So, instead of someone manually typing info from PDFs, emails, or forms into a system, ADP uses software to find important pieces of data (think names, dates, numbers, answers, etc.) and organize them automatically.

This synergy enables informed decision-making and precise execution, simplifying workflows by automating emails, contracts, and reports.

The benefits? Fewer errors, less repetitive work, and more time back to your team.

Background of automatic document processing

ADP’s roots trace back to the 1960s and 1970s with word processors, personal computers, and key innovations like Jacob Rabinow’s 1965 optical character recognition (OCR) machine and IBM’s 1966 scanner.

In the 1990s, advances in machine learning and hardware improved document processing accuracy. By 2012, deep learning algorithms based on convolutional neural networks had revolutionized OCR, significantly improving automated document recognition.

The cloud plays a big part as well. The late 2000s and early 2010s saw cloud-based OCR services from Microsoft Azure, Google Cloud, and AWS.

Cloud computing also enables real-time collaboration, remote access, scalable storage, and cost savings, further enhancing ADP capabilities.

Today, the intelligent document processing market is projected to grow at a 30.1% CAGR from 2023 to 20305, driven by ADP’s efficiency in reducing manual, error-prone tasks.

Research by Gartner suggests that 50% of all B2B invoices globally will be handled via intelligent automation by 2025 — without manual input at all.

Automated document processing vs. intelligent document processing

A similar term, intelligent document processing (IDP), can be (and often is) used interchangeably with automated document processing, like in the above paragraph.

Automated document processing speeds up repetitive, rule-based tasks to extract data from structured documents and move it into your systems with minimal effort.

Intelligent document processing goes a little further. It uses AI to handle complex or unstructured documents like contracts, emails, or handwritten forms. It can understand context, classify dynamically, and make decisions that normally need human judgment.

So, strictly speaking, ADP may be considered more applicable for basic task automation, whereas IDP leans toward more complex leveraging of AI/ML to handle both structured and unstructured data for business processes.

However, the rise of artificial intelligence across all end-to-end applications for automatic document recognition blends these terms even further, and we will refer to both as equals for this article.

How automated document processing works

ADP is a systematic approach to managing and processing documents that can be broken down into six core steps:

1. Collection

Automated processing tools gather all relevant documents.

Data capture can involve scanning physical documents, gathering data from unstructured documents, and collecting digital information from various sources.

2. Preprocessing

Before the tool starts to process data, documents first undergo preprocessing to enhance their quality, which can include noise reduction, skew correction, and binarization.

3. Classification

Classification ensures all types of documents get categorized based on content or format.

For example, monthly invoices tied to vendor contracts with financial services companies or cloud providers are separated from payroll or timesheets connected to employee contracts.

4. Data extraction

Document processing software then extracts structured, semi-structured, and unstructured data from the documents now categorized accordingly.

5. Validation

The extracted data then goes through verification and validation to ensure the highest possible accuracy.

The system can do that by using predefined rules or cross-referencing with other data sources.

6. Integration

Finally, the validated data gets integrated into the database, and users can access it for analysis.

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Key benefits of automated document processing

Automated document processing is really useful when you want handling paperwork to be faster, easier, and more accurate.

Here are some of the top benefits of ADP:

1. Save time

ADP does the repetitive tasks for you, including data entry, so your team gets more time back for high-value work.

2. Reduce errors

Humans can make mistakes, so manual data entry tends to be more error-prone. ADP captures information from docs accurately and consistently, plus the use of AI and validation rules means everything is double-checked.

3. Lower costs

If you’re spending less time on manual work, you’ll naturally have lower labor costs (because machines are working for you). Plus, fewer mistakes mean you won’t spend money on extra expenses due to errors, misfiled documents, or delayed processing.

4. Make faster decisions

Your team gets access to information faster because data is automatically extracted and organized. This means faster insights and quicker business decisions.

5. Scale easily

ADP is capable of handling a high volume of docs without needing extra staff, so you can grow your operations without spending more on headcount.

