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What is Optical Character Recognition (OCR) Software?

Keeping up with all the documents and data that an organization receives can be overwhelming.

Back-office staff wastes lots of time keying (and re-keying!) data, shuffling paper and emails, fixing errors and mistakes, chasing down lost documents, and filing and retrieving physical documents.

All the while, stakeholders anxiously await the information they need to make decisions.

Optical character recognition (OCR) solutions help alleviate this burden by automatically converting machine-printed text on physical and electronic documents into actionable information.

This article explains how OCR works and how organizations can benefit from the technology.

What is Optical Character Recognition (OCR)?

OCR automatically converts the information printed on documents into machine-readable text.

Sometimes referred to as text recognition, OCR has been around for years but has continued to achieve strong growth as organizations look for ways to manage the ever-increasing volume of documents they receive and automate the capture of the information the documents contain.

Data can be extracted from scanned documents and PDFs.

The best OCR solutions use artificial intelligence (AI) and machine learning to interpret data from documents of any type, with any layout or format, at a high rate of speed and accuracy.

How does OCR work?

OCR converts the information printed on physical documents into actionable information.

There are several steps to the OCR process:

  • Image acquisition: the OCR software analyzes scanned images or digital documents.
  • Preprocessing: the OCR software de-skews, de-speckles, and cleans up the images.
  • Text recognition: the OCR software interprets or recognizes the text.
  • Postprocessing: the OCR software converts extracted text data into a digital file.

Together, these steps automate the manual keying that bogs back-office staff down.

Let’s take a closer look at how OCR software works.

The OCR process starts by converting physical documents into an electronic format using a high-speed production scanner such as the ibml Fusion or other device, software, or outsourced service.

The software can interpret the characters on documents submitted electronically.

Scanned images are cleaned to help ensure optimum image capture accuracy.

The software then analyzes the images to identify characters that must be captured.  Some OCR solutions also analyze the structure of a document to identify text that must be captured.  It interpret characters on a document using algorithms such as pattern recognition, where the software uses examples of text in various fonts and formats to recognize characters, and text recognition, where the software interprets characters by applying rules for features specific to a letter or number (e.g., “The number seven is an angled line with a line connected at the top.”).

Finally, identified characters are converted into ASCII code that can be used by computer programs.

OCR solutions typically provide a score indicating how confident the technology is in the accuracy of captured data, so users can make informed decisions about how they want to use the information.

What are use cases for OCR?

Any document-centric business process can benefit, including:

  • Invoice processing: OCR software can extract header and line-item data such as the supplier’s name, invoice due date, product quantity, product unit price, and invoice total.
  • Travel and expense (T&E) management. The OCR technology built into T&E solutions makes it easy for business travelers to submit receipts for reimbursement.  The software extracts data from images of receipts taken with the business traveler’s mobile device.
  • Lockbox processing: OCR automates the capture of remittance details such as the customer’s account number, the total amount due, and the payment due date.
  • Sales order processing: OCR software can automatically extract the information from customer sales orders and routes it to the appropriate individual or system for fulfillment.
  • Logistics. OCR is ideal for extracting data from package labels, bills of lading, confirmation of delivery receipts, invoices, and other documents used as part of the shipping process.
  • Big Data. By unlocking the information contained on physical documents and PDFs, OCR can be the first step in an organization’s data modeling and cash forecasting initiative. Data can be quickly mined, without the need for staff to manually review or input information.
  • Records management: OCR can assist with indexing documents in a repository.
  • Transportation screening: OCR software can recognize Passport numbers and driver’s license numbers to assist with screening individuals for international travel and security.

Whether it’s extracting data from bank statements, contracts, employment applications, insurance claims, utility bills, or other printed documents, the opportunities to use OCR software are limitless.

What are the benefits of OCR?

Automating the extraction of data from documents delivers significant benefits to organizations.

  • Reduced costs. OCR eliminates manual keying, paper and email shuffling, and inevitable typos that consume staff time and drive up back-office costs.
  • Faster cycle times. Digitizing physical documents on a high-speed scanner and extracting data automatically reduces the friction that bogs back-office processes down.
  • Streamlined workflows. Documents can be digitally routed to downstream systems, processes, or individuals based on pre-set business rules for the data extracted by OCR.
  • Enhanced customer experience. The high level of data capture accuracy achieved by best-in-class OCR solutions helps organizations deliver an optimal customer experience.
  • Business continuity. Digitizing, extracting, and centrally archiving the information from documents safeguards mission-critical information from break-ins, fires, and disasters.
  • Improved collaboration. Converting physical documents into PDF electronic format makes it easier for dispersed stakeholders to edit, annotate, format, and search documents.  Digitally stored documents and data also can be instantly accessed, at any time, from any location.

These are some of the reasons that organizations of all sizes across all industries are deploying OCR.

How to choose the right OCR solution

There are lots of OCR solutions out there.  Choosing the wrong one can set your organization back.  That’s why it’s critical to partner with a leader in OCR technology such as ibml.  We are constantly improving our OCR solutions by integrating the latest advancements in software and scanners.  With OCR technology from ibml, organizations can take back control of their mission-critical information.

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