The Benefits of OCR Technology in Finance and Accounting

by Zach Haris


The world has already embraced the benefits of digitized processes and products. Smartphones are most individuals’ tools for everything from grabbing a ride, paying bills, sending work documents, to daily communication. Government offices schedule appointments and have applications done on their websites.

Digitizing records saves both time and paper. Archiving is done much faster and placed in a larger storage space. Access is more practical and efficient, making information easy to search and share among relevant parties.

Finance and accounting would benefit greatly from digitizing products and process. Optical character recognition (OCR) can scan documents and images, converting them to files in different formats. The technology lets accountants and financial analysts focus on the more specialized aspects of their jobs, leaving the routine tasks of deciphering old receipts and statements to computers.

More and more accountants are performing higher skills, rather than the manual ones most did during the analog age.  OCR will help accountants and analysts focus on the more technical aspects of their jobs while also introducing more accuracy and precision into mechanical tasks. Here are some benefits in using optical character recognition in any finance endeavor.

Better Auditing and Reporting on Expenses

Financial advisory firm Stout Risius Ross reports that businesses spend more than $1B in fraudulent expense reimbursement costs. Some instances include blank receipts from cab drivers, blank receipts on non-business transactions and adding more to the actual expense, double receipts from restaurants and hotels, and other means of adding fraudulent charges into business expenses.

OCR management can avoid and stop these types of reports. For instance, you can require staff to use a mobile device to capture their receipts in real time. The new protocol using OCR will force employees to stop reporting fraudulent expenses.

Optical character recognition in finance will also benefit auditors when they go through these expense reports. Audits can be conducted with better depth and faster turnover, providing auditors an easier search through expense documents and budget reports. The auditor can spend more time analyzing the transaction details rather than just collating and reporting each one as is.

Faster Processing of Accounts Payable

Human beings are prone to error. It takes time and practice before one can thoroughly manually enter data for records. The task itself is repetitive and tired eyes or hands will lead to more errors. If employees need to input massive amounts of data, the company ends up spending more on overtime and overhead costs like electricity.

OCR technology introduces improved efficiency by doing these things faster and with greater precision and accuracy.  At the same time, the business spends less on operational costs and labor expenses on employees. Employees can focus on resting after hours and devoting office hours to specialized tasks. Streamlining invoice processes for payables records is the first step to better accounting. The OCR would work by going through a volume of invoices from several suppliers or vendors. From here, they can configure the invoice formats and establish relevant data.

Other OCR technologies have a thorough step-by-step process. A good program can have the invoices from different sources move towards one destination, regardless of the form. Automated classification algorithms are used to recognize the information and organize them accordingly. Data can be extracted rapidly from each field indicated; numbers are validated in a faster process based on calculations and database. All information can be verified using an intuitive operator interface to assure accuracy. Gathered data is stored as searchable PDFs staff can easily refer to in the future.

Improved Payment Processing

Structured documents can also be interpreted by OCR technologies. They’re usually able to decipher key data found on a static layout, letting you perform tasks such as depositing checks using your phone. There’s no need to go all the way to your bank, line up, and wait an hour or so to process a check. If your bank’s app uses OCR, you can just take a photo and the check amount will be found in your account in no time.

Absorbing All Kinds of Information

Apart from receipts, transactions, and checks, OCR can read through long texts on books and presentations. More developed technologies can even analyze handwriting, making meeting notes and information collation faster after important gatherings.

For long texts, OCR can scan printed documents and convert each line into searchable, editable and selectable live text. There’s no need for you to manually retype each sentence while you write reports or disseminate the information. You also avoid inaccuracy in terms of spelling and flow.

Soft copies of each document will also be part of the system’s archive. There’s no need to worry about allotting enough office space for thick books and the paper settling dust over the years.

Small but Significant Benefits

Apart from converting information into accessible files, users are free to download what they need into their laptops, computers, and smartphones. Accessibility answers storage and compatibility, letting auditors, analysts, and accountants work remotely or from the comforts of their preferred device. There’s no need to worry about misreading the information or being unable to work with it on a business trip abroad.

Having a capable and experienced OCR provider will assure your company each stated benefit. You look forward to more efficient operations, cost-saving solutions, and focus on employees. But you need the right OCR partner to make sure the information is safe and only kept among relevant partners. Outside access to delicate financial information could compromise any client relations or projects you’re currently working on.

