Revolutionizing Invoice Scanning with OCR

Jake Jones

I’m your host, Jake Jones, a multimedia producer and brand influencer here at Zone & Co. I'm joined this week by two of my colleagues from Zone, Dennis van der Graaf, Product Manager, and Justyna Bielak, Product Owner. Thanks for joining us, guys. 

Dennis van der Graaf

I am really happy to be here. Thank you for the invitation.

Justyna Bielak

Thank you as well.

Jake Jones

If this is your first time joining the conversation, I encourage you to go back and listen to Episode 23 and Episode 24. Over the last few episodes, we've learned all about OCR invoice scanning, and some of the systems surrounding and supporting it. As we close out this topic, we're going to talk about how OCR invoice scanning can change your business. Justyna and Dennis, it's great to have you both back again to wrap up OCR invoice scanning. We've had a lot of great conversations, so I'm really excited to wrap this up. But before we do, I just wanted to give you guys both an opportunity in case maybe this is the first episode our listeners are hearing - who you guys are and what you do for us here at Zone.

Dennis van der Graaf

Thank you. I'm Dennis van der Graaf. I've worked for almost seven years for Fast Four / Zone & Co. I started really at the bottom of the company as a support rep and slowly moved through different functions where I am currently. At this moment, I'm the Product Manager of the product management team. I'm basically guiding our Product Owners on a daily basis to make sure that our Volume Apps are evolving and are becoming better and bigger products. 

Justyna Bielak

Hi, I work as a Product Owner for Zone & Co, and together with Dennis and our developers, we are focusing on ZoneCapture SuiteApp which includes scanning vendor documents and sending and receiving e-invoices. On a daily basis, we make sure that the product is stable and we deliver new features to our customers. 

Jake Jones

I'm glad to be wrapping up this topic with you guys, both such experts in this field. Let's talk about what this can do for your business. What are the benefits of using OCR invoice scanning?

Justyna Bielak

OCR can improve your end-to-end flow and ensure your data entry is well organized. Because, as we mentioned a few times, your data is coming from multiple sources. If you organize it in a way that all documents are synchronized with the OCR tool, you then make sure the end-to-end flow is covered completely and you do not lose any information in your company. The OCR tool can be a way to help you organize documents and automate classifying and categorizing them. It's not only for invoices but also for all kinds of document types that the OCR tool is able to recognize. With the OCR tool, you're able to get all documents classified and categorized, making it easy to find, retrieve, and at the same time, archive them in your system. What we see is that efficiency is increasing. When you automate data entry, you make your process faster and more accurate. Less manual data entry means that your employees can focus on analyzing the data. There's a higher chance they will actually notice some errors or frauds coming potentially from this document. 

Dennis van der Graaf

When you have an OCR tool completely integrated into your ERP system or any other system you're using, in many cases you will also have the opportunity to get split-screen functionality to see everything. For example, on the left-hand side is the document that you're working with, and on the right-hand side you see your ERP system. You have one general overview where all the data is on one screen. If you would compare that to how it used to be in the past – it could be somewhere in your email, or on your desk as a paper. This is much more convenient, everything is in one place. You have the general overview, and as a human, you can double-check really quickly. Automation of the pre-population of the data is working as expected, and there’s nothing strange happening in your system.

When you have digitized data from your document, it is something that can be used to figure out other logic. For example, you can use that data to compare it against a database that you already have. And that database can be either your vendor database inside your ERP system or maybe some kind of database where your POs are stored. This may be any kind of data source you use. Confirm and double-check if everything is exactly as you were expecting it. With that additional check and the automation you can achieve there, in many cases, you could end up in a situation where you're reducing your costs inside your company quite significantly and have more money available to do other things that are basically more important and can better direct your company.

Jake Jones

Saving time, that's saving money. What a great tool. This puts all your data in one place. It's searchable, you can pull it up, and you can easily retrieve it. That's an amazing part of the tool. And the fraud. When this is automated and you’re making a final check on something, you're gonna catch any fraud that comes through. That's such an amazing part of the tool as well. I obviously have to ask the question. Are there any cons to using this system? Anything that someone who's about to get into this and start using OCR for invoice scanning needs to know about? 

Justyna Bielak

You cannot assume that OCR will provide you with perfect recognition results because we need to take into account that every PDF looks different. The quality of every PDF is different. Of course, in the happy path testing, when we have a very clear PDF layout where everything is perfectly labeled and all data is in line, the recognition results will be perfect. But we need to remember that not all vendor PDF layouts are that clean. Sometimes, even for humans, it's hard to figure out where the invoice number actually is or where the PO number is located on the invoice. We can imagine that for the OCR tool, the same issue will happen. We also sometimes see very poor-quality scans. If the PDF is very blurry, it is also the same. If I have an issue reading this PDF, then the same issue will happen for the OCR tool. In the case of poor-quality documents, the recognition results won't be perfect. This is something that you need to be aware of. But that doesn't mean that the OCR tool is not useful. As long as the document is quite structured and of good quality, at least most of the data should be captured. Manual work will be for sure reduced. Maybe it won't be 0% effort for your employees, but for sure it will be significantly reduced. 

Jake Jones

I love how you said, if it's hard for a human to figure out, it's obviously going to be hard for the programs to figure out. It's so important to get quality scans and quality documents. That's obviously going to affect a little bit of this. I've had you both on to talk about e-invoicing. Would that be almost a solution for this? Because e-invoicing is so standardized all the way through. Is that an answer to this issue?

