OCR stands for Optical Character Recognition. In its simplest form, OCR is a way for computers to identify and extract pieces of information from documents - invoices, essays, books. These could be physical documents (printed on a piece of paper) or digital documents - PDF/ Word/ Image files.
OCR has been around for about 5-6 decades now, but it’s only now that field accuracy levels have reached a point where the technology can be applied to many use cases in finance. But before we go there, let’s delve into the history of OCR, and how it came to be employed in the BFSI domain.
The origins of OCR can be traced back to the work of Emanuel Goldberg, a Russian inventor, in the 1920s. Goldberg created a machine that could read characters and convert them into standard telegraph code. This machine was one of the earliest forms of OCR technology, even though its capabilities were quite limited compared to today's standards.
In the 1950s and 1960s, the development of OCR technology picked up pace. During this period, David H. Shepard, an American inventor, created the first commercial OCR system called Gismo. Gismo could read fonts that were available at that time and was used by the U.S. Air Force for reading and transmitting printed messages. In 1965, the US Postal Service introduced an OCR device for sorting mail.
Another significant advancement came in the form of IBM's 1403 line printer. Released in the early 1960s, it featured an attached device that could recognize characters using a small photocell and light. It was particularly used for recognizing the numbers printed on bank checks, and it was this application that propelled OCR technology into the limelight, as banks around the world began adopting this technology for processing checks faster and more accurately.
By the 1970s and 1980s, the development of OCR became increasingly sophisticated with the advent of computers. Software-based OCR became a reality, allowing for the recognition of a wider range of fonts and, later, even handwritten texts.
Today's OCR systems are highly advanced and integrate artificial intelligence and machine learning. This allows them to recognize text in a vast array of languages, styles, and layouts with impressive accuracy.
Before we delve into the myriad benefits of OCR solutions in invoice capture, let's take a moment to understand what this technology actually entails.
Invoice OCR software is like your business finance assistant, employing Optical Character Recognition to transform the chaotic realm of invoices into structured, actionable data. Think of it as a digital sleuth, deciphering and translating data from invoices into machine-readable text.
So, how does this dance of machines unfold? All the invoices, both digital and paper-based, are uploaded into the system. The OCR software then dons its hat and meticulously extracts chosen fields like invoice date, invoice number, PO number, payment details, and supplier information. The extracted data is organized into a format that's not just coherent but also easily searchable whenever the need arises.
There are primarily 2 ways to capture invoices using OCR.
The traditional path involves a member of your team manually uploading invoices to the OCR platform. The software then works its magic, extracting relevant data for further processing. It's like inviting OCR into your home, handing it a pile of papers, and letting it do the sorting.
Here's where the magic truly shines. CashFlo pioneers the automatic email, WhatsApp capture approach, transforming the way businesses capture invoices. Imagine a seamless flow where invoices from vendors materialize directly in the OCR system. When a vendor sends an invoice, the system intelligently scans the inbox, identifies the relevant email, extracts the attached PDF, and populates the data onto the platform automatically. It's like a virtual assistant that anticipates your needs and executes them effortlessly.
Ankur Bhageria, CEO of CashFlo says, “The other thing to keep in mind as far as OCR solutions is how do you capture the invoices? Right now there are two ways: Either somebody in your team is sitting and uploading those invoices on an OCR platform, then the platform reads it. The other way, and this is something that again, we believe is the right way to do, is can the solution pick up the invoices automatically from the vendor email itself? So whenever the vendor sends across the invoice to the buyer, the system should ideally be capable of picking up the relevant email, picking up the relevant PDFs and then scanning it and populating it on the platform.”
For a comprehensive list of factors, click here to delve deeper into what makes an ideal OCR solution.
At first glance, the adoption of OCR solutions might seem like a formidable leap into the unknown. But, the benefits that await are nothing short of transformative.
Manual work, while essential, can also be a pitfall of potential errors and typos, leading to financial hiccups (Just ask Citibank, which transferred $900 million by mistake). With a robust invoice extractor backed by OCR technology, not only do you sidestep future costly mistakes, but you also unlock a treasure trove of time and cost savings. Liberating your workforce from the shackles of manual invoice processing means they can channel their energy into more productive endeavors, yielding a substantial return on investment. Here are 5 ways in which OCR can benefit your finance team:
Certainly! Adopting OCR (Optical Character Recognition) technology can be a game-changer for finance teams. Here are some key benefits:
For a comprehensive list of benefits, click here to see all the ways in which OCR technology can transform the way finance teams operate, making them more efficient, accurate, and agile in handling their responsibilities.
In the world of OCR, accuracy is king. Achieving high precision at the field level is the secret sauce that separates top-tier OCR solutions from the mediocre ones. When it comes to invoice capture, precision is the name of the game for capturing crucial fields like vendor names, item descriptions, amounts, vendor bank account information, GST and IRN numbers.
