How does Optical Character Recognition (OCR) work in Accounts Payable Automation

Dec 10, 2019 2:35:06 PM

Over the years, accounts payable has evolved from being a cost center to a profit center, and Optical Character Recognition (OCR) played a crucial role in it. OCR is a technology that converts different digital documents such as PDF, images, etc. into editable and searchable text.

A study by iPayables showed that the main frustrations the AP professionals faced was caused by lengthy approvals and payments processes, which is linked to manual, paper-based processes. With most of the accounts payable systems having OCR, the AP software is enabled to decode and pull out data automatically from the digital invoices. Thus, OCR has helped reduce the manual workload and increase process efficiency. However, there’s more to AP automation than OCR. In today’s blog, we will learn about OCR and to what extent it is useful in accounts payable automation.

Survey manual Accounts Payable Processes

Image 1: Common issues caused by manual Accounts Payable Processes 

Let us first understand how OCR works

OCR is all about decoding and converting a scanned image or document into text format so that it can become editable. Let us say your partner emails you a paper document which could be a PDF, brochure, magazine piece, scanned documents, or digitally captured images. A scanner can help you get a raster image which is nothing but a collection of dots, and it makes these documents only viewable—but, with an OCR software, you also edit them. An OCR software individually reads and extracts the letters or numbers in a document to form proper words and sentences. Therefore,  OCR enables you to read, search, and edit such documents in the original format.

Now, the question is whether OCR is enough to achieve your AP automation goals

OCR does not completely automate your accounts payable, leaving great scope for manual intervention, and in turn, for errors too. Just retrieving data from digital invoices does not ensure touchless invoice processing. Besides, OCR is just a temporary or partial remedy for problems associated with a manual accounts payable process. You need a more reliable system that enables digital transfer of invoices or documents between suppliers and buyers, without the need of manual supervision, to improve consistency and accuracy of the data. You need an end-to-end automation solution that can eliminate paperwork.

While OCR does have a part in automating your AP process, investing your time and money solely into this technology would turn out to be worthless. According to the survey conducted by iPayables on AP automation, 82% of companies use an automated AP workflow with some electronic or OCR capability. What you need is a best-of-breed AP automation solution like To-Increase MediusFlow, which has been enabling companies to increase their AP automation levels up to a massive 97%. With a solution such as this, you can streamline and enhance your entire procure-to-pay process with efficient tools and achieve truly touchless, end-to-end automation.

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