6. Stay compliant

Automated systems keep clear digital records of document processing, which allows you to meet regulatory requirements and make audits simpler.

7. Improve customer experience

Customers get responses and approvals faster when their docs are processed quickly and accurately. This keeps them happy and confident in your service!

How to measure the ROI of automated document processing

When you need to quantify the financial returns from your investment relative to its cost, you implement a return on investment formula.

ROI = (Total revenue − Total costs)​ / Total costs x 100%

If your business already uses or plans on adopting ADP solutions, you can measure their effectiveness in terms of monetary benefits.

A positive ROI indicates profitability, while a negative ROI suggests the need for adjustments in the solution or its usage.

Measuring costs

When looking at the total costs, you should factor in these key expenses:

  • Software licensing or subscription fees are your upfront cost for the software solution.
  • Hardware and infrastructure expenditures, including servers and storage, can be substantial.
  • Solution implementation and integration costs involve setting up the solution, integrating it with your existing systems, and making it functional.
  • Training and change management that your team will require come with a price, but they are necessary to help your team make a smooth transition from legacy systems.

Key challenges in ADP addressed by professional document management solutions

Although automated document processing brings higher operational efficiency and ease to businesses, it can also present possible challenges and barriers to efficient implementation.

These potential roadblocks can often be neutralized with a dedicated tool for document management.

Data privacy concerns

Professional document management software employs the latest encryption methods and aligns with global security standards.

This provides you with a security framework that is compliant with E-SIGN, UETA and HIPAA regulations. Backed by SOC 2 certification, you can store, eSign and share documents with total confidence.

Software limitations

The diverse nature of business operations means document types and formats can vary widely.

Flexibility is at the core of a professional solution, and ever-changing business needs demand an automated document processing solution capable of responding to these complexities.

Tools with customizable templates and rich integration options easily expand the solution’s functionality per request. Consider the following integration capabilities:

Cost concerns

With the large variety of pricing options, some ADP tools make it hard for businesses to scale without huge investments.

This is common with flat pricing structures, where you have to pay for features you may not even need (at least in the near future).

That’s why it’s best to seek a solution with either scalable pricing (per seat or per document) or a pay-as-you-go model.

This way, you get a plan more tailored to the features you need now, leaving space for scalability down the road.

Implementation barriers

Getting rid of manual document processing may feel like you are moving in the right direction until you face issues with proper implementation and staff training.

And even with tools that have little to no learning curve, you still need to adjust to a new tool without completely ruining your existing processes.

A smooth transition from outdated to automated processes ideally involves:

Use cases and real-life examples of ADP

Here are some real-world case studies that will clearly show you why ADP is a bridge connecting piles of scattered documents into a cohesive structure.

Tax season transformed

The annual tax season often overwhelms businesses, making them juggle tax forms, receipts, and supporting documents.

A small business owner has to sift through a year’s worth of documents, including tax forms like their W2s and 1099s and various receipts.

In the past, this would mean hours, if not days, of manual sorting, data entry, and cross-referencing with previous tax records.

For HPC, a US accounting, tax, and advisory firm that has embraced ADP, the company has increased close rates by 20% using automation technology.

AI-powered intelligent document processing helps instantly categorize all the documents, extract relevant data, and compare them with previous years’ filings.

As the user uploads documents, the system immediately flags discrepancies between a vendor invoice and a corresponding bank transaction.

An IDP solution can also summarize the view of the user’s financials and offer insights based on the tax bracket and industry norms.

Clinics and medical providers moving beyond traditional paperwork

In the healthcare sector, the daily challenges of processing documents range from patient records and lab results to insurance claims and billing details.

Physicians and providers often handle numerous patient charts, diagnostic reports, and referrals.

Manually processing these documents is tedious and error-prone.

With an ADP or IDP system, physicians can quickly access patient histories and identify critical values from lab results, potentially preventing medical complications.

An ADP system can also streamline administrative tasks across the medical facility. For example, a leading US provider of in-home care, The Key, reports saving 3,000 hours annually due to automated forms processing.

