Receipt capturing enables the elimination of the manual data capture process. It allows you to digitize and process receipts quickly and on the spot. Being able to capture receipts straight away, allows you to quickly process them. This results in significant cost-, time- and resource savings.
A receipt-capturing solution can be useful in many cases. An example: imagine having to reimburse your employees, but you’ve lost the receipts. With a receipt-capturing solution, receipts never have to get lost again. Another example could be receipt-clearing for loyalty campaigns, where receipts can be used to gain more insight into customer spending behavior.
In this 2023 guide to receipt capturing, you will gain a better understanding of what receipt capturing is, what Klippa’s receipt capturing solution can do, and how it works. Besides that, we will dive into the benefits and what type of companies use our receipt-capturing solution.
What is Receipt Capturing?
First things first, let’s settle on the basics: What is a receipt? A receipt is a financial document on which the price paid for goods or services is shown. The date, time, location of purchase, and some other data fields are visible.
Receipt capturing in essence is the process of capturing data from receipts without any troublesome preparations. For example, receipts can be captured from business trips for reimbursement as expense claims. A common way to capture receipts is to snap and store receipts digitally with your mobile phone.
Mobile Receipt Data Capture
For some use cases, it is essential to capture data in remote locations or on the go. In these situations, mobile data capturing usually is the best choice. In mobile data capturing a smartphone or tablet is used to capture receipt data.
A common example is using a mobile phone to scan receipts for expense management, extracting information such as dates, merchants, total amounts, line items, and VAT values.
In mobile receipt data capture solutions, Optical Character Recognition (OCR) is used to perform image-to-text conversion. Usually, the OCR engine is powered by machine learning technology to intelligently capture the data from the receipts.
Now that it’s clear what receipt capturing is, let’s continue with the ways in which the capturing of receipts can occur.
Manual vs. Automated vs. Human-In-The-Loop Receipt Capturing
Receipt capturing can appear in the following ways:
- Manual data capture
- Automated data capture
- Human-in-the-loop (HITL)
Manual data capture
Manually capturing receipts is the traditional method of extracting important details from a receipt. The details have to be entered into the computer manually. This is an old-school method, typically used by companies with low volumes of receipts.
However, medium to big-sized companies receives large amounts of receipts on a daily basis. Employees have to capture and organize large volumes of receipts by hand. This approach might work for some businesses, but in today’s competitive environment, it is way too time-consuming and error-prone.
In order to keep a high level of accuracy throughout this process, manual verification has to be done to make sure no errors occurred. This results in manual data capturing being a tedious process.
Besides that, small discrepancies could already lead to legal and financial repercussions, such as penalties due to incorrect VAT reclaims.
Automated Data Capture
In an automated data-capturing process, the data from receipts are collected by software solutions using automated data entry. These software solutions use technologies such as artificial intelligence and machine learning to capture important details from electronic and physical receipts. The important details are then saved in well-organized computer files.
An automated solution basically comes down to capturing data from receipts, without any human involvement.
However, there is a shortcoming when it comes to automated data-capturing solutions. It is not an error-free method. Machines are not as flexible as one might think. They are designed for specific tasks. If the input were to slightly differ from the intended form, it will generate an error or a less-than-ideal output.
Human-in-the-loop (HITL) is the middle ground between manual and automated data capturing. It first uses the power and speed of automated data capturing to extract receipt data, but for hard cases that an automated solution could not solve, a human verifies and completes the data capturing.
Ultimately, this results in the highest possible level of accuracy. HITL combines the best of human intelligence with the best of AI.
What Can a Receipt-capturing Solution Do?
A receipt-capturing solution can provide help with a couple of functionalities:
- Optical Character Recognition (OCR)
- Data extraction
- Data anonymization
- Fraud detection
Now, let’s give all these functionalities a closer look by diving into them one by one.
The first thing a receipt-capturing solution can offer is scanning functionality. By scanning, we mean the process of reading the receipts with the use of OCR. What OCR exactly is, will be explained in the next section.
When the scanning process is completed, all the relevant fields are converted into a structured data format. The largest share of the process can be automated by picking an automated solution, like the Klippa OCR API.
Optical Character Recognition (OCR)
OCR puts an end to manual data entry of receipts. This technology turns an image into text in a machine-readable format (for example CSV, JSON, or XML).
