The marriage between optical character recognition and accounting... At a glance, you may think automation isn't necessary to your accounting process. However, you'll want to keep the following in mind:
The marriage between OCR and accounting is more valuable than you may know. Here is how OCR is changing the accounting landscape forever.
The expression 'out with the old, in with the new' has never been more prevalent than it is with OCR and accounting. Although manual accounting has been around for decades and has served a valuable purpose in the past with its flexibility, the process is now outdated and lacking efficiency.
These are the most common challenges that accounting departments face using their outdated process:
Departments spend hours of their time on manual labor that is repeatable and can be automated. Consider how many accounting tasks there are that must be manually entered and the average salary of your staff that is in-putting it. This is time and money that would be better spent on completing more important tasks.
Mistakes are more prevalent with manual work, which could upend relationships with suppliers, customers, etc. There are many industries that are fierce with competition, so even the smallest mistakes could cost you a sale.
According to FEI, "No fewer than 95% [of business leaders] have seen poor quality data undermine their businesses' performance. And human error is among the leading culprits behind data problems."
Reducing the number of inaccuracies and risks associated with manual data entry allows businesses to continue building and nourishing meaningful relationships with more reliability.
Manual data entry is more prone to errors that are difficult to notice until it’s too late. These seemingly minor mistakes can lead to much bigger and more expensive problems like fines and penalties.
In fact, Harvard Business Review reports that incomplete data costs U.S. businesses more than $3.1 trillion per year in expenses. When companies aren't armed with the most efficient processes and tools to protect them from unintentional errors, expense risks are maximized, affecting all businesses — big and small.
Optical Character Recognition (OCR) is an automated technology that scans documents and converts any kind of written text into computerized text data. In accounting, this process is growing in importance. It's cutting processing time in half, and allowing staff to input accounting data quickly and efficiently, before getting on with more important matters.
Going paperless and converting paper documents to digital is essential for modern-day businesses, clearing out space and improving productivity. OCR speeds up the process, automating the conversion of complex financial, healthcare, and legal documents.
As of right now, more than 75% of accounting tasks can be automated with accounting software and automated technology, saving businesses a substantial amount of time and money in the process.
Optical Character Recognition is transforming accounting in the following ways:
OCR optimizes the data entry process by removing the possibility of manual errors and improving efficiency and accuracy. Documents are scanned and converted to your digital database without hours of typing and tedious upkeep.
Improve vendor relationships with automated invoice processing. Automation reduces the threat of large volumes of invoices, making payment cycles smoother and faster, and reducing common operational costs and errors.
Rather than auditors coming to your physical location to audit your documents, OCR-generated documents can be audited remotely. This means less time scheduling and fitting an audit into your busy day and more time keeping the accounting department running smoothly. This advantage combined with automated audit protection will keep your business safe.
OCR data is encrypted on servers rather than stored in physical locations that may be vulnerable to security breaches, or being lost or destroyed. This is significant for businesses today since at least 75% of all paper documents are lost and this process can better protect your data.
Digitizing data and other documentation allows you to store everything in the cloud, ultimately removing the need for unnecessary amounts of paper communications and storage. According to Finances Online, accounting is a crucial area for automation, with 90% of accountants saying that cloud accounting and digital business processes can be the key differentiator among companies in the near future.
It's challenging enough to ensure your accounting information is compliant and accurate, without the hassle of human error and manual entry adding to it. Automated technology like Optical Character Recognition is the perfect solution to many of your accounting concerns.
After all, there's a reason more than 29% of automated technology is used in accounting, completing more than half of all accounting tasks. Consult a trusted CPA like Kaizen to guide you through the modern-day accounting process and keep your business running smoothly.
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