They can now avoid downtime and have easy-to-sign contracts and agreements for their patients.

Optimizing inventory and order management

With the countless components, raw materials, and finished products to track, and a myriad of customer orders, manual handling of vast data can result in costly errors.

Knowing that, Rakuten Super Logistics turned to PandaDoc and, as a result, streamlined document workflows and elevated the customer experience.

By adopting an automated system, the manufacturing facility can scan, categorize, and process documents related to inventory and orders.

The system updates inventory upon receiving raw materials and flags potential shortages when customer orders come in, enabling proactive management and efficient fulfillment.

Likewise, document workflows across other departments have been transformed.

The sales team can now quickly create and send professional proposals, even during calls, reducing sales cycle times and boosting close rates.

The customer experience has improved with easy eSigning, replacing the old print-and-scan process.

This not only saves time but also positions Rakuten Super Logistics as a modern and efficient partner in e-commerce fulfillment.

Minimizing the costs of education

The educational sector is primarily focused on imparting knowledge. However, it also manages student enrollment, academic records, financial aid, and the admin needs of faculty.

If administrative tasks are inefficient, it can hinder the education process. This could cause educational institutions to stray from their core mission.

For example, the founders of the educational program Digital Remit provide workshops and education to business owners around Oxford, London.

Previously, they had their participants spend an hour of each workshop filling out actual (paper-based) paperwork before introducing a document automation system.

Now, with that one change in place, they cut document creation time by 90% and freed up 30% of their teachers’ time.

Furthermore, the IDP system can help with financial tasks. It can automate the collection of fees, the payment of scholarships, and the processing of grant applications.

By minimizing manual work, this institution saves on administrative expenses, and that can allow for spending more on research, facilities, and student services.

Effortless transition to automated processes

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ADP tools and software

When it comes time to choose the right automated document processing tool, you want to make sure it gives you the most value from your workflows.

Here are some features to look for when evaluating software options:

Security

Because documents often contain sensitive data, strong security measures are essential. That means encryption, access controls, and audit logs, to start. Check out PandaDoc’s security page to learn more.

Scalability

Whatever ADP solution you go with needs to be able to handle growing volumes of documents as your business grows – without slowing down or needing manual intervention.

Integrations

The tools you use should connect seamlessly with your existing system. That means your CRMs, ERPs, cloud storage, workflow platforms, etc. Having a smooth integration will save you time in the long run while reducing errors.

eSignatures

There are ADP tools that include eSignature capabilities, like PandaDoc, which allows docs to be signed and processed within one system. This makes approvals faster while reducing back-and-forth.

Analytics and reporting

Choose a tool that has built-in analytics so you can have insight into processing efficiency, error rates, and bottlenecks. That will help you optimize your workflows and measure ROI.

Embrace the power of ADP for your business

Automated document processing stands as a beacon of efficiency, turning routine document tasks into insightful, data-driven actions.

With proper intelligent document processing operating in your business’s backyard, your team can focus on human-centered and mission-critical tasks.

Once you’ve committed to implementing automated document processing, choose a software that grasps the complexities of ADP and ensures a smooth integration process.Schedule a free demo to learn more about PandaDoc solutions for automated document processing.

FAQ

Intelligent document processing (IDP) and robotic process automation (RPA) are both automation technologies, but serving different purposes. IDP uses AI to understand and extract data from complex or unstructured documents. RPA automates repetitive tasks and workflows in software systems. The two techs are often used together, with IDP extracting data and RPA moving it into other systems automatically.

Here are three phases of document automation:

  1. Capture: Collecting and digitizing documents from various sources.
  2. Processing: Extracting, classifying, and validating the data.

Integration: Sending the validated data into business systems for use in workflows, reporting, or analytics.

ADP automates data entry and extraction, which means there’s less room for human error. With built-in validation rules, AI checks, and cross-referencing with data sources to make sure the info captured is correct and consistent, your team will have cleaner, more reliable data.