The short answer
OCR (optical character recognition), usually combined today with AI-based field extraction, can read a supplier invoice, create a draft purchase invoice in ERPNext or Prometheus, match it to the purchase order and receipt, and route it for approval. In a well-designed set-up, clean invoices that match need only a quick confirmation, and a person's time goes into the mismatches, duplicates and unreadable scans. It is one of the most reliable automation wins in an ERP, but only if you design the review step, the matching rules and the tax fields carefully. Capture that posts straight to the ledger without review is not automation; it is a new source of errors.
How it works in an ERP
A typical flow in ERPNext or Prometheus looks like this:
- Intake. Invoices arrive at a dedicated accounts payable mailbox, a scanner folder or an upload screen.
- Extraction. The OCR or extraction service reads the supplier, invoice number, date, line items, subtotal, VAT, any withholding tax and the total.
- Draft record. A draft purchase invoice is created, with the original file attached.
- Matching. The draft is matched to the purchase order and purchase receipt; quantity, price and tax differences are flagged.
- Review and approval. Clean matches go to the accounts payable clerk to confirm. Mismatches, new suppliers and invoices over a threshold go to an approver.
- Posting. A person submits the invoice, and it is scheduled for payment.
Example: three invoices on a Monday morning
- Invoice A from a regular packaging supplier matches its purchase order and receipt exactly. The clerk checks the highlighted fields and submits it.
- Invoice B from a freight company has no purchase order. It is routed to the operations manager to approve and code.
- Invoice C has the same supplier and invoice number as one entered last month. The system blocks it as a likely duplicate and flags it for review.
The Nigerian details that matter
Generic OCR tools are often trained on US or European invoices. In Nigeria, your capture needs to handle a few things properly.
VAT fields. Nigerian VAT is charged at 7.5 % on most taxable supplies, but some goods and services are exempt or zero-rated, and some suppliers show VAT only inside a total, or quote VAT-inclusive prices. Your extraction should capture the VAT amount separately where it appears and flag invoices where it is missing, because your ERP's tax templates and any VAT you recover on purchases depend on it.
Withholding tax. Many payments to suppliers are subject to withholding tax, deducted at source and remitted to the tax authority. The rate depends on the type of payment and the supplier, so capture the supplier category and have the ERP apply the right withholding tax rule at the review step, rather than leaving it to be corrected at payment time.
Supplier tax details. A valid tax invoice generally identifies the supplier and its tax identification number, and shows the VAT charged. Designing capture around these fields means missing details are flagged when the invoice arrives, not during an audit. Confirm exactly which details a compliant invoice must show with your accountant, and whether any e-invoicing requirements from the Nigeria Revenue Service apply to your business or your suppliers.
Local formats and quality. Invoices often arrive as phone photos, WhatsApp images or poorly scanned copies, with handwritten amendments, rubber stamps and mixed date formats. Test extraction on documents like these, on amounts written in naira (₦) with thousands separators, and on invoices in dollars or other currencies for imported goods and cloud subscriptions.
Keeping the original. Invoices received as PDFs are already electronic, but you still need to keep them. Attach the original file to the ERP record, keep it for the period your accountant and the tax authority require, and back it up. Where power or connectivity is unreliable, make sure the backup runs somewhere other than the machine that holds the originals.
An audit trail. Auditors and the tax authority expect a trail from source document to financial records. Your set-up should show who confirmed or changed each extracted value.
This is general information, not tax advice; confirm your requirements with your accountant.
Rather talk it through? Send us a handful of real supplier invoices (with personal details removed) and we will show you how they would be captured, matched and approved in your ERP. Talk to a Promatics specialist
What usually goes wrong
- Automating before cleaning supplier data. Duplicate supplier records and missing tax identification numbers make matching unreliable. Clean the supplier list first.
- No purchase orders to match. If most spending has no PO, OCR saves typing but cannot validate much. Decide which spending categories should require a PO.
- Trusting confidence scores blindly. Extraction tools report how sure they are, but a confident misread of a total is still wrong. Key fields such as total, tax and invoice number should always be visible to the reviewer.
- Ignoring the long tail. Handwritten invoices, poor scans and multi-page statements will never extract cleanly. Give them a manual-entry route rather than forcing them through.
- Sending data somewhere you have not approved. Many extraction services are cloud-based. Know where documents are processed and stored, and whether that fits your obligations under the Nigeria Data Protection Act 2023, particularly if invoices contain personal data and are processed outside Nigeria (NDPC).
- We know our monthly invoice volume and how many arrive as PDF, photo or paper.
- Our supplier list is de-duplicated, with tax identification numbers recorded.
- We have decided which spending requires a purchase order.
- Approval thresholds and approvers are agreed.
- Key fields (total, VAT, invoice number, supplier) are always shown to the reviewer.
- Withholding tax treatment is agreed with our accountant.
- Duplicate detection is tested.
- We know where the extraction service processes and stores documents.
- Originals are attached to the ERP record and included in backups.
How we build it
We start by collecting a sample of your real invoices and agreeing what "done" looks like. We then choose an extraction approach that suits your volume, your document quality and your data-location requirements, and build the capture, matching and approval flow in a separate custom app, so it survives ERPNext upgrades. Every build is tested against your own documents, including the awkward ones, and failures alert a named person rather than failing silently. The same approach extends to receipts, expense claims and other forms; see ERPNext and Prometheus customisation.
When to bring in help
If you receive a few dozen invoices a month from a handful of suppliers, a standard add-on or careful manual entry may be enough. Bring in help when volumes are high, when invoices must be matched to purchase orders and receipts, when you need VAT and withholding tax handled correctly, or when an auditor will ask how you know each invoice was checked. That is where design, testing and accountability matter more than the OCR engine itself.
Sources and further reading
Product capabilities and guidance change. These are the primary sources this article relies on, checked on the review date above.
- Purchase Invoice, ERPNext documentation (Frappe)
- Nigeria Data Protection Commission, NDPC
This article is general information, not legal, accounting or security advice for your specific situation. Examples are hypothetical unless stated otherwise.