Optical Character Recognition (OCR) technology has long been considered a valuable tool for automating the extraction of data from documents. However, as more advanced accounts payable (AP) automation solutions emerge, the limitations of OCR become increasingly apparent. If you’re thinking about implementing an OCR solution for your business, it’s essential to fully understand the capabilities and limitations of the technology and determine whether a more comprehensive solution might better address your needs.
In this guide, we’ll discuss the key aspects of OCR technology, explore various scenarios where OCR might fall short, and outline the primary features of an automated AP solution. By the end of this article, you’ll have a better understanding of whether OCR is the right choice for your business or if a more comprehensive solution is needed.
Understanding OCR Technology
Optical Character Recognition (OCR) is a software tool that scans invoices and other documents, converting the data into editable text. This text can then be used to populate fields in a database or AP system, creating an electronic version of the invoice. OCR systems use intelligent filters and keyword searches to locate specific data points on a document and can learn to improve accuracy over time.
While OCR can be a valuable tool for extracting invoice data, it’s essential to consider the broader context of your AP process and identify any potential issues that might not be resolved by OCR alone. To help you make an informed decision, we’ll explore five key scenarios where OCR might not be the best fit for your business.
5 Scenarios to Consider When Assessing OCR
- PO Invoices:
- When processing Purchase Order (PO) invoices, if the data matches between documents, manual data entry is often minimal. In this case, OCR might not significantly improve your AP process. It’s important to gather information from your AP staff to determine if other processes are more time-consuming and if automating those processes would provide more significant benefits.
- PO Invoice Not Receipted or Containing Wrong Price:
- OCR software can capture specific data points on an invoice, but it won’t know if the data is incorrect or if something hasn’t been received. Consider how your AP team would handle situations where OCR sends invoice data to your ERP/Finance system, even if the price is wrong or the goods haven’t been delivered.
- Partial Invoices:
- If you receive invoices that relate to specific lines on a PO, OCR might struggle to link the invoice data to the correct PO line, meaning manual intervention would still be required.
- Duplicate Invoices:
- OCR technology doesn’t possess the ability to detect duplicate invoices, so you may still encounter issues with duplicates being posted to your ERP system.
- Consider your current validation process and the minimum amount of data required to post an invoice to your ERP. Think about the implications if OCR were to send an invoice missing key data to your ERP or if it couldn’t reference specific order line numbers.
If any of these scenarios pose potential issues within your AP process, even the best OCR software might not solve your problems. Instead, consider a fully automated accounts payable system that can address these issues and provide a more comprehensive solution.
6 Key Features of an Automated Accounts Payable Solution
- A good automated AP solution should include OCR technology to handle data capture. The OCR system should be able to process multiple languages, data inputs, and learn from processed invoices to improve accuracy.
- Automated AP systems can perform various validation checks, such as verifying that all necessary invoice data is included for matching, ensuring remittance details match those on record, and checking for duplicate invoices.
- A comprehensive automated AP solution should be able to handle all matching scenarios, using AI and automated engines to link invoice data to appropriate PO lines and GRNs, validate prices and amounts, escalate invoices when needed, and route invoice queries for resolution.
- Non-PO Invoice Processing:
- For non-PO invoices, automated AP systems can assign invoices to cost centers using pre-configured rules and set default approval routes
- ERP Integration:
- Automated AP systems can integrate with your ERP system to allow for full posting of invoice data following matching, linking to POs and GRNs within the ERP.
- Automated accounts payable systems should offer intuitive reporting dashboards, providing a range of reports to help AP staff improve productivity and optimize working capital for the business.
Before deciding on an OCR solution, it’s crucial to review your entire AP process and determine whether data capture is the only issue you need to address. You may find that your problems run deeper, and a fully automated accounts payable solution is a better fit for your business.
If you’re interested in learning more about how a fully automated AP solution can address your AP issues, request a demo https://softco.com/request-demo/ and speak with a member of our sales team.
Choosing the Right OCR/IDP Solution
When selecting an OCR or Intelligent Document Processing (IDP) solution, there are several factors to consider. Here are seven essential things to keep in mind when searching for the best OCR/IDP solution for your business:
- Document Types:
- Find a solution that can handle various document types, languages, and text inputs. Ensure it can process different text types, such as handwritten, cursive, printed, and mixed entries, and improve image quality to extract data from low-resolution or distorted images.
- Ease of Use:
- Look for an OCR/IDP system with a user-friendly interface, allowing non-technical workers to set up and customize use cases, create new formats, and monitor organizational success metrics.
- Infrastructure Compatibility:
- Find a solution that can be easily integrated into your existing infrastructure, minimizing the need for extensive modifications or employee retraining.
- Future-Proof Vendor:
- Choose a vendor with a clear vision for the future, a robust product roadmap, and a commitment to ongoing research and development.
- Customer Satisfaction:
- Look for an OCR/IDP solution that can improve customer satisfaction by linking data extraction to conversion rates and ensuring payout rates meet or exceed customer expectations.
- Results-Driven Partner:
- Work with a vendor that understands the importance of delivering results. A comprehensive ROI calculation should include both obvious cost savings and less apparent benefits, such as lower churn rates.
- Native Integration and Automation Capabilities:
- Consider solutions that offer strong integration capabilities with RPA platforms and utilize machine learning to improve text recognition and document processing efficiency over time.
By considering these factors, you can find the perfect OCR/IDP solution for your business that will save you time and resources, reduce costs, and increase productivity.
OCR technology can provide valuable data extraction capabilities for businesses, but it’s essential to recognize its limitations and assess whether a more comprehensive automated AP solution might better address your needs. By carefully evaluating your existing AP process and considering the key features of automated AP solutions, you can make an informed decision on the best solution for your business. Remember, the right OCR/IDP solution should not only address your immediate needs but also anticipate and adapt to future challenges, ultimately helping your business thrive in an increasingly digital world.