One of the main arguments for using OCR technology is that it automates manual and repetitive tasks and thus increases operational efficiency from the company’s point of view. Advances in OCR mean that there are more and more areas of application of the technology and that more industries are taking advantage of it.
But what exactly is OCR technology and where can it actually be used? This article brings you closer to technology using three practical examples.
What is OCR technology?
OCR is an acronym for OCR which is an abbreviation for OCR which is also known in Germany as Automatic Text Recognition. OCR is a software solution whose urgent task is to recognize text and characters in any document. By editing documents using OCR technology, the text in documents becomes computer-readable. Nowadays, an automatic text recognition solution can perform other tasks including, for example, interpreting the content in a document.
The OCR solution can be purchased as a standalone solution (mostly a local software). For businesses that operate in the cloud as much as possible, there are also cloud-based solutions such as It works via an API connection.
Where can OCR be used?
OCR technology can be used in various fields. Companies use the software, for example, to scan paper documents to digitally archive them and make them searchable. Another application for automatic text recognition is the scanning and processing of identity documents for identity verification for KYC purposes. Another very popular area of application is that
Enter incoming invoices for accounts payable. Below we explain 3 common practical examples of corporate OCR application.
1. Automation of accounts payable
OCR software can automate the recording of incoming invoices in the accounting system and ERP system. First of all, Invoice OCR is able to digitize analog invoices on paper and make them searchable. PDF invoices are becoming more and more popular these days and do not require this step. The most important step in automating accounts payable is reading the relevant fields on invoices. Some OCRs are trained on machine learning algorithms and therefore independently recognize related domains.
Instead of employees typing these fields into the ERP or accounting system manually, they just have to make sure that the OCR has recognized the information correctly and corrects it manually if necessary. With well-trained OCR solutions and standardized billing, this is 90% behind.
Since incoming billing occurs in large quantities, especially the larger the company, an OCR solution saves a huge amount of time for employees. It’s not just time savings that creates an advantage. Manual and repetitive tasks are often perceived by employees as stressful and boring. For this reason, automation also exists to increase the satisfaction of your team.
2. KYC Automation
KYC checks involve identifying and verifying customers and business partners in order to detect potential risks. Know your customer (KYC) exams are mandatory for companies operating in the financial and banking sector, as well as the insurance and real estate sectors.
Any documents requested by the customer or business partner for identity verification can be automatically processed by an OCR solution. First of all, an identity document, for example a passport or ID card, is captured by an OCR engine. Then the OCR reads the text in it. After reading the text now, the program can interpret the content using artificial intelligence. By interpreting the text, OCR can recognize various data fields, such as full name, place of birth, date of birth, nationality, gender and place of residence. After OCR has analyzed the information, the relevant data for the meta document is sent in a structured format (such as JSON) and can, for example, be automatically transferred to a company’s database.
Thanks to the automated registration and OCR reading, identity documents of any type can be processed within a few seconds. In addition, manual data entry errors are greatly reduced, thus improving processing accuracy.
3. Smart Document Archiving
Over the years, companies have amassed thousands to millions of documents in their archives. The large volume of business documents makes it difficult to know exactly what is in the archive, and it becomes difficult to locate a specific document. Fortunately, today software solutions exist that enable companies to browse their archives efficiently. With OCR software, your archive can be made searchable and documents in your archive can be categorized and categorized.
Many documents are already searchable nowadays because they are available in the archive in PDF and Word file format, for example. However, there are also many files scanned in the company’s archives that are categorized as image files by the computer. Through OCR processing, the text of the scanned file is recognized, read and can now be searched.
Companies can also go a step further and automatically categorize documents in their archives using OCR software. For example, it is possible to automatically sort a document into a specific category, depending on its contents or other characteristics. For example, all scanned passports or ID cards can be labeled as identification documents and all invoices, receipts, and order confirmations as proof of purchase. Archive classification simplifies the search for the right documents.
How do I find the right OCR software?
Choosing the right OCR software is similar to choosing an ERP or accounting software. Companies should be clear in advance about the minimum requirements that the OCR software must meet. The following questions provide guidance on points to consider when choosing:
- What languages does OCR recognize?
- What documents and formats does OCR support? → What is the high rate of OCR?
- Is OCR an on-premises or cloud-based solution?
- How long does implementation take?
- Is there a point of contact / account manager during implementation?
In all cases, you should compare several software providers to find the most suitable solution for your application.
What companies are using OCR technology worthwhile?
In addition to the three practical examples mentioned, there are many other areas of application. To see if OCR also makes sense in your company, it’s worth taking a look at your own corporate process. Are there processes and tasks that are ideal for automation due to their repetitive and routine nature? How many documents of the same type do you process weekly or monthly and how long does it take to process each document?
Medium-sized businesses and large corporations in particular receive large volumes of documents regularly where the use of OCR technology is particularly beneficial. If one talks about the volume of documents, then using OCR is beneficial for companies that process hundreds of documents every month.
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