Worlds Forum Accounting has excelled in providing outsourcing services in finance and accounting. If you’re looking into solutions, Debt-ridden Accounting has the expertise to get you started and provide this specific service. The company’s credentials include Six Sigma Certification, ISO 9001:2008, ISO 27001:2013, compliance with HIPAA and Sarbanes-Oxley. Given the specificities of OCR, you need a provider that truly understands the technology and assure expertise. Debt-ridden Accounting is sure to offer these, particularly at a feasible cost.

Bookmark or Share this post
  • Facebook
  • Google
  • LinkedIn
  • TwitThis

5 Simple Ways To Create A Balance Sheet

by Selina Stewart

First things first: what is a balance sheet? A balance sheet is an essential way to evaluate a business’ financial health and can be calculated every month, quarter or half-year to create a snapshot of a company’s net worth.

In this article, we will be discussing how to calculate an annual balance sheet for a business. Creating an annual balance sheet will help you evaluate the equilibrium between your company’s assets against its liabilities, to determine the overall financial strength and value of your business. For an example of a full balance sheet, scroll down to see the example at the end.

1. Understand the Basic Equation

The following equation is a simplified representation of what a Balance Sheet calculates: the total sum of your company’s assets equals the value of the company’s liabilities and owner’s equity.

Assets = Liabilities + Owner’s Equity

As with any math equation, you can play around with the equation to isolate one category. Most business owners and investors use the following equation to calculate the value of the company’s equity.

Owner’s Equity = Assets – Liabilities

2. Calculate Assets

Assets, money, investments, and products the business owns that can be converted into cash: These are what put companies in the financial positive. A thriving company should have assets that are greater than the sum of its liabilities; this creates value in the company’s equity or stock and opens up opportunities for financing.

It’s important to list your assets by their liquidity—the facility by which they can be turned into cash—starting with cash itself and moving into long-term investments at the end of the list. For the purpose of an annual balance sheet, you can separate your list between “Current Assets,” anything that can be converted into cash within a year or less, and “Fixed Assets,” long-term possessions that can be sold or that retain value down the line, minus depreciation.

“Current Assets” may include:

  • Cash: All money in checking or savings accounts
  • Securities: Investments, stocks, bonds, etc.
  • Accounts Receivable: Money owed to the business by a client or customer
  • Inventory: Any products or materials that have already been created or acquired for the purpose of sale
  • Prepaid Insurance: Any payments made in advance for business insurance coverage or services (this tends to be paid in advance for the year).

“Fixed Assets” may include:

  • Supplies: Important objects used for business operations (manufacturing equipment, computers, office furniture, company cars, etc.)
  • Property: Any office building or land owned by the business
  • Intangible Assets: Intellectual property such as patents, copyrights, trademarks and other company rights that retain intrinsic value

3. Determine Liabilities

Liabilities are the negative part of the equation; these include operational costs, debt and material expenses. Generally speaking, the lower your liabilities, the greater the value of your company (and equity) can be. “Current Liabilities” include cash spent, as well as any debts that must be paid out within one year, while “Fixed Liabilities” refer to bills due anytime after one year.

“Current Liabilities” may include:

  • Accounts Payable: Money owed by a business to its suppliers or partners
  • Business Credit Cards: Company credit card bills due
  • Operating Line of Credit: Any money owed to a bank that has extended the business an operating line of credit
  • Taxes Owed: Any federal and state taxes owed for one year
  • Wages and Payroll: Employee compensation, including wages, medical insurance, etc.
  • Unearned Revenue: Any revenue garnered from a service or product that has yet to be delivered to the customer or client

“Fixed Liabilities” may include:

  • Long-Term Mortgages: Property or building mortgage expenses
  • Bonds payable: Long-term bonds owed to the government, as well as any interest paid on the bond (this interest is often semi-annual and can be added to “Current Liabilities”)
  • Pension Benefit Obligations: The total amount of money the company owes to employee pension plans up to the current date
  • Shareholder’s Loan: A form of financing provided by shareholders
  • Car Loan: Any long-term car loans on company vehicles (plus insurances costs)

4. Equity Valuation

Owner’s Equity = Assets – Liabilities

The value of your assets minus your liabilities will result in an estimation of the value of your company’s capital. If this equation results in a negative net worth, this can be dangerous for a small business; it will make it difficult for to secure financing, which can be troubling for a company whose expenses are already eclipsing its profits.

