What is Intelligent Document Processing (IDP)?

Businesses nowadays must deal with massive amounts of paperwork. We’re talking invoices, contracts, emails, handwritten forms — even your CEO’s hot pink post-its. You can be sure that someone is already spending hours sorting, processing, and managing those documents, too. Clearly, this is a very resource heavy job. One that slows down operations, introduces unnecessary human errors, and increases your costs.

Intelligent Document Processing (IDP) is an AI-powered solution that helps you eliminate those document issues. Since it uses Optical Character Recognition (OCR) to read your document’s text, Handwritten Text Recognition (HTR) to decipher handwritten notes, Natural Language Processing (NLP) to understand its context, and Machine Learning (ML) to improve accuracy over time, IDP can automate your entire document workflow, making it feel like magic.

Companies that have already implemented IDP have seen faster approvals, improved compliance, and a 32% reduction of operational costs. With IDP, your employees can focus on tasks that add direct value to your business, instead of chasing documents and manually inserting data day in and day out.

Want to jump straight in? Find what you need in the list below, or just keep scrolling.

• What is Intelligent Document Processing?
• The technology behind Intelligent Document Processing
• How does IDP work?
• How Intelligent Document Processing has changed over time
• Common misconceptions about IDP
• Why companies using IDP see immediate ROI
• Why IDP really is industry agnostic
• Challenges and solutions for IDP
• How to get started with Intelligent Document Processing

Intelligent Document Processing is a technology that helps businesses automatically capture, classify, and extract data from documents. Unlike the traditional, manual data entry (or the basic scanning of old), IDP doesn’t just convert an image into text — it understands what the document is about, and files it for you accordingly. 
 
Through AI-powered OCR and HTR, an IDP solution can read both printed and handwritten text. And with NLP, it can interpret the meaning of the words and phrases, too. Machine Learning then helps IDP get even smarter over time, increasing its accuracy as it processes more and more documents. Now, businesses can process their invoices, contracts, and forms with humans acting as pure quality assurance. 

Intelligent Document Processing combines several AI-driven technologies to automate document workflows, making processes faster, more accurate, and scalable. And unlike its aging counterparts; IDP “understands”, categorizes, and — when it’s ready — integrates the data into your business systems for you. 
 

The goal of Intelligent Document Processing (IDP) is to automate your document workflows by capturing, extracting, validating, and integrating your information with as little manual effort as possible. Here’s how it does that, in six quick steps.

Step 1: It’s capturing documents from several places.

The first thing any decent IDP solution does is gather your documents — from multiple sources. That’s everything from scanned paper documents to email attachments, PDFs, invoices, contracts, and even digital forms. IDP helps you make sure that no matter how a document enters the system — whether it’s from a multifunction printer, a mobile scanner, or an online portal — it’s always recognized and prepared for processing

Step 2: It’s improving document quality for accurate processing

When it comes to automation, accuracy is the north star. To get it right, IDP applies image enhancement techniques to scanned or low-quality documents. This effectively sharpens blurry text, corrects any skewed alignments, and removes visual noise. For the Optical Character Recognition (OCR), this is important because if the document’s nice and tidy, that also means that it can read the content better.

Step 3: It’s using AI to extract key information

When the document is clear and usable, IDP extracts the structured and unstructured data with a combination of OCR, Natural Language Processing (NLP), and Machine Learning (ML). The OCR turns printed text (or a handwritten one through HTR) into its digital ditto, and NLP moves in to understand the meaning of those words and phrases. Thanks to all of that, IDP can now recognize the invoice numbers, payment amounts, contract clauses, and even your customers’ names — all without needing any pre-set templates.

Step 4: It’s automatically categorizing and sorting documents

Once the data is extracted, IDP classifies your documents into predefined categories (invoices, purchase orders, HR forms, legal contracts — you decide what works best). Machine Learning helps IDP recognize different formats and improve their classification over time. So, instead of having your employees waste half a day manually sifting through files, IDP chaperones each document so that it makes its way to the right workflow or department.

Step 5: It’s validating data

Before finishing the document processing, IDP uses an automatic validation check. It looks at all the extracted data and compares it with existing records in your database and/or business system. That means that if an “invoice total” doesn’t match the corresponding purchase order, IDP flags it for review. This helps you reduce errors, prevent compliance risks, and improve your financial accuracy.

Step 6: It’s integrating the data with business systems

Once everything’s verified, the extracted information gets integrated with your business software. That’s your Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and/or Document Management System (DMS). This means that invoices can now be automatically approved, contracts can be safely stored, and employee records can be updated — without a single manual data entry.

We can probably all agree that a lot of things have changed these last few years. That’s also true for document processing, which has moved from being a heavily manual job, to become the AI-powered automation solution it is today, making workflows both faster and more accurate. 
 
In the past, employees had to enter data manually. They needed to read, sort, and type information into their business systems themselves, which generally meant slow processing, high costs, and a lot more errors than you’d want. 

⬇ 

More recently, automation through Optical Character Recognition (OCR) made text extraction from scanned documents possible. But it still needed proper templates to work as advertised, and struggled with variations and poor quality source documents.

⬇ 

Today, Intelligent Document Processing goes far beyond its old friend, traditional OCR, using Machine Learning (ML), Natural Language Processing (NLP), and contextual understanding to extract and process all types of data, in most formats. 
 

When you’re relying on manual document processing, you’re likely to see delays, human errors, and sometimes even big compliance risks. And as your employees spend their time searching for documents, entering data, and fixing mistakes — they’re slowing down your workflows and unavoidably increasing costs. Intelligent Document Processing (IDP) takes these inefficiencies away, making your operations smoother, more precise, and a lot more cost-effective.

