Document Automation - A Comprehensive Guide
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Documents have been an integral part of businesses for centuries now.
There are over 4 trillion paper documents in the U.S. alone and they are growing at a rate of 22% per year! (PWC)
As organizations expand and business processes become more complex, business documentation needs have multiplied manifold and turned out to be increasingly challenging. Documents need to be properly classified, segregated, and stored in order to use them efficiently otherwise, it might pose issues for employees.
Companies spend $20 in labor to file a document, $120 in labor to find a misfiled document and $220 in labor to reproduce a lost document.
What is the solution to this problem?
Advanced technologies have made document automation possible, easing tedious and cumbersome manual documentation processes and impacting the way businesses manage documentation.
Let's read more about document automation and its benefits to enterprises in today's scenario.
What is Document Automation?
Document automation commonly referred to as document assembly involves the use of systems and software technologies to produce electronic documents with minimal human dependency.
Or simply, document automation is using software to create automated workflows for the entire end-to-end document management workflow which includes scanning, data extraction, data capture, data storage, conversion from unstructured to structured data, and document classification.
Data and text extracted from different sources are used as inputs for creating new documents. Rules are defined in the form of predesigned templates that can act as a guide to creating a final document.
Document automation can be:
Processing of documents
Coined as document process automation, it entails the identification, extraction, and validation of relevant information from various types of documents and transforming it into enriched data for the end-user. Document processing takes care of every step in the document lifecycle.
Generation of documents
This involves taking existing or extracted information and using them as inputs to create documents that may be invoices, contracts, business letters, proposals, and more.
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What is the importance of Document Automation?
Enterprises have a lot of documents that need to be taken care of which, if managed inefficiently, can cost a lot of money.
Businesses waste an average of $20,000 on document issues. (Nitro, 2020)
With document automation, document processing becomes smoother and hassle-free. Take a look at why enterprises need document automation and what are the benefits of using document automation:
Minimize Repetitive Document tasks
69% of the employees say that automation reduces the wastage of time and 59% believe that they would have more than 6 spare hours per week if repetitive jobs were automated
Document automation minimizes repetitive tasks that reduce the time and effort of employees. Document scanning, extraction of data, classification, document indexing, and storage of document data is important for any enterprise to function effectively. Document automation does all this and more.
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Streamline document processes
88% of office workers cited the need for a dependable, unified search platform that would help them do their jobs better. (M-Files, 2019)
It can eliminate inconsistencies and streamline document processing by using custom templates to reduce time spent on documentation. This helps the organization to establish a documentation process that every employee can just follow to make their time and effort productive.
Save time & FTE Effort
65% of staff experience challenges when checking and approving office documents. 83% of employees must recreate existing documents since they can’t find them in their company network. (M-Files, 2019)
Document automation is crucial to save time and manpower, reduce physical file maintenance, and lower the risk of document unavailability and inaccuracy. This can not only save time but a lot of money for enterprises.
Organizations lose 20 to 30% of revenue every year due to inefficient processes. (Forbes)
Besides this, it also enables smooth workflow between departments and enhances overall organization to manage business processes efficiently.
What is Document Automation Software?
Document automation software is a tool that uses advanced technologies to help businesses achieve the automation of documents with ease.
Its capacity to integrate with other technologies such as Optical Character Recognition (OCR), Natural Language Processing (NLP), Machine Learning (ML), etc., and its ability to work with Document Management Systems (DMS) and other software, makes it an ideal fit for many organizations.
Depending on the types of documents that organizations work with, the automation requirements too may vary greatly. While some small businesses require simple software to deal with documents such as contracts, letters, or proposals, other businesses such as law firms or finance companies may need automation solutions that deal with a wide variety of documents, from simple ones to complex documents that may involve clauses or calculations.
They can also ‘assemble’ associated documents as a single one for increased value. An example is including an insurance policy with loans or referenced documents, exhibits, etc. in legal contracts.
Though document automation software may be designed with a range of functionalities to suit any organization, all of them exercise the use of templates to facilitate the creation and generation of documents. The templates can contain static and dynamic data that allows appropriate changes to the content to make documents purposeful.
Document automation software helps to:
- Make templates that can be reused, duplicated, and edited as per organization requirements
- Assemble different documents that have data populated automatically from relevant sources
- Streamline automated workflows with an easier document process optimization
- Adhere to compliance norms where required and lower violations risks
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How does Document Automation work?