If, however, a company has positive equity, this means that business owners have the option of acquiring capital by selling part of their business through equity, stocks and/or dividends.

In a sole proprietorship, this is called the “Owner’s Equity”; in a corporation, this is called “Stockholder’s Equity,” and it can include common stock, preferred stock, paid-in capital, retained earnings, etc.

“Equity” may include:

  • Opening Balance Equity: The initial investment into the company
  • Capital Stock: The common and preferred stock a company issues
  • Dividends Paid: Profits paid out to shareholders by a company (applies to corporations)
  • Owner’s Draw: Portion of the revenue used by company’s owner (applies to sole proprietorships)
  • Retained Earnings: The sum of a company’s consecutive earnings since it began

Having an Income Statement will assist you in filling out this section since it helps you determine the opening balance equity and the retained earnings.

5. Consider All Applications

A solid balance sheet is an essential financial statement and part of a complete financial report. It can be used to secure financing or take a snapshot of a company’s current financial state, but it can also be used to evaluate the worth of your company over time. While accounting software like QuickBooks can easily generate balance sheets and other financial statements, it’s good to know the process to ensure your calculations are accurate.

Comparing your “Current Assets” minus “Current Liabilities” on a yearly basis will paint a picture of your company’s annual growth and expenses, which may have room for improvement. Calculating “Fixed Assets” minus “Fixed Liabilities” can provide a more long-term view of the company’s value over time and its ability to pay back long-term debts or expenses built up over many years.

Remember, the expenses of different companies may vary greatly, so don’t forget the assets and liabilities that are specific to your industry or area. For more help with balance sheets and other financial statements, see our infographic on financial reporting.

Bookmark or Share this post
  • Facebook
  • Google
  • LinkedIn
  • TwitThis

How to help clients go cashless

by Junita Jackson

The day of the cashless business continues to draw ever closer. You may have heard of how Visa declared a “war on cash” last month as they offered $10,000 to individual restaurants to go cashless, and the bank calculated that businesses could save billions in revenue and save millions of hours in labor. And while Visa does stand to directly benefit from such an approach, accountants should begin talking to their business clients about the reasons they should go cashless.

This conversation needs to happen sooner rather than later. Going cashless entails upgrading a business’s digital payment technology, and the sooner the business realizes the benefits, the sooner they can consider how to upgrade. At the same time, accountants must remind clients of mistakes that can be made while going cashless and afterward as well as how to avoid them.

The benefits of a cashless business

The simplest way to talk to clients about the benefits of going cashless is to note how fewer individuals these days are using cash. A 2016 Gallup survey found that only 24 percent of Americans make all or most of their purchases with cash as opposed to 36 percent five years ago. Perhaps unsurprisingly, the group who have dropped off the most in using cash are technologically savvy young people. Customers are embracing not just debit and credit cards, but new mobile technological payments instead of cash.

A business which has a younger clientele should thus more strongly consider going cashless. And going cashless can be just as convenient for any business as it is for customers. Employees can quickly handle transactions without having to waste time digging through a till for the right amount of change. This makes each transaction faster. Businesses can thus serve more customers and the customer spends less time waiting in line.

And while some small businesses may be concerned about the threat of hackers or electronic security, going cashless can improve physical safety. Having no cash in a till is the ultimate deterrence against thieves, robbers, and the occasional unscrupulous employee. Financial transactions also become more secure, as businesses no longer have to worry about how to store and count cash. Instead of sitting down at the end of every business day counting the total value of cash transactions, a financial ledger can quickly show how much cash the employee has, saving costs.

Going cashless is a major change which breaks with thousands of years of civilization. But the potential benefits of attracting a younger clientele as well as being able to quickly record transactions and having a real-time knowledge about a business’s financial health is huge and can be worth it under the right circumstances.

Slow and Careful Implementation

Despite these benefits of going cashless, plenty of business owners will still balk at the concept. Even if only 24 percent of Americans make all or most of their purchases with cash, that may mean losing a significant amount of customers. For these reasons, the process of updating point of sale technology to go only cashless needs to be done carefully. And according to the U.S. Federal Reserve Bank of San Francisco, 60 percent of business transactions under $10 are done with cash, in part due to how many small businesses require a minimum purchase to accept cash.

