Automatic Document Recognition: Steps, Use Cases and Benefits
Published: May 16, 2023
Reading Time: 5 min
Automatic document recognition – how does it work and what does it do?
Companies process a large number of documents every day, including letters, contracts, confirmations and delivery notes. Paper-based processes can quickly become confusing, delayed or incorrect. Most of the time, they are inefficient and cost not only time but also financial and human resources.
Many reasons to rethink the processing of documents and finally implement them digitally with the help of suitable solutions. That is why it is worth taking a closer look at how automatic document recognition works, in which areas it can be used and what benfits it brings.
What is automatic document recognition?
A document recognition solution enables the company to capture desired documents automatically. The software used for this purpose uses technologies such as optical character recognition (OCR), machine learning and artificial intelligence (AI) to analyse and classify receipts. Relevant information from the documents, such as invoice numbers, names, delivery dates or amounts, is automatically recognised and saved in a digital format. The further processing and approval process can then be carried out digitally.
Steps in the Workflow
How does that work exactly?
Automatic document recognition can be divided into the following steps:
Areas of Application
Automatic document recognition can provide support in various departments and use cases. Among others, it is used in the following areas:
Accounting
Incoming invoices can be automatically recorded and imported into the accounting software. This significantly reduces the manual processing workload for employees, makes the process more error-resistant and noticeably reduces the overall processing time per document.
Procurement/Sales
The processing of orders and delivery notes can be automated. This guarantees a better overview of the status of all orders, as well as all suppliers and customers.
(Travel) Expense Reports
Invoices can be photographed when they are received and stored in the system. The report is then completed digitally with significantly less (time) effort as soon as the employees are back at work. In this way, no receipts are lost and costs incurred (as well as planned costs) can be called up clearly and up to date for everyone. Allowances, mileage and cost summaries are calculated automatically. The process becomes quicker, more reliable and more transparent for the responsible offices.
Warehouse Management
Automatic document recognition can also be used in warehouse management to process incoming and outgoing goods automatically. The software can recognise the information on delivery notes and invoices and match it with the data in the warehouse management system. This automates stock reconciliation and avoids errors.
Further individual document types
The recording of document information is not bound to certain patterns and layouts – in principle, all documents that are used in the company can be read out. These can be, for example, time sheets, applications, certificates, CMR documents and other document types.
Benefits
Automatic document recognition offers a number of benefits for businesses. The most important ones include:
Efficiency
With automatic document recognition, companies can significantly reduce the time spent on manual processing steps and thus the throughput times per document. The resources saved can be used for more important tasks. Costs are saved and the company additionally benefits from the positive effects of the timely and fast processing of the documents, for example in the case of cash discount periods and other deadlines.
Accuracy
Automatic document recognition improves the accuracy of document processing, transmission or processing errors are avoided. Here, too, there are positive effects for efficiency and cost savings: missed deadlines, delays due to corrections or error tracing are eliminated.
Compliance
Integrated validity, consistency and compliance checks, as well as automated documentation of the entire process, enable better adherence to compliance guidelines and documentation obligations of the company. This is particularly important in industries with high compliance requirements, such as the financial sector.
Scalability
Digital solutions can easily scale and keep pace with the growth of the business. The software can handle an increasing number of documents and data volumes without the need for additional staff and training.
Transparency and Overview
Digitised documents can be found and retrieved within a few clicks. The employees involved can see the status and have relevant data in view at all times.
Independent, flexible working:
Digital solutions are not dependent on a direct exchange between the participants – processes can be carried out independently of location, even from mobile devices, and at flexible times.
Conclusion
Companies that use automatic document recognition can optimise their processes and become more competitive as a result. They benefit from a variety of advantages, including improved efficiency, accuracy, error resistance and compliance of the process. Implementing a suitable solution usually takes less effort than expected. Once it is in place, it can easily scale and be used for other use cases. By transferring it to the existing booking systems, employees do not have to undergo lengthy retraining; they can usually work with the new tool immediately.
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