What is Intelligent Document Processing (IDP)? A Plain English Guide
IDP explained without the jargon. Learn what intelligent document processing actually does, how it differs from OCR, and whether your business needs it.
TL;DR: Intelligent Document Processing (IDP) uses AI to read documents like a human would—understanding context, handling different formats, and extracting the data you need. It’s OCR that actually works, plus the intelligence to know what the data means.
Intelligent Document Processing is AI that reads documents and extracts useful data. Think of it as a very fast employee who can read any invoice, contract, or form, understand what they’re looking at, pull out the specific information you need, and format it for your systems.
The global IDP market was valued at $7.89 billion in 2024 and is projected to reach $66.68 billion by 2032—a 30% annual growth rate. This growth reflects how many businesses are moving from manual document handling to automated extraction.
How IDP Differs from Basic OCR
OCR (Optical Character Recognition) converts images of text into actual text. It’s useful, but limited. OCR gives you a blob of text without structure. It doesn’t know that “$1,234.56” is a total amount. It can’t tell the difference between a vendor name and a product name.
IDP adds intelligence on top. It understands document layout and structure, knows what different fields mean in context, extracts data from tables and complex formats, and learns from corrections to improve over time.
For example, OCR sees “ACME Corp 123 Invoice Date 15 Jan 2025 Total $5,432.10” as a string of text. IDP understands: Vendor = ACME Corp, Invoice Number = 123, Date = 15 Jan 2025, Total = $5,432.10.
According to industry research, modern IDP systems can achieve 99% accuracy on structured documents. That’s a significant improvement over manual data entry, which typically has a 1-3% error rate.
When IDP Makes Sense
IDP is worth considering if you process 100+ documents monthly, documents come from multiple sources in different formats, manual data entry takes significant staff time, errors cause problems like duplicate payments or missed deadlines, or you need audit trails for compliance.
IDP might be overkill if you have very low document volume, all your documents are already digital and structured, or the data is simple enough for basic automation.
The Key Features That Matter
When evaluating IDP solutions, focus on these capabilities. Visual grounding shows exactly where each piece of data was found in the original document—critical for verification and audit. Flexibility means the system works across document variations without requiring templates for each format. Integration determines whether extracted data can flow directly into your accounting software or ERP.
According to Grand View Research, 65% of enterprises are now allocating budget to AI-powered document automation. The technology has matured beyond early adopters.
Getting Started
Audit your document flow first. What types of documents do you process? How many? Where do they come from? Identify high-volume, high-pain areas—usually invoices for most businesses, but sometimes tender requirements or contracts.
Run a pilot with real documents before committing. Test with your actual invoices, not demo data. Measure field-level accuracy and the time your team spends reviewing extractions.
The goal isn’t to replace your admin team—it’s to free them from repetitive data entry so they can focus on work that requires human judgment.
Related
- How to Automate Invoice Processing in Singapore — Practical guide to invoice automation
- SmartDoc: Intelligent Document Processing — See IDP in action for invoices, tenders, and contracts
- SmartDoc vs ChatGPT — How purpose-built IDP compares to general AI