Data entry is a time suck.
There are precious few bookkeepers out there who love data entry. It’s a tedious task that stretches on for hours, gets in the way of performing higher-value tasks, and results in disengagement by employees.
The data entry requirements for accounting teams only grows as time goes on, and trying to retain talented staff is a struggle if most of their time is spent on something so mind-numbing.
Luckily, there is technology that reduces this burden and empowers your accounting team with the tools they need to focus on work they love to do.
Data Entry is Error Prone
One of the biggest dangers of data entry is that it’s all too easy to introduce errors into the process. Your team is working with invoices and other accounting paperwork that comes in many forms. They’re spread across software systems, in hard copy form, in email inboxes, on network drives, and countless other locations.
When an error gets introduced in accounting, it can result in invoices that get paid late, less than the amount due, or more than is due. These errors impact cash flow predictions and other financial projections, which influence many decisions. You can also end up getting a reputation that you’re not a reliable company to do business with, as many errors will give your partners pause.
On top of that, these errors have the potential to generate incorrect tax documents. Depending on your industry, you could be facing significant financial penalties for taxes that aren’t done properly. Some industry regulations could also be affected.
The 1-10-100 Rule for Quality
When you’re trying to improve the quality of your accounting operations, a good rule of thumb is to look at the 1-10-100 Rule for Quality. It looks at the costs associated with prevention, correction, and failure. The rule emphasizes that investing in prevention makes more sense than needing to correct an issue later on, or encountering failure due to a lack of preventative practices. Your budget is better served spending $1 on prevention, rather than $10 on correction or $100 on failure.
Prevention refers to the practices, procedures, processes, policies, training, and technology you use to do the work right from the beginning. Accounting technology that improves productivity and accuracy of your data entry is an excellent way to follow the 1-10-100 rule.
OCR Software Changes Everything
Optical Character Recognition, or OCR, software is the technology that makes data entry so much easier for accounting teams. It converts documents into a standardized format and extracts the data needed to automate accounting processes. This digital transformation makes a massive difference in the amount of manual data processing needed and the way that your accounting team does their work.
How OCR Software Works for Accounting
OCR technology is capable of looking at a given document and converting it into a digital format. Typically, you would run paperwork through a scanner or take pictures of them with a mobile device equipped with an OCR app. The OCR software intelligently examines the document and extracts important data from it, as well as creating an editable and searchable document.
Structured data, such as invoices that have an identical format, are among the easiest types of documents for OCR to process effectively. However, even unstructured data entry can be managed with an advanced OCR solution designed for accounting.
The document doesn’t need to be a hard copy for OCR to work with it. You can send pictures of documents, PDF files, and other digital formats through this process, so you end up with better structured data. The OCR software handles the bulk of its process with automated methods, so human input is minimal.
Benefits of OCR Software
OCR software offers many benefits for your accounting team.
- Saving work hours: Your workforce no longer needs to spend countless hours on tedious data entry. Instead, they get to turn their attention to tasks that relate to their core competencies.
- Happier accountants: When your staff gets to do the work that they’ve trained to do, rather than low-skill duties that don’t use any of their specialized talents, they’re more engaged with what they’re doing. Your team has higher satisfaction with their jobs and you reduce costly turnover.
- Move closer to a paperless office: If you’ve been working on reducing the number of hard copies floating around the accounting department, OCR is an excellent way to move forward in that goal. While it might not be feasible to achieve a fully paperless office, you can drastically reduce how much you’re working with.
- More office space: Once you’ve cut down on the paperwork in your office, you can reclaim space that was previously taken up by document storage. If you’re in a smaller building or suite, freeing up this area is a big help.
- Improving the scalability of your accounting team: Organizations end up with more data every year, which can result in more data entry requirements. OCR software allows your team to do more with less, which sets you up for seamless scaling as the data and documents you deal with continues its exponential growth rate.
- Cutting down on human errors: Manual data entry offers many opportunities to input incorrect information. When the numbers are off in accounting, it can have far reaching implications for the business. You could be making decisions based off incorrect cash-flow projections or paying too much to a vendor. By automating most of the processing, you reduce this risk. Staff also has more time to focus on catching any errors that do get introduced during parts of the process that aren’t automated.
