Written by Stephen Beard, Managing Director of Plyo Bookkeeping, a Vancouver-based bookkeeping firm.
What is OCR software?
OCR (optical character recognition) software have been a real game changer for the small business accounting world. But what is OCR? In a nutshell, it’s software which can read images and pictures, recognize characters, and automatically extract key financial information such as supplier name, invoice date, invoice number, total amount and tax amount. As you can imagine, this really speeds up the data entry aspect of bookkeeping.
But good OCR software does much more. They allow you to fully digitize your receipts and invoices, so you can throw away all the folders full of old receipts you had lying around. This is actually a much stronger audit trail, as once digitized, it’s faster and easier to search for old supplier invoices. Paper is easily lost, but your digital records will be stored on both your cloud based accounting software and in your OCR software, making this a more secure way to store financial records.
The last big advantage of OCR is that it improves communication with your bookkeeper and accountant, as they can easily access copies of the original invoices, should they need more detail.
Dext vs Hubdoc
There are two big names in the OCR accounting space, Dext and Hubdoc. These software are rivals, but they’re also priced very differently. Dext costs $37.50 per month for up to 250 documents, while Hubdoc costs just $12, with no limit on the number of documents you can process. It will therefore come as no surprise that Dext is considered the superior tool in almost every aspect reviewed.
However, while Dext is frequently touted as superior to Hubdoc, Hubdoc does offer all the key functionality that a small business needs from its OCR software, so for those on a budget it’s a great option.
Dext is a modern, sleek and intuitive software to use. Hubdoc on the other hand, looks more like and early 2000s windows application. Looks aren’t everything, and the Hubdoc interface is still easy enough to navigate and understand. The Dext interface is also straight forward to navigate. Both are straight forward to integrate with QuickBooks Online and Xero.
Not all OCR software are created equal, and the consensus seems to be that Dext is superior to Hubdoc when it comes to reliably extracting the correct information into the correct data field. While Hubdoc will certainly be fine for the majority of standard invoices, it’s software will be less able to correctly interpret hand written invoices and receipts compared to Dext. Dext will also outperform when there are more complicated multiline invoices.
Dext offers a variety of features that Hubdoc does not. For example Dext offers a matching feature, which means that Dext can detect matching bank transactions which have already been reconciled in your accounting software. Rather than creating a duplicate transaction, Dext prompts the user to match the digitized receipt with the existing transaction, improving the audit trail and preventing a transaction from being duplicated. Dext also allows you to create more advanced supplier rules, which can further speed up your purchase invoice processing.
Dext has a more modern user interface, performs slightly better at OCR scanning and has some useful additional features. Hubdoc still does an excellent job at the all the core features of an OCR accounting software, and at just $12 per month it represents excellent value for money.