What is OCR and How Does It Work?
Rose Report: Issue 44
By Ted Rose, CEO Rose Financial Solutions
How is Optical Character Recognition advancing the finance and accounting industry?
While data is everywhere in today’s information-driven world, it offers little insight unless it is organized and stored in a format that allows it to be used efficiently. As businesses increasingly rely on data-driven information such as financial forecasting, key performance indicators (KPIs), and cashflow analysis to make better business decisions, the need to store data in digital form is becoming more critical. However, not all accounting transactions are paperless, and manually converting printed invoices to digital data is a time-consuming process. Fortunately, Optical Character Recognition (ORC) takes on this tedious task.
Simply put, OCR technology converts text, whether handwritten, typed, or printed from an image or PDF to encoded text that is digitally stored and can be electronically edited and searchable. You may not be aware, but daily you use this technology when you write a check or access a website via a QR code. In accounting, OCR is utilized to process non-digital invoices, statements, checks, etc., automate the data entry, and integrate that data into your accounting solution. OCR significantly saves time, increases accuracy, and improves reporting by reducing the need for manual data entry. OCR isn’t a new technology. In fact, it has been around for nearly a century as it is reported that the first OCR device was developed in the late 1920s and used in computer applications since the 1950s. However, the capabilities of early OCR technology to today’s are like comparing the Wright brothers’ plane to a modern-day jet in speed and accuracy.
Advantages of Utilizing OCR
- Saves Time: OCR significantly reduces the time it takes to capture data and enter it into an accounting system. This empowers accounting and finance professionals to spend less time working on mundane data entry processes and more time providing financial management services that utilize higher-level skills—including professional judgement and strategic guidance.
- Increases Accuracy: Technology has revolutionized the finance and accounting industry in ways that just a decade ago would have seemed impossible. Yet, there is one fundamental challenge that remains: human error. Typos happen, and misplaced commas or incorrect numbers can be costly. Since OCR removes the need for manual entry of data by staff, these types of errors are eliminated.
- Improves Reporting: Streamlining accounting processes is critical for timely reporting. Structured accounting data is an evolutionary process: when structured data accumulate into financial information it becomes exponential and creates new and novel information. Delays due to manual data entry can hamper a “big picture” view of your financial position. Utilizing OCR ensures that you have the timely and accurate finance and accounting reporting that leads to better business decisions.
At Rose Financial Solutions (RFS), we wrap 25+ years of finance and accounting expertise into our solutions and utilize OCR to streamline our clients’ processes. With the best people + processes + technology, we’ve built our reputation as the leader in the next generation of finance and accounting outsourcing called Finance as a Service (FaaS). We combine a team of experienced finance, accounting, tax, and technology professionals with our leading-edge technology, Easby Powered by RFSWorkflow, that delivers an unprecedented view of your company’s performance. Set your course for confident business decisions and achieve more. Contact us to learn more about our FaaS solution and OCR.
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