Predefined templates are at the core of document automation. Data inputs including text that is populated from different sources are inserted into sections of these templates to create new documents. Templates can contain a host of elements that include text chunks, tables, numbers, logos, or other images.
Document automation can differ in the processing and generation of documents.
There are mainly 3 steps in automated document processing. They are:
Step 1: Data Extraction from Documents
The first step to getting relevant data is to extract necessary information from documents that may be structured, semi-structured, or unstructured. Data extraction is based on what kind of documents you have.
- Structured documents - Obtaining required information from structured documents such as excel sheets, surveys, or questionnaires is pretty straightforward as most information is organized. Automation software with the help of OCR API (optical character recognition) capabilities can extract correct information even if documents are present as images and populated them for use.
- Semi-structured documents - Documents such as invoices or purchase orders do not have set data fields and hence extraction becomes slightly difficult. Document automation software, in such cases, uses a combination of OCR and DL (deep learning) to gather and organize it into structured data.
- Unstructured documents - With very few structured data fields, extraction of data from documents such as contracts, memos, letters, etc., can be increasingly complex. Still, OCR and DL can be used to obtain required data, with an increased focus on important aspects that add value to the documentation process.
For Data extraction, documents can be loaded into any intelligent document processing software like Nanonets, Power Automate, or more. This software is proficient at document understanding and they scan the document thoroughly. After scanning the document, you can select the data that you want and discard the rest of the data.
Step 2: Document Validation
The following step to extraction is checking the accuracy and quality of the sourced data based on business rules, internal policies, and standards of external data. Document verification is crucial and can be done by multiple methods :
- With business rules - Checking if there is no duplication of data, as is common with invoices, and whether the data acquired is in sync with business requirements
- With internal policies - An organization can have set policies while validating data. This includes verifying whether the data extracted conforms to the company’s guidelines to obtain and input information in appropriate fields such as date, amount, etc.
- With standards of external data - Most documents have standard guidelines that need to be followed while making them and these too become an important part of the validation process. For example, invoices may differ but have common fields such as invoice date, invoice number, receiver, and sender addresses, supply date, description of goods, and the total amount.
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Step 3: Data Enrichment
Data enrichment refers to the process of adding value to the internal information to make the existing data more complete. This is mostly accomplished using external data sources. This can be done by:
- Adding attributes with metadata to make documentation complete.
- Supplementing information for a more complete picture. Example: providing full postal or zip codes
Automated Document Generation
Intelligent automation tools can help organizations to get required data and change them into necessary document types. The total process can be made smooth, effortless, and error-free to generate a higher number of documents in a lesser turnaround time.
The document generation process is as detailed below:
Getting input data to merge with templates
Automation tools first pull in required information from appropriate databases or systems. Example data such as names, numbers, addresses, etc.
Choosing desired output format
Select the documents where automation will be required and effective. These documents may comprise legal contracts, invoices, work orders, and customer communications, and may involve more than one type of document, with specific templates for each of them.
Convert data to a specific format
Once the input data is ready and the document for automated generation is chosen, the selected information is then ready for placement in predesigned templates. This can involve the transformation of data from one type to another. Example from image to text.
Check content for inconsistencies or modifications
Before generating the final output, document automation systems check for anomalies or adjustments in required content. An example may be a field’s characters that exceed set limits. The software can detect such inconsistencies and make necessary adjustments before the final document is ready.
Once the document is all set and ready, the software proceeds to generate the complete document in the desired format and stores it in folders, document management systems (DMS), Enterprise Information Systems (EIM), Electronic data interchange, etc., for future use.
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Who Needs Document Automation?
Document automation is very essential for users who need to frequently create or generate documents for various purposes. Industries that deal with complex, interdependent, and document-intensive workflows can stand to benefit from document automation. Document automation can be used in the following industries and more:
- Financial Services
- Account Payable
- Business Process Outsourcing
- Government and Public Services
Irrespective of the industry, document automation solutions aim to reduce the workload and administration and logistics activities of an organization. This helps to create and share documents that are highly accurate, consistent, and compliant, and are constantly required to make business workflows smooth and effective.
