In this article, we will explore exactly what OCR in accounting is and some of its benefits. We also share our simple 9 step process for implementing OCR technology in accounting. Read on to learn more.
OCR software for accounting automates data entry by extracting text and numbers from scanned documents like invoices and receipts. It makes financial record-keeping easier and more accurate by cutting down on manual errors.
Example: A company might use Adobe Acrobat's OCR to convert text from scanned purchase orders into editable formats. This simplifies entering data into QuickBooks for faster reconciliation of Product ID 56789 transactions and efficient management of financial documents.
Here are some of the benefits of using an OCR tool in Accounting:
OCR software significantly lowers the chances of errors associated with manual data entry. By automatically extracting information from documents and importing it into accounting systems, businesses can ensure data consistency and reduce costly mistakes.
Automating the data capture process with OCR technology saves considerable time and labor costs that would otherwise be spent on manual entry. This allows accounting staff to focus on more strategic tasks, ultimately boosting productivity and reducing operational costs.
OCR solutions help organize and store digital copies of financial documents efficiently. Searchable text in digitized documents means quicker retrieval and better document tracking, which is crucial for audits and compliance.
With OCR, financial data from paper documents is digitized and can be accessed from anywhere. This facilitates remote work and timely decision-making.
OCR software can handle large volumes of data effortlessly. This makes it easier for businesses to scale without needing to proportionally increase administrative staff.
Digitizing financial documents with OCR decreases the reliance on physical storage, which can be susceptible to damage or loss. Digital documents can be securely backed up and encrypted, offering better protection of sensitive financial information.
Use our 9 step OCR technology process to effectively manage your accounting tasks. Simply follow the steps below:
Prior to scanning, all documents must be organized and prepped. This ensures they are free of staples and are properly aligned.
Example: Ensuring each invoice from suppliers like OfficeDepot is single-sided and free from physical damage before scanning.
Documents are scanned using an OCR-capable scanner that converts them into digital format.
Example: Scanning a batch of purchase orders totaling $5,234 ensures they are digitized for easier processing.
The OCR software processes the scanned images to recognize and convert text into editable and searchable data.
Example: The software identifies and converts terms like Net 30 or product codes such as A123X from scanned documents.
OCR results are checked for accuracy. Employees correct errors in recognition manually to ensure data integrity.
Example: Verification might include correcting the quantity of 50 HP Laptops mistakenly recognized as 500 due to a scan error.
Relevant data like dates, amounts, and vendor names are extracted for further processing.
Example: From a digital invoice, the system extracts the total amount of $1,200 and the vendor name "Staples".
Extracted data is integrated into accounting software or databases, aligning with existing financial systems.
Example: Integrating extracted data into an ERP system, matching payment amounts like $453.75 to vendor "FedEx" for shipping charges.
The system checks the data against internal rules and databases to validate its accuracy and completeness.
Example: Validating that the extracted payment of $2,500 to "Canon" for office equipment matches purchase records.
After processing, digital documents are archived in a secure, searchable database for compliance and future reference.
Example: Archiving a contract with "Dell" for 25 desktops ensures it can be retrieved quickly for audits or disputes.
Generate reports based on the OCR-processed data to analyze financial transactions and inform business decisions.
Example: Creating a monthly expense report that includes a charge of $320 for software licenses from "Adobe".
DeltaStream Technologies is a leading electronics manufacturer specializing in high-quality components for tech industries. Here's how they implemented our OCR technology process.
DeltaStream’s accounts payable team prepares incoming invoices by ensuring they are staple-free and single-sided, ready for scanning to maintain data integrity.
Using advanced OCR scanners, the finance department digitizes all physical invoices, such as a $15,000 batch of electronic components, for faster processing.
The company’s OCR software accurately captures and converts text from digitized invoices, ensuring data like part numbers and terms are correctly extracted.
DeltaStream's team reviews OCR data for accuracy, correcting misrecognitions like an erroneous "5000 LED screens" instead of "500."
Key invoice data, such as due dates and amounts, are automatically extracted and entered into DeltaStream’s financial systems, like a $22,000 microchip invoice from Samsung.
Verified data is integrated into the ERP system, enhancing real-time financial reporting and cash flow management, such as accurately recording $5,500 payments to Intel.
The finance team ensures invoice data matches purchase orders and receipts, confirming details like 250 Nvidia GPUs priced at $350 each are correct.
Digital copies of processed invoices are securely archived, facilitating quick retrieval for audits, like finding a quarter's invoice for 100 Dell monitors.
Processed data is used to generate financial reports, aiding management in tracking expenses like a $120,000 investment in soldering equipment, ensuring budget compliance.
We hope that you now have a better understanding of what OCR in accounting is and how to use our simple 9 step process for implementing OCR technology in accounting. If you enjoyed this article, you might also like our article on price tag OCR or our article on OCR technology in banking.