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5 Ways to Empower Your Business with Optical Character Recognition (OCR)

Published on by Adam Bluemner

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Once upon a time, the idea of attaining a paperless office seemed a bit like the business management version of scaling Mt. Everest. These days we’re all a lot closer to the summit than we might have ever expected.

The digitization of records of all kinds has done a lot more than save paper, though. It’s also made records archival, searchable, sortable, and transferable—and businesses considerably more intelligent and nimble in the process.

But some types of documents and communication have remained stubbornly resistant to digitization. For these outliers, optical recognition software provides a solution.

Optical character recognition (OCR) software provides the ability to convert scanned documents and images into editable and searchable documents in a variety of output formats.

Consider five different examples of how your business can begin using optical character recognition to create efficiencies and cut overhead expenses:

1. Accounts payable invoice processing

It’s always hard to justify paying an employee for something that can be done just as well automatically.

Manually entering data from electronic or paper invoices into accounts payable records is one of those repetitive tasks that’s ripe for an efficiency improvement. If you are only creating payable records for one or two invoices a day, it’s probably not taking too much time. But if you are closer to double digits in terms of invoice processing, that amount of data entry is creating a significant overhead labor expense that’s unnecessarily cutting into your profitability.

OCR can help streamlines the processing of invoices for payables record creation. A successful OCR-enabled invoice processing system requires a couple key conditions. First, there needs to be a significant volume of invoices from repeated vendors or suppliers, as the invoice processing software needs to be configured to interpret specific invoice formats. Second, if your accounts payable module doesn’t natively support OCR document management, you’ll need to use your AP system’s API to import data from the OCR application.

If these conditions apply, and OCR makes sense for your business, you likely have an opportunity to realize significant labor-based cost savings through a more automated and efficient accounts payable process.

2. Expense reporting and auditing

The people who study this sort of thing (the financial advisory firm, Stout Risius Ross, in this case) say that fraudulent expense reimbursement costs business over $1B annually. Yikes.

A CNN article cataloged a number of the expense reporting fraud schemes that employees can use:

…Getting the cab drivers to give them blank receipts, asking for double receipts at hotels and restaurants, masking one transaction as another, using cash to buy something and getting a blank receipt and putting in for more than the transaction it was. There are an endless number of possibilities here.

An OCR based expense management reporting system can help defeat this type of expense management fraud in a couple of key ways. First, mobile-device based OCR client software can allow for policies that require real-time capture of receipts and other expense documentation. Adding this layer of transparency can dissuade potential fraud attempts. Second, auditing expense reports is a critical step in detecting and preventing fraud. OCR increases the ease and depth with which audits can be conducted, allowing auditors to easily search expense documents for particular transaction details.

3. Business card recognition

Anyone who has ever attended a conference or trade show knows the pain of entering all those new contacts into a CRM or contact management system.

A capable OCR business card recognition app can eliminate this pain point, while helping to make you the first to follow up with all those new contacts.

Optical character recognition software often struggles with assigning semantic meaning to data—especially when the data originates in previously unseen 3rd party documents. This challenge is much easier to overcome in the case of business cards, though. The reason is that the possible range of semantic meanings from business cards is so much more limited than other types of business documentation.

Because of the easy time saving provided by OCR business card recognition, apps that support it are becoming increasingly common. LinkedIn CardMunch and Evernote Hello are two of the more popular choices.

4. Preserving meeting notes

You know you’re studiously taking notes on their unique requirements, but for all your client knows, you’re text messaging co-workers an invitation to meet later for happy hour. Using a stylus to hand write notes or simply relying on good old pen and paper solves that problem—but you lose the search-ability of your notes. OCR apps for handwriting provide a solution.

Recognizing characters in handwritten notes is considerably more complex than standard printed text. In fact, it’s even garnered its own term: intelligent character recognition (ICR). ICR software providers still tend to talk about the accuracy of their technology in more glowing terms than customers do, but the end users are starting to come around.
A recent reddit thread discussing handwriting capable OCR tools included detailed descriptions of a variety of technical solutions with reports of varying levels of accuracy. One popular app was described as handling “handwritten text very nicely for me, even when the handwriting is pretty bad.”

The reality is that working with ICR solutions will require some manual review of notes if 100% accuracy is your goal. But for many note-taking tasks 100% accuracy isn’t a necessity. At minimum a handwriting ICR can provide the benefit of allowing search functions to find the note your are looking for, while allowing you to access the original document to get the full details you need.

5. Importing application and form submissions

These days a lot of customer generated data is collected online and in the form of the other natively searchable documents. But there’s still quite a bit of data that’s collected that isn’t immediately searchable.

If you are collecting information from customers in a highly structured format and have a large number of transactions associated with the data collection document, you likely can benefit from OCR. Some common examples include:

  • Service sign-up forms,
  • Loyalty program enrollments,
  • Waivers,
  • Rental agreements, and
  • Applications.

Manually re-entering data is time-consuming administrative work that isn’t really generating any direct value to your business. Data re-entry also provides an opportunity to introduce data errors and slow business process cycle times.

Replacing your manual processes can create an easy source of savings and free up employees for more productive work. It’s not necessarily easy though. Generally, you’ll need to integrate the OCR program with the relevant business software system that supports the application. In many cases that will require working with your business software support provider to create the custom integration. You’ll need to weigh the investment versus the likely returns, but if the activity is repetitive enough you may find yourself able to generate significant savings.

Tips for choosing OCR applications##

OCR software ranges from free applications to sophisticated programs which can be tailored and trained to look for specific information in your documents.

Some key feature differentiators you’ll want to consider when looking at options include:

  • Support for both scanned documents and digital images (photos)
  • Efficiency of conversion time
  • Accuracy rates
  • Range of supported fonts
  • Range of supported languages
  • Export file formats
  • File compression options
  • OS compatibility
  • Mobile capture capabilities
  • Color support
  • Ability to preserve original document layouts
  • Access to an API and integration capabilities

Many accounting and ERP systems offer integrated OCR capabilities as well. If you are looking for an OCR capable business management software system, or need to work with a technical support provider to integrate OCR capabilities with your existing software, feel free to check out our free software matching service.

Adam Bluemner

is a Managing Editor at Find Accounting Software. He's been helping software buyers make informed investments in business software for over a decade.

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