¿What is OCR? Discover how can an OCR improve your finance operations
What is OCR? If you are a person who is dedicated to the financial area of a company or to document management, the acronym OCR probably sounds familiar to you. If you are delving into these worlds now, it probably crossed your mind to look for what OCR is, as these acronyms appeared after trying to find ways to automatically digitize or scan documents.
If you are one of those people who is looking for some OCR technology software, keep reading, because in this article we will explain what OCR is, in the first place, and we will describe how the Snab platform makes use of this technology to digitize invoices and how it is supported. in it when facilitating the invoice payment process for companies.
Do you want to know what is OCR? Well then, keep reading, this article is for you.
What is OCR?
OCR is an abbreviation that comes from English, and stands for Optical character recognition. So what is OCR? A technology used to digitally recognize characters in a document. This technology has been very pioneering and has multiple uses in the area of document management, and also in the financial area, where it is widely used for scanning invoices, tickets and other financial documents.
What are the main uses an OCR has?
OCR technology is a technology that is increasingly used by a large number of companies and in a large number of sectors. In fact, there are more and more companies that are dedicated to creating OCR technology and this technology is also advancing a lot as new techniques are developed.
Previously, many companies used the typical scanner that printers brought to digitize documents. In other words, invoices or paper documents were received, they were passed through the printer’s scanner and in this way the documents were partially digitized. However, this was not enough, the need arose to be able to extract that information automatically without anyone having to manually type the information from those documents into another. That’s where this technology comes from.
The main fields where we can see the widespread use of this technology is the world of legal or contracts, in the new world of artificial intelligence, and finally, in the world of finance, especially in the field of invoices.
In the first of them, there is a great problem when it comes to digitizing and extracting the information from the contracts. Imagine old contracts, or long legal documents on paper that it is important to digitize to extract the information. To give an example, a database could be created based on these contracts with their date, the reference, the parties involved, the most important clauses or the price, among others. These digitization tasks are usually required by consultants, law firms, agencies, etc.
Secondly, the field of artificial intelligence, which could be defined as the creator of this technology, since its usefulness is infinite, and even more from now on with the rise of the pioneering ChatTPG technology. This technology is so powerful that its applications are endless. This technology could generate a search engine similar to that of Google or Yahoo, but with document information. After scanning millions of documents, I could generate content, I could write guides, books. All spontaneously, and as a result of a document scan.
On the other hand, we have the case of the financial field and the application of OCR to digitize documents. This is the case that interests us the most, which is why we will dedicate more time to it and analyze it in greater depth.
If you are part of a financial team and still don’t know what OCR is and how it can help you, keep reading the next section.
How can an OCR help finance teams?
OCR technology is very powerful in the financial field since there is still a very tedious process of accounts payable, as it is practically manual in each of its phases. Having a good platform allows the company to digitize the entire accounts payable cycle by extracting automatic data and removing all the manual tasks that exist in the process.
- It allows you to create new accounts payable in seconds. Easily receive new invoices and create the corresponding account payable simply by receiving invoices in the integrated mailbox or uploading them to the platform.
- Automated data extraction. New invoices or accounts payable created or received in the mailbox will be automatically completed using OCR technology, extracting relevant information such as supplier information, main invoice fields or bank information. This allows data to be extracted in approximately 2 seconds, when a manual extraction can take minutes.
- Increases efficiency in the payment and accounts payable process. Reduce the time spent manually extracting and posting invoices with automatically extracted invoice information as described in the previous point.
- Supplier management. The information that is extracted from the supplier is compared with your list of suppliers already created in the system.
Who within a finance team benefits most from OCR?
As we said before, the main beneficiary of this technology is usually in the accounts payable team. This person is in charge of receiving the invoices in a generic email from the platform, and reviewing them. Once reviewed, it is also very common for them to extract the information from the invoices to an excel and create a list with the invoices pending payment in the system. In this way, the OCR could avoid this manual creation of the excel.
OCR technology is also very supportive and very similar to accounting equipment. Both in small teams and in larger teams, since the invoice information must be posted in the accounting system. That is why in most companies, as this is still a manual extraction process, accounting teams waste a lot of time recording invoices. Consequently, OCR technology is a faithful friend of accounting teams.
In the treasury, the help of the OCR is not so direct, but indirectly and is of vital importance. I would say it’s almost more important the impact of that here. To avoid wrong payments, and the headache of fixing a problem like this, good OCR is vitally important. Making a mistake in a payment can have very negative consequences for the company. It can mean a loss of relationship with the provider, in addition to all the hours it takes to fix the bug. From contacting the bank, looking for the transfer, undoing the payment, or making another payment to make up the difference between others. The cost of making a wrong payment is infinite and therefore a good OCR can solve the problem.
– Financial management:
In the financial direction, having a good OCR can be a great relief. The financial director or director has to ensure the professionalism of his team, and the quality of his work. Good OCR can help them work happier, be more productive, and make fewer mistakes.
Nowadays, a company that still works without OCR is an unattractive place to work, and therefore future financial professionals will opt for other companies before accepting a job offer, or change companies before in the case of suffering in the day to day.
We hope that this article has helped you to know what OCR is, and that you are clear about how it is used, for what, by whom, and what are its advantages.
Snab is a platform that relies on OCR to automate the entire invoice payment cycle
Snab is a cloud-based accounts payable and treasury management platform that, through pioneering software, automates the entire payment cycle from start to finish.
Snab automates the receipt of invoices through an integrated mailbox, the extraction of their data with OCR scanner technology, digitizes the approval management of said invoices by creating approval flows, and finally allows payment of these in one click, without having to leave the platform. In addition, payments are automatically reconciled because the platform pays invoices, instead of making totally disconnected transfers.