Document automation is required where productivity is of primary importance. When employees are free of ‘waiting times’ it enables them to be more productive. Any user with access permissions can create and, generate required documents since they are digitized and or used the stored ones from centralized databases to complete tasks quickly.
While small companies that require very few documents may not benefit from using a sophisticated document automation system, big organizations with multiple departments using numerous documents can directly benefit from using suitable and customizable document automation software.
What are the benefits of Document Automation?
Document automation solutions are a means to resolve issues faced with document processing and document generation. With the increasing number of business transactions, many organizations stand to benefit from leveraging document automation software capabilities to make document creation a breeze. The most important benefits are detailed below:
Faster creation of documents
Nanonets customers save 90% of their time on document processes.
The major benefit of automation is that it eases the arduous tasks of creating documents every single time from scratch. Document automation helps speed up the creation/ generation of documents, saving valuable time for employees.
Ease of use
Efficient workflow automation can help eliminate endless waiting times for experts to come and create the necessary documents. Users can make use of document automation software capabilities to create or generate required documents with high accuracy in a jiffy.
Lower incidence of errors
Manual creation of documents can involve copy-pasting or newer ones may have inconsistencies that require repeated correction and exhaustive human effort causing unnecessary delays in workflows.
Advanced document automation can help eliminate or significantly reduce these kinds of errors with guaranteed accuracy. The use of predefined templates and AI-based technologies that use data capture, help to get the required information with ease and send alerts to relevant personnel in case of missing data.
Maintain standard and consistency
Documents that are created manually may not be consistent in their format every time. For example, a sales proposal created by two individuals may invariably differ in their styles. This can be confusing for the parties receiving it and difficult to track for the company.
With intelligent document automation, the templates provide the structure and only some input data may need to be changed. This ensures that any type of document, regardless of how many individuals deal with it, is always accurate and consistent.
Savings on cost
Document automation can result in a 40% document-related cost reduction.
Reduced expenses are an assured benefit that organizations can experience from automating document creation/ generation. Apart from improving organizational control, automation can significantly reduce overall expenses such as printing of documents, creating storage cabinets for physical documents, etc.
Digitized documents that are created or generated can be stored in centralized locations with all required data, facilitating savings on time and cost for companies.
Something even as simple as e-signatures can have a massive impact on productivity
E-signatures provide up to 83% productivity enhancement in obtaining approvals and 86% savings in documentation expenses. (ESRA, 2017).
Document generation, especially of the same type, is a tiring and repetitive task that can drain employees of their valuable time. Since automation uses templates and pulls in data from other integrated systems with ease, it reduces the workload on employees.
By freeing precious time, it allows them to avoid such cumbersome, low-skill tasks, and to focus attention on more important or complex tasks with efficiency, leading to better job satisfaction and improved productivity levels.
Boosts privacy and security
Paper documents are usually stored in physical cabinets or files that are prone to damage. Security is a huge concern amongst companies dealing with customer data.
In the US, 68% of organizations were hit by a public cloud security incident; 75% of attacks exploited misconfigurations; 23% used stolen credentials. (Sophos, 2020)
Document automation systems have inbuilt digital storage spaces with appropriate access permissions to prevent the loss of documents and enhance data security.
Document automation solutions that have additional security controls help industries such as legal services or healthcare secure sensitive data against breaches and leaks. This helps organizations to conform to compliance, prevent violations, and maintain document security for all their documents in one place.
Improves business relationships and customer experiences
Any business thrives on good relationships be it internal, vendors, or customers. Manual creation of documents can take a toll on maintaining good relationships if they are prone to errors, delays, and inconsistencies.
Document automation eases all of the above. It facilitates the quick and easy creation/ generation of documents and makes them readily available in a centralized location. Closing sale processes, automated approvals, and signing digital contracts with e-signatures, are all possible with document automation.
Enabled access to online documents makes partnering with more vendors and reaching out to multiple customers easier and safe. The convenience of accessing the documents anywhere, anytime, enhances better relationships and contributes to personalized customer experiences.
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What are the challenges in implementing Document Automation?
Though document automation is highly beneficial there are certain challenges that many organizations can face in the digitization of the documenting processes. The common ones are detailed below:
Planning requirements and documentation processes
Often the starting point of the automation processes is the hardest. A lot of planning is essential to select the department or the business process that needs to be automated for it to be beneficial for the organization.