It has proven itself very useful in the process of receipt capturing. OCR is powered by AI and helps employees to work faster, with a minimal error rate.
A receipt-capturing system can also be used for data extraction. By extracting the data from a receipt, it can be processed, stored, and analyzed to improve the company’s operations even further.
Another functionality of a receipt-capturing solution is the conversion of a picture of a receipt to a digital text file. Scanned images and PDFs can be converted into file formats such as JSON, CSV, XML, PDF/A, and XLSX.
Receipt-capturing solutions can also be used to sort and classify unknown documents. This process is called document classification. The characteristics of the document are extracted and sent to the algorithms, which will determine how to classify the document.
An example of a use case is classifying documents with sensitive data. After the classification is done, the data can be anonymized.
An example of sensitive information on a receipt could be a payment card number. You could choose to blackline or encrypt the numbers, so they won’t be usable in case they end up in the wrong hands.
Lastly, receipt-capturing solutions can be used for document fraud detection to prevent receipt fraud.
Fraudsters could, for example, duplicate receipts to get money, or create fake receipts for a product they didn’t purchase, in order to receive a reimbursement. By automatically flagging such attempts, the software can save you a lot of money.
How Does Receipt Capturing Work?
A good example of an automated receipt-capturing solution is Klippa DocHorizon, which we will discuss next.
So, how does this receipt-capturing solution work? The process basically consists of four steps:
- Capturing and uploading the receipt to the API
- Converting the image into a text file
- Parsing into JSON
- Verifying the extracted data
1. Capturing and Uploading the Receipt to the API
In the first step, a picture or the PDF of the receipt has to be uploaded to the API. It is important that the image contains the entire receipt, is clear, and contains no noise in the background.
The image can be uploaded via our mobile- or web application. The receipt can be uploaded either with or without the background. If it’s sent uncropped, the API will automatically crop the document.
2. Converting the Image into a Text File
In the next phase, our receipt-capturing solution will automatically convert the picture into a text (TXT) file. The data from the receipt is then extracted, but not yet structured.
In this step, our solution will recognize what each part of the receipt actually is. The software will determine which part is the total amount, what the address is, or the purchasing date.
3. Parsing into JSON
In the data parsing phase, the Klippa parser converts the text file into JSON, while using machine learning. JSON is a standard text-based format for representing structured data and is commonly used for transmitting data in web applications. From this point onwards, processing the captured receipt in your database is very easy.
4. Verifying the Extracted Data
This fourth step is optional. In this step, we can verify the extracted data from the receipt with third-party sources. Verifying the data ensures good data quality which is in line with the regulations.
Which Fields from the Receipt Can Be Captured?
The receipt-capturing process as described above makes snapping an image of a receipt really easy. Our software solution can capture a lot more data fields from receipts than only the purchasing amount and date.
Klippa can extract the following features from receipts:
- Language on the receipt
- Type of document
- Country of origin
- Name of the merchant
- Contact details of the merchant
- Address details of the merchant
- Website of the merchant
- Quality of the image
- Method of payment
- VAT number
- VAT amounts and percentages
- Amount of change
- The currency and the total amount
- Card number
- Line item prices, quantity, descriptions, and category
- Purchasing date
- Chamber of Commerce number
Besides the default fields as mentioned above, automated checks can be performed. These automated checks consist of image hashing to find duplicates and cross-checking to identify fraudulent receipts.
Now that it’s clear which fields can be captured from a receipt, let’s continue with the free receipt-capturing solutions.
Free Receipt-capturing Solutions
In the search for receipt-capturing solutions, you will probably come across some open-source solutions as well. We list a few of them below:
- Smart Receipts
Free apps are great for self-employed individuals. However, open-source solutions often offer low quality and require a lot of development work and hosting. Hence, we recommend paid receipt scanning solutions to businesses.
What Are the Benefits of a Receipt-capturing Solution?
Receipt-capturing solutions mainly help companies to increase the effectiveness and efficiency of their day-to-day operations. There are a couple of other major advantages:
- 40 to 75% in cost reduction
- Minimal error rates
- Increased productivity
- Minimal processing time
40 to 75% in cost reduction
Typically, intelligent automation solutions (like receipt capturing software) result in 40 to 75% in cost reduction. The payback period is ranging from months to years. Automation ultimately leads to having to hire fewer employees and therefore, you will have to spend less on employee salaries.
