What is Receipt Capturing and How Does it Work? A Complete Guide

Managing receipts might seem like a small task, but for businesses, it can quickly become a significant challenge. Think about expense claims, loyalty programs, or financial audits – each relies heavily on accurate receipt management. Yet, manual entry is prone to errors, time-consuming and inefficient, especially as businesses scale and handle larger volumes.

That’s where receipt capturing comes in. This technology allows you to extract key data from receipts with ease, streamlining operations and eliminating repetitive tasks. Whether you’re reimbursing employees, running customer loyalty campaigns, or simplifying tax preparation, a receipt-capturing solution can save you time, money and resources.

In this guide, we’ll cover everything you need to know about receipt capturing. From how it works to its practical applications, this guide is your roadmap to modernizing receipt management. Let’s get started!

What is Receipt Capturing?

At its core, receipt capturing is the process of extracting and organizing key data from receipts into a usable digital format. This can be done manually, through automation, or with a combination of both methods.

For instance, receipts from business trips might be captured for expense claims, helping streamline reimbursement processes. The simplest way to capture receipts is by snapping a photo with your smartphone and storing it digitally for future use.

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. By using a smartphone or tablet, businesses and individuals can capture receipt data remotely and efficiently, even in challenging or fast-moving environments.

This process relies heavily on Optical Character Recognition (OCR) technology, which converts images of receipts into machine-readable text. Powered by Machine Learning, modern OCR engines adapt to various receipt formats, ensuring high accuracy and reducing manual effort.

Now that we’ve got a clear idea of what receipt capturing is, let’s look at the different ways you can actually do it.

Receipt Capturing Methods

Receipt capturing can appear in the following ways:

• Manual data capture
• Automated data capture
• Human-in-the-loop (HITL)

1. 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 receive large amounts of receipts daily. 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 occur. 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.

2. Automated Data Capture

In an automated data-capturing process, the data from receipts are collected by software solutions using automated data entry. These tools use advanced technologies like Artificial Intelligence (AI) and Machine Learning (ML) to identify and extract important details from electronic and physical receipts. Once captured, the data is stored in a structured format, ready for processing or analysis.

Automated receipt capturing is designed to operate without human intervention, offering speed and efficiency. However, it’s not entirely foolproof. Machines, while highly specialized, work best within predefined parameters. Variations in receipt formats, poor image quality, or unexpected inputs can lead to errors or incomplete data extraction.

While automation significantly reduces the workload, it’s important to recognize its limitations and combine it with human oversight or additional checks when accuracy is critical.

3. Human-In-The-Loop (HITL)

Human-in-the-loop (HITL) bridges the gap between manual and automated data capturing, offering the best of both worlds. This approach starts with the speed and efficiency of automated tools to extract receipt data. For complex cases where automation falls short, such as unclear images or non-standard receipt formats, human expertise steps in to review and complete the process.

The result? A near-perfect level of accuracy. HITL combines the precision and scalability of AI with the flexibility and judgment of human intelligence, ensuring reliable results even in challenging scenarios.

What Can a Receipt Capturing Solution Do?

A receipt-capturing solution can offer several key functionalities to simplify processes:

• Scanning
• Optical Character Recognition (OCR)
• Data extraction
• Conversion
• Classification
• Data anonymization 
• Fraud detection 

Let’s quickly go through each of these to see how they work and why they matter.

Scanning 

The first key feature of a receipt-capturing solution is its scanning functionality. By scanning, we mean the process of reading the receipts with the use of Receipt OCR. Not sure what OCR is? Don’t worry, we’ll break it down in the next section.

Once the scanning is complete, all relevant fields are extracted and organized into a structured data format. By using an automated solution like the Klippa OCR API, the majority of this process happens effortlessly, saving time and reducing manual effort.

Optical Character Recognition (OCR)

OCR eliminates the need for manual data entry by transforming receipt images into machine-readable text formats like CSV, JSON, or XML.

This technology is a game-changer for businesses, speeding up data extraction and reducing errors. Powered by AI, OCR ensures fast and accurate data extraction, helping employees focus on more critical tasks while keeping error rates to a minimum.

Data Extraction

A receipt-capturing system also excels at data extraction, pulling key information from receipts so it can be processed, stored, and analyzed. This extracted data helps businesses streamline operations and make informed decisions.

Conversion

Another key feature of a receipt-capturing solution is its ability to convert receipt images into digital text files. Scanned images and PDFs can be seamlessly transformed into formats like JSON, CSV, XML, PDF/A, and XLSX, making the data easy to use and integrate into various systems.

Classification

Receipt-capturing solutions also enable document classification, which involves sorting and organizing unstructured documents. The system extracts key characteristics from a document and uses algorithms to determine its appropriate category.

For instance, sensitive documents can be identified and classified automatically. Once classified, additional steps like data anonymization can be applied to protect sensitive information.

Data anonymization 

Data anonymization, also known as data masking, is a security technique used to protect sensitive information on documents by making it unreadable or unusable to unauthorized parties.

For example, a receipt might contain a payment card number. To safeguard this data, you can black out or encrypt the number, ensuring it remains secure even if the document falls into the wrong hands.

Fraud detection

Finally, receipt-capturing solutions can be used for document fraud detection, helping to prevent receipt-related fraud. 

For instance, fraudsters could duplicate receipts to claim extra reimbursements or forge receipts for items they never purchased. With automated fraud detection, the software can identify and flag such attempts, protecting your business from unnecessary losses.

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:

1. Capturing and uploading the receipt to the API
2. Converting the image into a text file
3. Parsing into JSON
4. 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. 

The quality of the image is important in order to get an accurate result. The image quality can be enhanced by using our mobile scanning SDK. 

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 makes snapping a photo of a receipt quick and simple. But modern receipt scanning software can do far more than just capture the total amount and date – it can extract a wide range of data fields for more detailed analysis.

Klippa can extract the following information 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

Additionally, Klippa includes automated checks to enhance accuracy and security. These checks use image hashing to detect duplicate receipts and cross-checking to flag fraudulent submissions.

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:

1. 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.

2. 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. 

3. Increased Productivity

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. 

4. 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 Software

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. 

Loyalty Campaigns 

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.

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:

• Wave
• Gekko
• Expensify
• Smart Receipts
• WellyBox

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. 

Automate Receipt Capturing With Klippa

Do you want to simplify receipt management, enhance productivity and reduce operational costs? Klippa DocHorizon is your Intelligent Document Processing solution for automated receipt capturing!

Klippa transforms receipt workflows by capturing, extracting and converting receipt data into structured, actionable information. It eliminates the need for manual data entry, reduces errors and ensures accuracy, making receipt processing faster, smarter and more reliable.

By choosing Klippa, you benefit from:

• Accurate Data Extraction: Easily pull key details from receipts, like merchant names, VAT numbers, amounts, and itemized data.
• Privacy Compliance: Protect sensitive data, such as payment info, and follow privacy regulations like GDPR.
• Flexible Output Formats: Convert receipt data into formats like JSON, CSV, XML, or PDF for smooth integration with your systems.
• Fraud Detection: Spot duplicate or fake receipts quickly to avoid financial losses.
• Efficient Organization: Automatically sort and categorize receipts for faster and easier processing.
• Custom Workflows: Create automated rules to handle receipts based on your business needs.
• Easy Integration: Our APIs, SDKs, and clear documentation make it simple to connect Klippa to your existing tools.

Let us help revolutionize your business operations with cutting-edge technology. Contact our team or book a free demo to see Klippa DocHorizon in action!

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