Planning includes the selection of processes, the time it will take to introduce/ train the personnel to use and adjust to document automation, and the cost that will have to be incurred to set it up. It also means choosing an automation solution that is flexible, comprehensive, customizable, and can be integrated with existing systems.
Another issue in planning is how many processes need to be automated. In a large organization, different departments might prefer different processes to be automated.
Though document automation solutions are capable of handling multiple processes, the time and effort required for that will be monumental. Besides if the automation is found unsuitable or inefficient, then the company will be burdened with additional expenses.
Understanding and accepting change
Bringing in changes to documentation processes via automation can be very difficult if the relevant departments or employees are opposed to it. Users who are new to documentation software may not understand how these solutions really work or may be reluctant towards the idea of automation.
To document automation achievable, leaders can take inputs from employees and first get them used to the idea of going in for automation. Two-way communication, involvement of top management/ heads, and explanation of their benefits are some of the ways to ensure overall understanding and acceptance to maintain smooth implementation of document automation.
Testing and Implementation
The reality between planning and implementing automation software can be vastly different. Timelines may differ, coordination between teams and external parties may be inconsistent, and any changes in planned processes can affect milestones for actual implementation,
The testing stage will help rule out gaps and make modifications where required for a smooth transition into document automation. Setting proper milestones to reach the go-live stage is essential to make the implementation of document automation solutions effective.
Maintenance and improvements
Automation software also involves improvements as the organization starts getting used to it. The addition of more processes means in-depth review, making refinements to existing automated processes, and extra costs that may have to be incurred to ramp up for more functionalities and maintain the effectiveness of the solution.
This kind of challenge is common and can involve initial struggles to streamline the solution but it may prove to be well worth it to achieve smoother document automation that can help with smoother workflow and increased productivity.
One of the major challenges in implementing automation of critical documents is to ensure that they are safe and secure. Manual documents are individually handled. Though they may be prone to human error, their security is usually not compromised. With automation, things can be entirely different.
Organizations that do not opt for a well-known document automation solution can risk losing documents or face compliance issues. Most industries such as healthcare, legal services, and financial services deal with sensitive data that cannot be compromised.
The challenge lies in choosing a system that has cloud-based integration which can thwart security issues, support safe sharing of critical documents, and ensure compliance.
Which documents are suitable for Document Automation?
Document automation can be suitable for a multitude of industries. Depending on their nature of work, automation needs may differ. Some of the common documents required frequently by many companies and are a perfect fit for document automation are:
- Sales quotes
- Agreements such as non-disclosure agreements (NDAs), service agreements, loan agreements
- Contracts such as vendor contracts, employment contracts
- Letters such as customer communication letters, offer letters invoices
- Different kinds of reports
Apart from the generalized documents, documents that can be automated can vary between industries. Here’s a list of a few documents, industry-wise, that can be automated for easier management.
- Employment agreements
- Company secretarial documents
- Share purchase agreement
- Regulatory agreements
- Wills and Trusts agreements
- Legal opinion letters
- Patient medical records
- Treatment plans
Human Resources (HR)
- Pay slips
- Employee offer letters
- Internal communication letters
- Employee handbook
- Bank statements
- Welcome letters
- Settlement letters
- Loan agreements
- Advance reminders
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How to choose a Document Automation Tool?
Document automation solutions are designed to streamline business processes by extracting data and using them to create documents, which can save valuable time and effort for that department. However, not all automation solutions are the same. Hence careful planning and proper research based on business needs can help in choosing the right software.
Intelligent automation solutions can vary extensively in their offerings. While one software may require technical expertise, another may not support all document types. Yet another may have too many capabilities that a business may never need.
With so many options in the market to choose from, selecting the right document automation solution can be daunting. Here are some pointers to keep in mind while choosing good software:
When choosing any document automation software, the first thing to check is how user-friendly it is. Users should be able to understand how it works and use it efficiently even if they are not technically strong. Any software that does not make work simple and in fact complicates it more would be a total failure.
Document automation software should enable easy creation of templates, use existing ones as they are, and facilitate easy navigation through its features for users without having to call in experts.
Integrations with existing business systems
Even the best document automation solution may be useless if they do not provide for good integration with existing systems that are used by a business.
A document automation system that facilitates easy integration can help capture accurate data from various sources to create or generate documents of value. Checking with the provider about a software’s capabilities to integrate and gather data from various sources can help organizations decide on the usefulness of an automation solution.