Minimal Error Rates
When an employee has to repetitively enter data from receipts into a system, errors will inevitably occur. Studies have shown that error rates range from 0.55 to 3.6%. However, outliers as high as 26.9% have been found. When mistakes are made, mistakes have to be repaired, which takes time. And we all know, time is money in business.
Fortunately, there is a solution to the problem: capturing receipts with sophisticated software. Such a solution will lead to fewer mistakes, which will eventually lead to a reduction in cost.
Receipt-capturing solutions help increase the overall productivity of employees. Before receipt-capturing solutions existed, employees had to spend a lot of time manually inserting data into the software.
With receipt-capturing solutions replacing the manual process, the productivity of employees will increase dramatically. The time put into manually entering data into the system can now be spent on more important and difficult tasks.
This does not only help with the productivity of employees. An extra side effect is that employees will be more satisfied if they don’t have to spend as much time on tedious tasks such as manually entering data.
Besides that, the facilitation of data will happen much faster. Therefore, it increases the overall business productivity as well.
Minimal Processing Time
Last but not least: is the minimal processing time, which is one of the most substantial benefits of a receipt-capturing solution. Automating a receipt-capturing process can save up to 70% in processing time.
An AI-powered OCR solution is able to capture data from receipts almost instantaneously. The days of slow and repetitive processing are gone. OCR captures data from receipts in seconds.
Now that the main advantages of using a receipt capturing solution are clear, let’s continue with, in which sectors these solutions might come in useful.
What Companies Use Automated Receipt Capturing?
A receipt-capturing solution can come in handy in many industries. Most of our clients use our OCR API in the financial industry. Examples are accounting, ERP, and expense software companies.
Besides that, insurance, banking, loyalty, FMCG, and retail companies are also using our receipt-capturing solution. For some companies, additional features were integrated into the solution.
To explain what our receipt-capturing solution can do, let’s continue to two use cases, namely expense software and loyalty campaigns.
Expense accounts need to be saved in an efficient, safe manner. Our receipt-capturing solution can help to save those receipts while saving loads of time and money.
The process is quite simple. First, you have to capture the receipt with your mobile phone, after which the OCR technology extracts all the data from the receipt. In the final phase, it will be saved to the cloud.
As an extra, our solution can easily be integrated (via an API) into any accounting or ERP system your business might be using.
Another use case of receipt capturing is in the loyalty space. The solution can be used to take over the tedious back-office tasks in loyalty campaigns. For example, checking the proof of purchase (receipt), determining and attributing loyalty points, and updating a client database.
An example of how we added additional features to our solution, is for a company in the loyalty space. We added duplicate detection based on image hashing. By doing so, this company can easily prevent fraud in its receipt-based loyalty campaigns.
How to Ensure a High-quality Output?
So, what is the recipe for success to ensure high-quality receipt capturing? The following factors contribute to excellent receipt capturing:
- Ensuring that the quality of the image is high enough. Our scanning SDK can help to improve the quality of an image.
- Working with a specialist in the field of data capturing.
- Continuously improving receipt capturing models while using AI.
Below you will find an example of low-quality compared to high-quality receipt capturing.
How Can Our Solution Be Integrated?
Our API can be integrated into any software you may be using. It’s made in a developer-friendly way, which means you can easily integrate some components into your existing software.
Our software is well-documented. Your developers will find all the information they need to successfully implement the API.
But what exactly is the difference between our API and SDK? This will be explained in the next paragraph.
What is the Difference Between Klippa APIs and SDKs?
The difference between our two solutions is actually quite simple. Our API is the service of sending a document to our software and receiving a structured data format back within seconds.
The SDK basically helps to improve the quality of the picture, for example by optimizing the brightness and detecting the edges of the image.
It is possible to link the Klippa Camera SDK to our cloud-based OCR API. After scanning the document, a request is handled through the API, and the JSON response is returned to the application.
The main advantage of the SDK is that your developers don’t have to build all the components themselves. They can easily “use” other people’s work. This leads to huge development costs- and time savings.
Our solution can be integrated within one day. If you are looking for an end-to-end solution to capture receipts, Klippa is here to help you. Get in touch with us by filling out the demo form below, or contact our experts.