Document classification is the process of automatically assigning predefined categories or labels to documents based on their content, structure, or intent. In finance and operations, where teams handle large volumes of invoices, contracts, receipts, bank statements, delivery notes, and email attachments, document classification is the foundation that enables automation, routing, and streamlined workflows.
Unlike simple keyword detection, modern classification models understand the semantic nature of a document. They can distinguish, for example, between a supplier invoice and a credit note, between a purchase order and a delivery slip, or between a legal contract and an amendment. This is essential in environments where documents arrive in different formats, languages, and layouts.
Advanced document classification uses a combination of machine learning, natural language processing (NLP), layout understanding, and domain-specific modeling. For finance teams, this means documents can be automatically sorted, routed to the correct system, enriched with metadata, and prepared for downstream workflows such as reconciliation, verification, or audit preparation.
Within Phacet, document classification is a core capability that powers several high-impact agents. It enables shared inbox automation by distinguishing invoices from general supplier emails, supports 3-way matching by separating delivery notes from purchase orders, and accelerates financial operations by tagging documents with the appropriate category before extraction and validation. Each classification event is supervised with full traceability, allowing teams to review, correct, and continuously improve agent performance over time.
A practical illustration of classification in action can be found in Phacet’s AI No-Code use case, where teams can create and supervise classification logic without writing a single line of code, ensuring reliable, scalable document automation across finance workflows.