- Speeding up invoicing processing time: The time it takes your accounting team to process invoices makes a big difference in your organization’s expenses. You avoid penalties, late fees, a bad reputation for lack of payment, and other negative consequences that come from the late processing of invoices.
- Improve data quality: The OCR software makes it easier to check for duplicated documents, confirm numbers, and double-check potential problems.
- Boosting data visibility: Since all of the documents get digitized, you have the ability to search and organize this information as needed. Having more visibility into your financial data is an important part of making better data-driven decisions.
- Storing all important documents in one place: Trying to track down a missing invoice is an exercise in frustration. OCR software improves your document management by helping you get all of your data into a single system.
- Better data security: You deal with a lot of sensitive information that could cause damage if it fell into the wrong hands. When you have a better organization of your accounting documents, it’s much easier to put security in place to ensure that only the relevant parties have access to it.
- Lower costs: You’re not hiring more and more people to deal with an ever-increasing number of documents. Instead, you can hire for the roles that are best positioned to growing your organization, and have higher productivity across the board.
- Easier to integrate accounting data: If you want to pull your accounting data into another software, it’s much easier to accomplish that when your records are already digitized.
- Automatically sort documents: The OCR system can extract key data points to assist with categorizing each one.
- Building a more resilient business: A fire, flood, earthquake, or another disaster could result in a loss of all of your hard copies. Digitizing your data with an OCR software allows you to have a better disaster recovery process.
- Easier audit trail: If you ever need to look into accounting documents for an audit, having it in a digital and organized form makes this process simple and lower stress.
- Setting up custom business rules: You can incorporate your own business rules into an advanced OCR software so that documents are routed to the appropriate party in the organization or its partners.
- Automatic validation: If you have predictable values that should be in an invoice or a similar document, you can have the OCR software look for them. If the expected value is not present, then it can be flagged for a staff member to take a closer look at it. This type of accounting automation is helpful for conducting business smoothly.
- Better allocation of your resources: Your accounting team has limited time. By automating mundane processes that take away large chunks of work hours, you’re able to better allocate your team’s resources.
- Synchronize your data: Your accounting team can quickly cross reference data between documents, have updates reflected across all related paperwork, and maintain up to date versions of all accounting paperwork.
- Create a single source of truth: You’re no longer looking at three versions of the same document or redundant work because someone misplaced a key invoice. Instead, you have a single source of truth that everyone in the organization is working off of.
- Streamline your accounting workflows: When you don’t need to fit in hours of data entry work every day, you have more efficient workflows that offer greater flexibility and agility. This process improvement is likely to be well-received by your staff.
- Enforce compliance: Another benefit of setting up custom business rules is that you can automatically enforce compliance with all relevant regulations and business requirements. If someone is out of compliance, you catch it as soon as the document comes in, rather than days, weeks, or months down the road.
- Better accessibility to your remote workforce: Remote accounting teams are of critical importance right now, but trying to get them access to the data they need can be challenging. You need to manage it in a safe and secure way, due to the sensitive nature of the data they’re working with. By converting your documents with OCR, you have an easier time getting resources to each remote worker as they need them. With reduced data entry requirements, you can keep on top of invoices even when everyone is working out of their home offices.
OCR & Accounting Automation
Advanced OCR software can integrate with other solutions that you use for your accounting team. Pairing OCR with an accounting automation platform like DocuPhase can enable you to free up even more time for your accounting team, allowing them to focus on higher value tasks.
One of the most powerful integrations is to inject accounting data extracted by OCR directly into an Enterprise Resource Planning, or ERP, platform like Microsoft Dynamics GP, NetSuite or Acumatica.
By synchronizing this data into the ERP platform, you make it available to everyone else in the organization. Upper management can use the accounting data for presentations, reports, and decision-making, the sales team can track their cash flow projections, and other departments have easy access to important data.
Another OCR software integration that’s particularly useful is putting it together with a document management solution. The OCR software develops the structured data that the document management software needs to organize all of the digital assets, and you end up with a comprehensive system for working with all of your accounting documents.