What is Document Classification?
Companies receive a flood of information every day: emails, contracts, invoices, applications, letters, or chat messages. These documents contain important data, but this data can only be used efficiently if it is classified correctly. This is exactly where automated document classification comes in: It ensures that each document is automatically assigned to the appropriate category, department, or processing route.
Go straight to:
- What exactly does document classification mean?
- Why is automated Document Classification so important?
- Typical application areas for Document Classification
- Methods & Technologies
- Benefits of automated Document Classification
- From classification to an automated workflow
- Choosing the right software: Solutions by inovoo
- Conclusion: Intelligent document classification accelerates processes
What exactly does document classification mean?
Document classification is the process of (automatically) recognizing incoming documents based on their content, context, or purpose and assigning them to predefined classes.
Examples:
- An incoming email is recognized as a complaint and forwarded directly to customer service.
- A PDF is identified as an invoice and routed to the appropriate workflow.
- A scanned application is automatically assigned to the correct department within a government agency.
The classification is therefore the basis for every business process that involves incoming communication: only once it is clear what type of document has been received can it be forwarded to the right system or contact person. Further steps such as processing, validation, or archiving can then be carried out.
Why is automated document classification so important?
The first step when modernizing business processes that involve incoming communications is to digitize analog documents (letters, faxes). Once these are available as scans, for example, the automated processing can begin. However, it is important to note that even if a document is available in digital form and a digital target system is available, processing can still involve a large amount of manual effort. Without intelligent classification, employees have to assign each document or file manually. In practice, this means:
- Time loss due to manual sorting and forwarding.
- High error rates when documents are filed incorrectly or forwarded to the wrong location.
- Missed deadlines when important documents are overlooked in a crowded inbox.
The solution to these challenges is to use software that automates document classification. This ensures that all information reaches the right contact person within seconds, significantly reducing overall processing times. This benefits not only the companies themselves, but above all their customers and business partners.
Typical application areas for Document Classification
The possible use cases are diverse – wherever many different document types are processed, automated classification offers significant advantages:
- Customer communication: Letters, emails, and messages from other channels are automatically recognized and sorted by customer concern (inquiry/complaint/cancellation/etc.).
- Accounting: Inbound invoices in different formats and languages, as well as with different layouts, are all automatically recognized as such and transferred to an invoice workflow.
- Public administration: Citizen applications, certificates or notices are immediately routed to the right department.
- Other processes: Intelligent classification speeds up processing wherever data and documents are received by an organization and then have to be processed in a specific way (e.g., claims reports for insurers, incoming orders, etc.).
Methods & Technologies
Over the years, classification methods have evolved greatly. Depending on the specific use case, different methods may be suitable:
Rule-based classification
Documents are recognized based on keywords or patterns (such as “contains the word invoice”). For simple cases with few document types, all of which follow a specific structure, this is a solution that is easy to implement.
Template-based classification
This is particularly suitable for highly standardized documents with fixed layouts (e.g., forms). If several categories of documents are received via a specific channel, but all match a predefined structure, this is a practical and resource-saving option. The document classes are trained using machine learning (ML). However, if the layouts change regularly, the necessary adjustments can lead to increased effort and delays.
AI-based classification with LLMs
Large language models (LLMs) open up new possibilities for document classification: The structure and layout of the document are no longer an issue when using LLMs, as they can recognize the type of document based on context. This means that even an invoice that does not contain the word “invoice” anywhere can still be recognized. In this example, the LLM recognizes the typical elements of an invoice (invoice items, amounts, addresses) and interprets the document class in a similar way to how a human would proceed in this case. With LLMs, documents can be classified automatically without any preparation or training.
Benefits of automated Document Classification
Companies benefit in several ways from the use of intelligent document classification. Compared to manual sorting, intelligent classification leads to enormous improvements in efficiency, accuracy, and scalability:
- Time and cost efficiency: Because all documents are automatically sent to the right place in real time, the manual distribution effort is eliminated. This means that documents reach the actual processing stage faster.
- High accuracy: Systems with AI or other technologies reliably assign thousands of documents per day to the correct category, while employees can focus on more complex tasks.
- Scalability: Modern platforms can efficiently classify documents even as volumes increase and can be flexibly adapted to new input channels or processes.
- Transparency and control: Modern monitoring dashboards (such as NOVO BI Board) allow classification to be monitored and evaluated in real time to further optimize the process.
From classification to an automated workflow
Once a document has been allocate to the correct category, it can be processed automatically. Another important point here is data extraction, as it ensures that the data is structured and can be used by the systems.
The purpose of data extraction is to make information from different types of documents machine-readable so that it can be processed automatically. Learn more now:
Modern automation platforms use this structured data to create a fully automated process:
- The extracted data from the classified document is transferred to the workflow.
- During further processing, the data is prepared for the target system and stored in the required format.
- The data is exported to the target system (CRM, ERP, specialist systems, etc.).
This creates a continuous digital process that increases speed and improves service quality.
Choosing the right software: Solutions by inovoo
To make the most of the advantages of intelligent document classification, you need a platform that creates a consistent process using correctly classified and extracted data. NOVO CxP (Communication Exchange Platform) by inovoo is a modern solution that allows you to achieve exactly that. The low-code platform extracts and classifies data so that it can be used directly for further automated processing. NOVO CxP...
- supports all input channels: letters, emails, scans, forms, and other data sources
- processes content regardless of format, language, structure, or complexity
- creates a consistent, automated process – from receiving the data to transferring it to your target systems
For particularly complex classification processes, the use of LLMs is recommended, e.g., using NOVO AI Studio. This brings the flexibility and power of this new technology directly into your process and allows you to classify particularly heterogeneous documents even better. Just like NOVO CxP, NOVO AI Studio integrates seamlessly into your existing environment. This enables not only intelligent classification, but also complete automation from receiving the data to final processing.
Conclusion: Intelligent document classification accelerates processes
Intelligent document classification is a crucial component of any automation project that aims to optimize the processing of different document types. Whether in customer service, accounting, or government institutions, intelligent classification speeds up processes, reduces costs, and improves service quality. With solutions such as NOVO CxP and NOVO AI Studio, you can easily implement automated document classification, whether rule-based, template-based, or using the latest LLMs. This allows you to create a future-proof basis for end-to-end automation.
