AI and OCR Technologies Transform Data Processing in Modern Accounting

With so many accounting apps available on the market, which ones stand out the most? We spoke to Maria Sigacheva about the top apps used by accountants these days and how artificial intelligence has improved data extraction. Maria is a chartered certified accountant (ACCA), indirect tax manager at Glencore, and board member at the Civil Mediation Council in the UK.

Optical Character Recognition (OCR) assists in extracting text from scanned receipts, invoices, and bank statements. Bookkeepers and accountants have long used this advanced image preprocessing algorithm to save time and money on manual entry and avoid typos and errors. Although the very first version can be traced back to the 1970s, Ray Kurzweil’s “omni-font OCR” which could process text printed in various fonts, the widely used cloud applications akin to those we use today were launched in the early 2000s.

Since then, the system has been developed to extract data from PDFs, organise nominal accounts based on historical data, and enter information into accounting software such as Xero, QuickBooks, or Sage. However, the extraction process involves certain limitations when an image has poor quality and/or contains handwritten text, a mix of languages, or unique fonts, as data may not be retrievable.

This can be solved through the integration of AI. OCR, powered by AI, has enhanced capabilities to resolve such limitations and provide better output accuracy. AI learns past patterns, can handle more complex layouts, detects any anomalies or potential errors, and has the capacity for financial analysis and predictions.

The top accounting tools that combine both OCR and AI are as follows:

Dext (formerly Receipts Bank) is ideal for AI-powered categorisation and automation. It uses AI and OCR to extract data from receipts, invoices, and bills, auto-categorises transactions based on past entries, and integrates seamlessly with Xero, QuickBooks, Sage FreshBooks, or other accounting software.

Dext is one of the leading expense recognition solutions with powerful OCR software. It has been invested in significantly and utilised to increase levels of accuracy. Receipts Bank was founded in 2010 in the UK and grew rapidly to become one of the most widely used and recognised online receipts software in the UK and abroad. In 2021, Receipts Bank changed its name to Dext to reflect its wider capabilities, retaining all features of the receipts capacity and adding new tools for management and reporting. By 2023, Dext had assisted over 35,000 accountants and bookkeepers with data entry, saved over 75,000 hours of worktime, and analysed an astonishing 5 million documents per month. As of December 2024, it was acquired by IRIS Software, one of the leading online accounting software companies.

Dext is paid for on a monthly basis, and it costs £23 to process 250 documents per month. It is available in two modules: one for business and one for accountants. Upcoming modules will offer the ability to pay invoices online and store business documents on Dext with the help of an AI assistant.

Key features:

AI-driven expense categorisation

Multi-currency support

Highly customisable automation rules

Advanced AI technology

Bank statement processing is not available

Easy integration into commonly used accounting software such as Xero, QuickBooks, FreeAgent, MYOB, and Sage.

Hubdoc (the best option for Xero users with seamless integration) extracts data from invoices, receipts, and bank statements, and automatically submits financial documents from linked accounts (bills, bank statements). Hubdoc was founded in Canada in 2014 by McDonald and Shulman with the initial aim of solving the problem of entering Amazon sales into Xero. Xero acquired Hubdoc in 2018. Fast forward to 2023, and Hubdoc has generated $15 million in revenue, independently of Xero. This product is more affordable price-wise at £12 per month and can be seamlessly integrated with Xero or QuickBooks. For Xero users, Hubdoc comes as part of the monthly package.

Key features:

Automatic document fetching

Syncs with Xero (auto-matches transactions and stores receipts)

Basic AI categorisation (less advanced than Dext or AutoEntry)

Basic AI technology

Multicurrency is limited

Bank statement processing is not available

Best for integration with Xero or QuickBooks

Friendly user interface and simplicity of use

AutoEntry is ideal for invoice and bank statement processing. It uses OCR and AI to extract and categorise data from receipts, invoices, and bank statements. It then auto-posts transactions to Xero, QuickBooks, Sage, or other accounting software. AutoEntry was founded in 2013 in Dublin. What started as a conversation about the manual data entry between Brendan Woods and an accountant grew rapidly and it was eventually acquired by Sage, one of the leading accounting software companies. AutoEntry now assists over 250,000 businesses and processes 1.4 million documents each month. The unique concept of this software is the flexibility it offers in the payment system, which many small-sized businesses and sole traders may prefer. The pricing structure is based on the credits system: £13 per month equals 50 credits. A credit equates to any type of document, such as an expense receipt – 1 credit, purchase invoice – 1 credit, or statement – 2 credits.

Key features:

AI learns suppliers’ details, which means it reduces the number of manual corrections over time

Extracts line items from invoices (Hubdoc and Dext do not do this)

Processes bank statements and handwritten invoices

AI advanced technology

Integration with Sage, Xero, QuickBooks, MYOB, ReconOne

How to choose the right AI/OCR tool

What factors should you consider when selecting the right application? My recommendation is to analyse which types of documents you use most in business. For invoices and receipts, choose either Hubdoc or Dext; for invoices, receipts, and bank statements, use AutoEntry; and for multi-page invoices and line items, use AutoEntry. If you work for various clients and would like to have all companies in one place, choose between AutoEntry and Dext. Both companies have an advanced accounting platform with client access.

Next, decide on the budget and level of AI required (basic or advanced). It is easier to calculate the budget if you know approximately how many documents your business processes each month. For AutoEntry, which uses a credit system, one credit equals one processed document. If you are already using Xero practice, Hubdoc comes as a free add-on. Dext provides greater value and a more advanced level of AI, resulting in fewer manual corrections.

Does your business require automatic fetching of bills or statements from suppliers or banks? If yes, try using Hubdoc. If not, use Dext or AutoEntry for manual upload or email submission.

Conclusion

Technology has developed significantly by minimising manual entry in bookkeeping. This article has provided useful information about the most commonly used OCR and AI tools, all of which enable bookkeepers and accountants to automate tedious tasks, reduce errors, and, by saving time, focus more efficiently on analytical work.