Dennis van der Graaf

I strongly believe that it will be in the long run. At this moment, EU forging is starting, just like we talked about in the episode about e-invoicing. In some countries, it’s already mandatory. Some countries are starting, or there's only B2G at this moment. It really depends on where you are located. I'm expecting that in the future, OCR is going to be something that's nice to have, but e-invoicing will take over because there is control from the government. E-invoicing offers insights, so fraud is not possible anymore. There are so many benefits to e-invoicing at the moment that I think it will prevail when we are 10 years further. I definitely believe that e-invoicing will take control in the long run. For now, OCR is for many companies already a really big step forward. But there is a next step to come, potentially. 

Jake Jones

Thank you, Dennis, for explaining that. Amazing how all these systems just work together. Justyna, something else we've talked about, as far as OCR invoice scanning, is the training and the auto-learning. Does that give an answer to some of these cons as well?

Justyna Bielak

Definitely. The assumption is that the longer you use the system, the better the recognition results will be. The layouts coming from your vendors are, of course, repetitive, so the OCR tool with learning capabilities is able to improve. And then, based on the documents you provide to that tool, the OCR system will be able to improve because it knows more or less what to expect.

Jake Jones

How does using OCR invoice scanning change a business, in your experience? 

Dennis van der Graaf

The fact that your employees are focused not only on data entry but also on other parts within your company or within the finance department, can be beneficial. They can execute the work they really should be executing. Because, and I think we can all be honest, entering data inside your system is important, but it is not the best way to spend time. There are better things you can do inside your company. Those are the main things we see changing quite a lot. The business analyst within the company is going to benefit from the additional data available there. They can see quickly if something is changing. Some data is not correct, for example. But what could be really interesting to the CFO, for example, is that by using OCR, the data is already there in the tool. Normally, the PDF would be somewhere in the email box, or on your desk, or still in the envelope in the mailbox. The fact that you're using OCR, means the data's already there. And maybe at that point, it’s still rough data, not refined. But it can already, for example, provide you with insight on how much I still need to pay that is in the pipeline (not yet added to my system, but the offshoring did already read it). You can take into consideration what's going to happen in 14 days with such an account, and that is also really valuable information.

Justyna Bielak

The OCR is the first step. Once you have the data, you decide what you're going to do with it. There are a lot of ways to do that. Already in the first step, when the document is being scanned, a lot of checks can be done. The vendor master data for example – you can double check if data coming from the PDF is the same as in your ERP system. Potential control duplicates can already be done, so you don’t waste time checking whether a vendor is sending the same document for the second time because maybe they are sending reminders every month. But already during scanning, this kind of check can be done. For sure, a lot of time for people who are used to manually entering data, OCR can be used in a more efficient way. They can actually start checking the red flags already raised by the OCR tool. 

Jake Jones

I love how it all kind of comes together: when you free up time, your finance team can focus on other revenue-generating focuses and objectives. What advice would you give a company that's ready to step into this? What are some things they need to think about as they're approaching this? 

Dennis van der Graaf

First, sit down and think about what you actually would like to achieve. There are many favors that OCR provides on the market, and many companies are providing some kind of integration. But really start by asking yourself. What exactly would I like to capture? What would I like to automate? What kind of data would I like to utilize inside the system? Only if you have answered those questions, you are capable of searching for a partner who could potentially fit your needs. If you just search in the wild, you see the most awesome things that you could potentially get, but does it really benefit your company? That's the question. 

Justyna Bielak

Another important question to ask yourself is – do you want the tool to be fully integrated into your ERP system, or can it maybe be an external, separate OCR tool that would require separate logging? That's also something to be considered. There are pros and cons to both solutions. If you have an external OCR tool, you need to take into account that you need to synchronize your data from your ERP system to these external tools. There might be some delay because the synchronization is usually not real-time. But at the same time, your employees would need to learn that new system. They would need to log into the external tool and probably use both systems because not all data will be in the external system. Most likely you will need to do a cross-check between your ERP system and an external OCR tool. Also worth mentioning is security: how would your company like to manage the security of your data? If you synchronize data from your ERP system to the OCR tool, you need to make sure the OCR provider is fully responsible for your data and that the data, as well as all documents, are stored and secured.

Jake Jones

Are there any final thoughts here as we kind of wrap up today's episode talking about OCR invoice scanning? 

Dennis van der Graaf

The first thing I think is important is: money. Everything will cost money. An OCR system and its implementation will cost you money in the end. But it will also save you money. What I see happening often is that users or people searching for an OCR are really focused on the exact cost, or how much this one document scan or page scan costs. But I think it is more important to look at the bigger picture. What is going to save you money in the long run? What are they offering? What kind of features do they offer? What kind of recognition do you get? What kind of integration is there? And at the end, potentially, the additional features that you look at are the benefits that are going to save you money. 

Justyna Bielak

What we see happening quite often is that customers are postponing the go-live of the OCR tool because they want to make it perfect. They want to have perfect recognition results. That's not the point. I still think that it's more beneficial to start actually using it, get familiar with it, and see where the disadvantages of the tool are and how we can improve it. Because until you actually start using it, we will not know that.

Jake Jones

Justyna and Dennis, thank you both again for being back on the show and sharing your expertise about OCR invoice scanning. 

Dennis van der Graaf

Thank you, Jake. We're really happy to be here again for this final episode. I hope this conversation clarifies a lot of information for our users. 

Justyna Bielak

Thank you, and I hope we answered and clarified for our end users the most important points and that it's clear how the OCR tool is working and how you can utilize it inside your company.