This means that as noted above, only certain businesses, such as online casinos, should look into going cashless and those that do may face a tricky transition period where they may lose a few customers. Above all else, a business interested in going cashless must make huge efforts to let customers know about this change. This includes sending an email and social media alerts as well as posting signs letting customers know that this business is going cashless.

Training your employees is also a critical aspect of going cashless as well. Going cashless almost certainly means upgrading a business’s point of sale technology, and all employees should be aware of how to use it. But even more important than that is that employees know why the business is undergoing this change and know how to answer common questions. For example, some customers may try to argue that a business has to accept cash as it is legal tender. This is not the case, which is why you cannot pay for your groceries by dumping a giant jar of pennies at the cash register.

Remember that no matter how much a business tries to inform customers of new changes, there will always be some customers who will be caught unawares and react negatively. Your client’s goal is to make that number as small as possible. By making the downsides smaller with preparation and training, your client can reap the benefits of going cashless and help make things easier for their customers as well.

Bookmark or Share this post
  • Facebook
  • Google
  • LinkedIn
  • TwitThis

The Cutting Edge in PH Finance: You and AI

by Junita Jackson


In the recent years, foreign investors started taking notice of the potential of Filipino professionals in finance and accounting outsourcing in the BPO industry, making the Philippines one of the favored global hubs for corporate and shared service offices that produces higher-end of business essentials ranging from creative concepts, software development, medical transcription, and legal services to financial management.

The Philippines once became a world leader in business support systems according to IBM’s 2010 research of annual global locations trend, foreign investors are seeing competence in its qualified pool of graduates with their set of skills, flexibility to work on different shifts, adaptation to internationally recognized accounting standards and ability to communicate well in English.

As finance and accounting outsourcing accelerates dramatically in the Philippine corporate setting, the services are no longer limited to general processing and auditing that requires manual work alone as technology maintains its distance in providing continuous improvement in processing, device enhancements, and new software developments to ensure clients and corporations a growing insight on innovation and digital transformation of data.

With all these advancements, business leaders are expected to allocate resources responsible to keep track on financial operations such as tax reporting, account maintenance, payroll processing, analysis and auditing, management consultancy and the like. However, to get the peak of the mountain of work, collaborating with a third party organization specializing finance and accounting outsourcing is a tested and trusted business strategy among foreign corporations and shared services.

Getting an outsourced finance and accounting partner may help you save human resource allocation, but in order to pick the best one for the business, leaders may look on the possible corporate edges and consider the type of organization they may be interested to work with.

There are a few growth indicators that may help leaders create business decisions before tying-the-knot with a particular service provider:

Business Decision making

CEOs are able to make better investment decisions with the help of their finance and accounting partner by giving consultations from results of financial data and lays down all pros and cons for the business and the market. They suggest and re-assess investments and allocation if needed.

Technology Awareness

Competition starts with technology, the best service is often expected to work with digital convenience for the users and the company as well. A good outsourced partner should help the business thrive with digital developments that may save the company from having excessive allocation of investments without sacrificing state-of-the-art software applications and hardware improvements.

Research and Analytics

A study on your company’s financial performance is a proof of a good finance and accounting partner as gained knowledge from research and observation provides the most intricate parts of a business-decision, the facts, and the solutions.

In the report of Everest Research Institute last 2016, the global multi-process of finance and accounting outsourcing market witnessed an increasing number of providers using robotic process automation (RPA), this suggests that top service providers are now starting to invest in developing  their capabilities related to technology, delivery presence, and domain and process expertise.

Aside from machine advancements, leaders should put high importance in supporting organizational improvement, cost-reduction, and business-outcome driven insights with the help of their service provider.

Worldsforum Accounting is a world-class organization that provides expertise in helping companies build business advancement and achieve financial success at a low cost. They also provide finance and accounting outsourcing services with their unique method that helps companies to improve financial processes and cash workflow. Other services include: Transaction processing, Financial Management reports, Expert financial advice, P&L management, Risk Management, and the list goes on.

Did you find what you’re looking for? Maybe we can help you out. For more finance and accounting outsourcing information, contact us here.

Bookmark or Share this post
  • Facebook
  • Google
  • LinkedIn
  • TwitThis