Receipt OCR (Optical Character Recognition) software is among the technological innovations that have emerged in recent years to support the work of accountants and bookkeepers. As the industry moves towards digitisation driven in no small measure by the governments’ initiatives – such as Making Tax Digital in the UK -, OCR receipt-scanning tools have become an integral part of the accounting automation toolkit.
For those unfamiliar with the technology, however, there may be some hesitation to give it a try, particularly if there are concerns about the accuracy of the software. As with any other automation tool, receipt OCR software can only save accountants and bookkeepers time and help them work more efficiently if it is accurate and reliable.
In this article, we take an in-depth look at receipt OCR software and the benefits it can offer accountants, bookkeepers and their clients. We also outline the factors to consider when choosing a receipt-scanning tool and seeking an accurate solution. Finally, we introduce you to Dext Prepare, the most accurate receipt OCR software on the market.
What is receipt OCR software?
Receipt OCR software recognises and extracts text and data from images of receipts. It converts the characters from those receipts into machine-readable text. This allows users to digitise their paper receipts and then organise and store the information online.
How does the technology work?
Step 1: Image capture
The process begins with image capture. Users either take a photo or use a computer scanner to generate an image file of their receipt. They then upload that file to the receipt OCR software. Most modern receipt-scanning tools allow users to complete the image capture and upload process on their smartphone, often via a mobile application.
Step 2: Character recognition and conversion
The receipt OCR software then analyses the image of the uploaded receipt. It identifies text characters and converts them into machine-readable text. To help ensure the accuracy of this part of the process, most receipt OCR software includes preprocessing features, which enhance the quality of the image before it’s analysed.
Step 3: Data extraction
Next, the software extracts specific pieces of data from the receipt. Depending on the tool, this data might include the transaction date, value, supplier name and other relevant details. Many receipt-scanning tools include mechanisms to validate the recognised data and to compare it against predefined patterns.
Step 4: Storage and organisation
With the data extracted, users can then organise and store it, often within the software itself. This means they have easy access to the data when they need to record their expense transactions in their accounts.
Some receipt OCR software goes a step further by preparing categorised accounting transactions based on the extracted data. Many of these tools integrate with leading accounting software like Xero, Quickbooks and Sage, allowing users to publish the categorised transactions directly to their accounts.
Step 5: Continuous learning and improvement through AI
The most sophisticated receipt OCR software uses machine learning and artificial intelligence (AI) to become more accurate over time. Users help to drive this improvement through their responses to the extracted data and suggested categorisations.
What are the benefits of OCR receipt software?
OCR receipt software offers a wide array of benefits for accountants, bookkeepers and their clients:
1. Time savings
Manual data entry has traditionally represented a significant drain on accountants’ and bookkeepers’ time. By automating the data extraction process, OCR receipt software frees accountants and bookkeepers up to spend more time on valuable advisory work and other strategic activities.
2. Greater accuracy
Manual data entry naturally carries a high risk of human error. By using technology to recognise, capture and extract the data from receipts, OCR receipt software minimises that risk. As a result, clients’ financial records are far more likely to be accurate, with fewer discrepancies for accountants and bookkeepers to untangle.
3. Faster reconciliation
By using extracted receipt data to prepare categorised accounting transactions, some receipt-scanning tools can make the reconciliation process faster and more accurate. This saves accountants and bookkeepers even more time.
4. Consistency across financial records
The receipt-scanning tools that integrate with leading accounting software help to ensure consistency across clients’ financial records by importing categorised transactions into users’ accounts. This also eliminates the need for duplicate data entry.
5. Improved organisation
When receipt images are stored in the cloud and the data is extracted and categorised digitally, the chaos of traditional receipt management is reduced significantly. Expenses can be tracked and analysed quickly and easily, while source image files are only ever a few clicks away.
6. Greater convenience
Many OCR receipt-scanning tools are available as mobile applications. This makes it far easier and more convenient for accountants, bookkeepers and their clients to capture images of receipts and create expense transactions, particularly while they’re on the move.
7. Enhanced compliance
The data recorded and extracted by receipt OCR software creates a comprehensive and transparent audit trail. This supports accurate and compliant record-keeping and can be invaluable in the event of an audit or investigation.
8. Improved client collaboration
For accountants and bookkeepers who use receipt OCR software with their clients, there are even more benefits to anticipate.
By design, most receipt OCR software is incredibly easy for clients. Tools with a simple user interface and mobile application, in particular, can help clients stay on top of their receipt and expense management with minimal supervision. This both empowers clients and saves accountants and bookkeepers time.
Many receipt-scanning tools include functionality that enables greater collaboration between accountants, bookkeepers and their clients. And with the same data available online to all parties, conversations become more efficient and productive.
The key features of accurate receipt OCR software
When it comes to choosing receipt OCR software, your greatest consideration is likely to be accuracy. After all, none of these benefits will be available unless the software can recognise, convert and extract data in receipts accurately. Here are some key features to look out for when you’re considering the accuracy of receipt OCR software:
- Can the software handle several different receipt formats, layouts and styles?
- Does the software include preprocessing features like image normalisation to enhance the quality of uploaded images?
- Does it employ machine learning and AI to continually improve the accuracy of its outputs?
- Does the software provider publish a measure of accuracy on its website?
Other factors to consider when choosing OCR receipt software
While accuracy is extremely important, it’s not the only factor to consider. Here are some additional elements to take into account when choosing OCR receipt software:
- How much data the software extracts from receipts.
- Whether the tool integrates with the accounting software platform you use.
- How well the tool automates the entire receipt processing workflow. Does it use the data it extracts to create and categorise transactions, for example?
- How easy the tool would be for clients to use. Look out for mobile functionality, a user-friendly interface and features designed to support client collaboration.
- Whether the tool includes search functionality to help you and your clients retrieve specific receipts or transactions.
- Whether the software can capture data from other sources, like invoices or bank statements.
- How robust the tool’s security measures are, and whether it complies with data protection regulations.
- Whether the tool could handle a higher volume of receipts and transactions, should your client base grow in the future.
Looking for accurate receipt OCR software? Say hello to Dext
If you’re searching for receipt OCR software with an industry-leading level of accuracy, look no further than Dext Prepare, our solution for auto-extracting financial data.
Supported by an easy-to-use mobile app, Dext Prepare is a truly client-friendly solution. It brings all their paperwork together in a standardised, digital format, and facilitates effective collaboration between clients and advisors.
The software uses machine learning and state-of-the-art AI to extract data from receipts and create categorised accounting transactions. Thanks to Dext Prepare’s integration with leading accounting software, including Xero, Sage and Quickbooks, these transactions can then flow seamlessly into your clients’ accounts.
Dext Prepare is fully compliant with GDPR data protection regulations, and stores digitised data securely for 10 years using bank-level encryption. The software complies with all tax authorities that accept the digital storage of financial documentation as proof of purchase.
Dext Prepare extracts data with 99% accuracy
Dext Prepare extracts data from receipts, invoices and bank statement with over 99% accuracy, making it the most accurate receipt OCR software available.
It supports a wide range of image file types and extracts a huge amount of data from receipts. The extracted data includes all the essential details – like the transaction date, value and supplier – as well as a host of other valuable information, like the currency, tax amount and invoice number.
The software uses machine learning and AI to continually improve the accuracy of its transaction categorisations, based on users’ responses to its suggestions. Unsurprisingly, Dext is recognised as the bestexpense management and invoice scanner app in the industry.
Ready to learn more about the most accurate OCR receipt scanning software available? Find out more about Dext Prepare.