The playing field, however, isn't uniform across OCR solutions. Some might tip the scales with a 60-75% accuracy rate, while others soar to heights as lofty as 95%. Case in point, CashFlo's pioneering approach leverages advanced generative AI technology to fine-tune accuracy rates. Imagine a scenario where invoices are effortlessly captured with near-perfect precision. This is precisely the realm that CashFlo's OCR solution unveils. Leveraging the might of AI and Machine Learning (ML), CashFlo empowers businesses to capture invoices via PDF uploads, emails, and even WhatsApp. The result? An accuracy rate that approaches perfection, reducing errors and inefficiencies to a bare minimum.
“What we’ve seen is that when invoice capture accuracy is only 65%, our clients can’t really trust the system. Even invoices captured correctly are double checked. And there’s a sense of mistrust of the system itself. However, when accuracy goes up to 95%, then there is an inherent trust established in the system. Users tend to not doubt the system when the invoice is captured accurately. With CashFlo, our users can also see the 5% of invoices where there’s a doubt, or where the system has not been able to clearly capture the information. This puts control in the user’s hand when the system is in 2 minds. This further enhances trust.” says Akshay Sethi, an employee at CashFlo.
CashFlo stands as a beacon of innovation in the OCR landscape, blending OCR technology with the prowess of generative AI. This potent combination, like a finely brewed potion, harnesses recent strides in artificial intelligence. Customizing models to each company's unique invoices sets the stage for a self-learning process that pushes the boundaries of accuracy and efficiency.
Generative AI is the beating heart of CashFlo's OCR solution, catapulting accuracy rates into the high 90s. In fact, we’re seeing accuracy rates of 95%+, never seen before in the realm of OCR. The technology's capacity to extract and interpret critical invoice data instills a newfound sense of confidence in businesses, empowering them to embrace automation without trepidation.
With the power of AI, CashFlo has redefined the landscape of invoice capture, offering an unparalleled accuracy rate that approaches the elusive 100%. Harnessing the prowess of AI-powered invoice scanning, CashFlo presents a solution that revolutionizes how businesses manage their financial operations.
The evolution of OCR solutions isn't isolated; it's a ripple in the broader AI revolution sweeping through finance functions. AI and machine learning have transcended buzzwords, becoming indispensable tools in automating complex financial tasks. The ability to recognize patterns, interpret data, and make informed decisions is propelling finance into an era of unprecedented efficiency.
CashFlo's innovation transcends traditional OCR boundaries. It introduces a realm of AI-ML powered invoice capture that ensures accuracy is no longer a distant goal but a tangible reality. With CashFlo, businesses can drastically reduce errors by over 95%, an achievement that has far-reaching implications for financial processes.
Finance functions are no longer confined to tedious data entry or cumbersome manual verification processes. AI-powered systems, backed by OCR technology, can seamlessly integrate with existing ERP systems, validating data against master records. This not only expedites processes but also minimizes the risk of errors that often lurk in the shadows of manual intervention.
The Indian market has seen a rise in digital solutions catering to the financial sector due to the country's digital transformation wave. Here's a list of some notable OCR solutions:
Remember, while selecting an OCR solution, it's essential for businesses to ensure compatibility with their existing systems, assess scalability, verify data accuracy levels, and consider integration capabilities. But more importantly, field level accuracy is among the most important considerations while making the above decision. GO for a tool that offers even 5% better accuracy, and it can be a game changer.
In the ever-evolving realm of business, staying ahead of the curve is more than a choice; it's a necessity. OCR solutions are not just tools; they're gateways to unlocking a future where finance functions hum with precision, accuracy, and unparalleled efficiency. The power of OCR, amplified by generative AI, is a testament to how innovation can transform the mundane into the extraordinary.
As businesses tread the path of automation, OCR solutions are guiding lights, illuminating the way forward. The benefits extend beyond cost savings; they encompass the empowerment of human capital, the eradication of manual errors, and the liberation of time for strategic endeavors. Whether invoices are received via email, WhatsApp, or PDF upload, CashFlo's custom-built OCR system, fueled by AI and ML algorithms, ensures accuracy remains paramount. With CashFlo's cutting-edge approach, the potential for accuracy soars, setting the stage for a new era where finance functions aren't just efficient but also visionary.
In a world where AI and machine learning have transcended mere buzzwords to become the backbone of modern finance, OCR solutions stand as beacons of change. They embody the convergence of technology and financial acumen, promising a future where efficiency and accuracy are the cornerstones of success. The journey ahead beckons, inviting businesses to embrace the possibilities that OCR and AI bring to the table, ensuring that the realm of finance continues to evolve, adapt, and thrive.