Invoice OCR: The Power Button for Your Invoices

1. Invoice OCR – Your factor for faster and smarter billing
2. What is Invoice OCR?
3. How does Invoice OCR work?
4. Who is Invoice OCR suitable for?
5. Why should invoices be digitized?
6. What are the advantages of Invoice OCR?
7. What should be considered with Invoice OCR?
8. Which Invoice OCR tools are suitable?
9. Conclusion: It's getting digital

Find out what's behind OCR technology and how you can make your company's invoice processes better, more efficient, and smarter.

Invoice OCR – Your factor for faster and smarter billing

The process of invoice processing can be time-consuming, error-prone, and costly and is long outdated. With Invoice OCR, you no longer have to struggle with manual data entry, but can revolutionize your invoice processes. Get ready and learn more about this indispensable technology here.

What is Invoice OCR?

Invoice OCR stands for Optical Character Recognition, optical character recognition for invoices. The technology was developed to extract information from documents and convert it into a digital format. It is perfectly suited for processing paper invoices and scanned receipts. Combined with Document Information Extraction (data identification and understanding), it enables machine reading and triggering of processes for your invoices and documents.

How does Invoice OCR work?

Docsumo

OCR, also called Invoice2Data, is done in these steps:

1. The invoice can either be in printed form, as an electronic image or as a PDF. The invoice is either scanned or uploaded directly into the OCR system. Which systems are suitable for this, you will find out further down.
2. In the next step, the image of the invoice is analyzed and optimized in order to improve the quality and readability of the text. This may include removing noise, straightening the text, or adjusting brightness and contrast.
3. The OCR system recognizes the text characters on the invoice using pattern comparisons, statistical models, or machine learning algorithms. The text is converted into machine-readable text.
4. Next, the OCR system analyzes the layout of the invoice to identify structured information such as invoice number, date, amount, supplier information, and item positions. Various features such as text formatting, position on the page, headings or keywords are used to recognize the relevant information.
5. Based on the recognized structure of the invoice, the OCR system extracts the relevant data and assigns it to the corresponding categories. This can include exporting information to specific database fields or formats.
6. To improve the accuracy of the recognized data, validation rules can be applied. The system, for example, checks the plausibility of the recognized invoice number or calculates the total amount based on the recognized positions and quantities.
7. Finally, the extracted data is exported to various target systems, e.g.  accounting software, ERP systems, or additional databases, in order to support the further processing process.

Parashift

Who is Invoice OCR suitable for?

Invoice OCR is suitable for any company that wants to save important resources. For example, small and medium-sized enterprises (SMEs) benefit from Invoice OCR, as they often have limited resources.

Companies with international business relationships, on the other hand, have to deal with different languages, currencies, and invoice formats. Invoice OCR overcomes these obstacles by enabling data extraction and processing in different languages and formats.

When you look into the various departments of your company, the accounting department is certainly the big winner through the use of Invoice OCR as the hub of all invoices.

But there are also other departments and actors who can benefit from OCR technology:

• Another example is the purchasing department. It uses OCR to process supplier invoices and monitor payments. The automatic extraction of invoice data can also be used to match orders and deliveries with the invoices.
• In logistics and supply chain, OCR can be used to capture delivery slips, freight documents, and other shipping documents. This greatly simplifies the tracking of goods movements, warehouse management, and the matching of deliveries with the corresponding documents.
• OCR is also used in customer service. Customer data can be extracted from incoming documents such as applications, forms, or customer correspondence. This enables faster and more accurate processing of inquiries and improves customer communication.

The versatility of OCR - apart from scanning and reading paper documents - also shows a look at the most common formats:

Text-based formats: The OCR tool can extract the text from various text-based file formats, including:

• Microsoft Word documents (.doc, .docx)
• Text files (.txt)
• Rich Text Format (.rtf)
• Portable Document Format (.pdf) – either as searchable PDFs or after OCR conversion

Spreadsheets:OCR tools can also extract text from spreadsheet files. Supported formats include:

• Microsoft Excel documents (.xls, .xlsx)
• CSV files (.csv)
• OpenDocument Spreadsheet (.ods)

Image formats: OCR enables text recognition from various image formats, including:

• JPEG images (.jpg, .jpeg)
• PNG images (.png)
• TIFF images (.tiff, .tif)
• BMP images (.bmp)

Why should invoices be digitized?

Digitizing invoices is not just state-of-the-art, rather your business documents must be digitized in accordance with the principles of proper management and storage of books, records and documents in electronic form as well as data access (GoBD).

The central points of the GoBD include:

• Orderliness: The electronic accounting and storage must comply with legal requirements and fulfill the principles of proper accounting.
• Individual recording: Each business transaction must be recorded individually, completely and promptly.
• Traceability: All changes to electronic documents must be traceable, including timing, person responsible, and reason for the change.
• Unchangeability: Electronic documents must not be able to be changed unnoticed and must be protected from unauthorized access.
• Completeness: All relevant business transactions must be recorded and stored, including all documents and receipts.
• Retention periods: There are certain retention periods for electronic documents, which can vary depending on the type of document and tax relevance.

Thus, the GoBD guidelines ensure that business documents are properly managed and stored. By digitizing invoices and using OCR technology, you can easily meet these requirements.

What are the advantages of Invoice OCR?

In addition to the legal and tax requirements, which you easily handle with Invoice OCR, you secure the following advantages:

• Efficiency increase: Invoice OCR speeds up the entire invoice process. Manual processing of paper invoices requires time and effort, while digital invoices can be automatically captured, processed and archived in your accounting system. This saves you time and allows you to focus on more important tasks.
• Cost savings: Digitizing invoices reduces costs for paper, printing, postage and storage. You don't have to keep printed copies of invoices and can save space. Furthermore, you minimize the risk of errors in manual data entry, which avoids additional costs due to corrections and rework.
• Traceability and transparency: With invoice digitization, you get better traceability and transparency regarding invoice status. You can keep track of outstanding invoices, meet payment deadlines, and resolve inquiries or discrepancies more efficiently.
• Environmentally friendly: You also reduce paper consumption and your company's ecological footprint. By switching to paperless processes, you contribute to environmental protection and promote a sustainable way of working.
• Better data management: Digital invoices can be stored, organized and searched more easily in electronic systems. You can filter invoices according to different criteria, track and generate reports on invoice activities. This simplifies accounting, audits and external inspections.

What should be considered with Invoice OCR?

What you should pay attention to above all is that the effectiveness and accuracy of the Invoice OCR system depends on various factors such as the quality of the invoice template, the readability of the text, the layout of the invoice, and the performance of the OCR tool used.

However, advances in machine learning are leading to continuous improvements in OCR accuracy and the ability to process complex invoice structures.

Depending on the OCR tool, it is possible to customize or train the system to specific requirements. By using custom templates, using tags or other recognition parameters, you can improve the accuracy and efficiency of your OCR tool.

Natif

Which Invoice OCR tools are suitable?

If you are looking for suitable OCR software, you've come to the right place. OMR Reviews is your starting point in searching and finding top software. In addition, we give you real user reviews, price information and links to the manufacturer. So everything you need for your decision.

Here is an excerpt of the best OCR software & tools:

natif.ai

Adobe Document Cloud

fintract.io

CamScanner

Parashift

Docsumo

Conclusion: It's getting digital

In whichever department, task or process you look at in your company. Digitalization is progressing at high pressure. Invoice 2 Data is just a tiny detail, but at the same time the basis for efficient processes in your company. If you had to dig out an invoice from the archive every time, instead of retrieving the most important details with a click, you probably have completely different worries right now.