One of the modern features that can set apart automation software is its accessibility. Nowadays, many representatives of a business are on the move and they require solutions that can quickly create or generate documents to present to potential customers or stakeholders.
Imagine a sales manager who needs to create proposals to close a deal with an interested customer. Using a document automation solution that is compatible with mobile, tablets, or other devices makes it possible to whip up required documents and share them on the go.
Supporting different document formats
When choosing a document automation solution, it is best to verify if the software supports different kinds of document formats such as text files, image files, PDFs, password-protected documents, etc., that may be required in a business.
The selected system should also be able to support different document automation features namely bulk, interactive, and on-demand.
Interactive document automation is when the software auto-creates a form based on a template and then creates a document by pulling data from the form into the template. On-demand automation, as the name suggests, refers to a document created in response to a ‘user’s demand’ when required information is submitted.
Focus on security
Organizations need to be concerned about security when looking for a document automation solution. Business documents are unique and must be secured against data theft to avoid vulnerability and to protect business interests.
Document assembling and sharing should be possible without the worry of losing data. Password protection or end-to-end encryption are a few features that can ensure data security. While access permissions can work in favor of protecting data from misuse, they should not become a hindrance to maintaining smooth workflows.
Satisfactory customer support
As with any product, document automation users too will highly benefit from good customer support from the provider. Ratings by user reviews and support even while using trial versions can provide insight into the way a company responds and supports users.
Having more than one channel of communication including email, phone, online chat, etc. can be more effective when you have doubts or glitches that need to be resolved quickly to avoid disruption in business workflows.
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Nanonets - The best document automation software
Nanonets is an AI-based OCR software that along with ML capabilities can help in the automated extraction of structured and unstructured data from PDF documents, scanned files, images, and more. Compared to traditional OCR software, Nanonets is advantageous as there are no separate rules and templates for each document type.
The AI algorithm and OCR models that are used in Nanonets learn continuously with time, making the handling of semi-structured or even unseen document types, a breeze. These can be trained multiple times, can be customized to pull data to suit specific business needs, and are easy enough to execute without the need for an in-house team of developers.
Using Nanonets can bring in a host of benefits that includes savings on cost, ease of use, precision, and scalability. The most unique benefits that set Nanonets apart are:
- No coding required
- Works perfectly with custom data
- Continuously learning algorithms
- No post-processing is required
- Handles data constraints with ease
- Multi-language capabilities
- Customized outputs
Document automation can bring a multitude of benefits to businesses that rely on paperwork for their operations. It is an effective solution to eliminate inefficiencies, reduce manual workloads on employees, and enable a smooth transition of workflows. Document automation with AI-based tools can streamline the whole document creation process for optimized business efficiency and profitability.
What does it mean to automate a document?
The automation of a document refers to the extraction of meaningful information from unstructured and/or semi-structured documents by a digital tool. The information extracted thus from a document is an organized format that can be subsequently processed or archived for posterity.
Can you automate Word documents?
In a word - Yes! Documents may be in the form of word processor documents like MS word docs. Most enterprises require the data in the documents for subsequent processing. For example, companies may require the details present in a Word-based invoice for subsequent processing of orders online. The automation of documents involves uploading the document into software and extracting relevant information from them to store in a form suited for further processing.
How do I create an automation document?
The automation of a document involves the following steps:
- Conversion of the document from its hard-copy form to a digital version from which meaningful data can be extracted.
- Distinguishing the elements of the document to identify meaningful content
- Classification of the document through analysis of the content identified
- Extracting the relevant content from the document
- Subsequent processing of the data either through data analytics tools for archiving for posterity.
What is intelligent document automation?
When the digital tool that extracts meaningful data from a document uses AI features such as ML, the automation becomes "Intelligent Automation", the process itself being referred to as Intelligent Document Processing (IDP). It combines data extraction with file management and orchestration and involves not only the extraction of data, but also categorization, validation, and storing functions. These tools that comprise IDP may work independently or in synergy to extract unstructured data from various kinds of documents and convert them into structured, meaningful information.
Find what an AI-based document automation software can do for your business. Get a personalized demo to see how you can process your documents 10x faster and 4x cheaper.
12 September 2022: This blog was originally published in June 2022 and was updated in September 2022 with updated content.