Speed up document processing

Once you’ve started automating document workflows, you’ll see reduced turnaround times fast. IDP can process and classify documents quicker than your manual methods (30-50% faster, just compiling data, in fact). This makes approvals, payments, and customer requests move forward without delays — turning frowns upside down from start to finish.

Increase overall accuracy

Human data entry is likely to come with a few mistakes, which leads to disorganization. As a result, 47% of workers today struggle to find what they’re looking for, meaning potential compliance issues and expensive rework. IDP helps you avoid that by extracting (and validating) information with AI-level, best-in-class precision, removing potential errors and minimizing risk.

Save costs

The cost reduction tied to ending the reliance on manual data entry, and subsequent error corrections, means that IDP can dramatically lower operational costs — allowing businesses that choose to implement this spellbinding automation to see up to 32% in savings.

Ensure compliance

IDP doesn’t forget. It automatically keeps records, flags inconsistencies, and helps your documents meet regulatory requirements. For finance, healthcare, or legal compliance — whatever it may be — IDP provides secure, traceable document workflows. Always.

Increase productivity

Studies show that a staggering 47% of employees feel like their company is disorganized or even confusing. Instead of spending days and weeks on repetitive, low-value tasks (like trying to find the right document), employees with IDP can focus on higher-value work: serving your clients, making big decisions, and running strategic initiatives. With IDP handling the routine work, your teams can do more with less.

Dealing with huge volumes of documents isn’t an industry specific issue. We all work with documents such as invoices, contracts, patient records, shipping manifests, and tax forms (the list is long). Processing all of this manually is a slow, error-prone, expensive, and sometimes soul crushing task. Intelligent Document Processing rethinks these aging workflows, making them faster, more accurate, and more efficient. 
 
Let’s take online retailers, Connox, as an example. They deal with high volumes of supplier invoices, purchase orders, and inventory records. IDP helps them streamline processes by automating invoice handling, matching their purchase orders, and updating stock levels in real-time. 
 
With IDP, Connox automated their supplier invoices, cutting manual processing time by 70% and reducing errors in their inventory tracking. This allowed them to scale operations efficiently without increasing administrative workload. 

HVVG, a German healthcare provider, is another great IDP success story. They implemented DocuWare IDP in hopes of automating patient record processing, reducing administrative burdens, and improving the speed of medical data retrieval for doctors and staff. And guess what? It worked. 

The bigger story here is that, across teams and industries, IDP removes manual bottlenecks, improves accuracy, and accelerates decision-making. You could be working in the car industry, at a university, in manufacturing, or push legislation in government — it doesn’t matter. You’ll have to deal with documents. Whether it’s about reducing invoice errors in finance, speeding up shipments in logistics, or improving patient data access in healthcare; businesses that use IDP will gain an upper hand by freeing up valuable time and resources. 

IDP comes with many benefits, but implementing IDP can bring a few challenges along with it, too. Let’s discuss the most common ones, so you know how to best address them, should they one day pop up.

Challenge 1: Integrating IDP with legacy systems

A lot of businesses still rely on somewhat older software systems. Software that wasn't designed for AI automation. Clearly, connecting IDP to these platforms can seem daunting.

Solution: Modern IDP solutions offer an API-based integration that allows seamless data exchange between IDP and the existing ERP, CRM, and document management systems. This helps businesses upgrade to automation-forward solutions without the stress of needing a total infrastructure overhaul.

Challenge 2: Ensuring data accuracy

Having different document formats, low-quality scans, and outdated data in general can lead to errors in extracted information. This means that businesses need to trust that IDP is delivering accurate, validated data. Easier said than done.

Solution: Today’s IDP tools are built with AI. That means that they’re continuously learning from past corrections; applying advanced image enhancement, contextual analysis, and real-time validation to improve accuracy over time. Unlike us humans, they’ll only make a mistake once. Still, a lot of solutions still benefit from using human verification to add an extra layer of quality guarantee (ours included), allowing staff to fine-tune data processing rules when needed.

Challenge 3: Getting full user adoption

Change can be scary. Employees might be hesitant to rely on automation, especially if they’re used to the manual workflows. You need to remember that resistance to change can slow down adoption and limit the impact of IDP, at least initially.

Solution: The best IDP solutions out there provide intuitive, easy-to-use interfaces that require very little training. Organizations that introduce it with gradual implementation strategies and show employees how automation reduces tedious manual work (and makes their job easier) often see much faster adoption.

Implementing Intelligent Document Processing isn’t just about adopting new technology. It’s about transforming the way your business handles documents. With a well-planned approach, you can make sure that your new automation gives you real efficiency gains — without messing up already functional workflows.  

1. Start by identifying bottlenecks. Where does manual document handling slow down your processes the most right now? Look at areas like invoice approvals, contract management, compliance reporting, or customer onboarding. 
    
2. Have a look at some different solutions. Not all IDP solutions are created equal. Compare providers based on accuracy, scalability, integration capabilities, and ease of use to find the one that works best for your business.
   
   
3. Try to run a pilot project. Start small by testing the IDP on a specific document workflow (something like invoice processing or employee records) before rolling it out across the entire company. 
    
4. Integrate the solution and train your teams. Make sure to have a smooth transition by training your employees, setting up automation rules, and integrating IDP with your existing ERP, CRM, or document management systems. 

Making the shift to real automation doesn’t have to be difficult or overwhelming. To explore how IDP can work for your business, you can start by getting our in-depth guide or go ahead and see DocuWare’s IDP in action. Whatever your next step is; make sure it’s one that makes your life just a little bit easier.