In today’s world of digital transformation, understanding the difference between OCR and IDP is essential for anyone involved in document-heavy processes—whether you’re managing invoices, expense receipts, insurance claims, or onboarding documents.
As a Solutions Engineer at Veryfi, Jasneil Nat often explains this distinction to clients looking to automate workflows and eliminate manual data entry. Let’s explore what these technologies are, how they work together, and why understanding them can unlock significant efficiency gains.
What is OCR?
Optical Character Recognition (OCR) is the foundational technology used to convert printed or handwritten text in images into machine-readable digital text. It’s like giving computers the ability to “read” what’s on a page.
- Scanning a paper invoice and extracting all the text.
- Digitizing receipts for easier storage and search.
- Converting printed forms into searchable PDFs.
OCR systems use computer vision and pattern recognition to detect characters, words, and sometimes even tables. Modern OCR engines apply AI to handle different fonts, languages, and layouts—but OCR alone doesn’t understand what the text means.
What is IDP?
Intelligent Document Processing (IDP) builds on OCR by combining it with artificial intelligence, natural language processing (NLP), and machine learning. While OCR reads text, IDP understands it.
- Document classification (e.g., “Is this a W-2 or an invoice?”)
- Data extraction (e.g., “Which number is the invoice total?”)
- Validation and enrichment (e.g., “Does this match the PO in our system?”)
- Automation triggers (e.g., “Route this to Accounts Payable if approved”)
In other words, IDP doesn’t just digitize content—it enables systems to act on it.
How They Work Together
Think of OCR as the eyes, and IDP as the brain.
- OCR extracts all text from a document.
- IDP identifies what that text means and where it belongs in your workflow.
For example, when processing an invoice:
- OCR reads every word.
- IDP identifies and labels fields like invoice number, due date, vendor, and line items.
- The system then validates, structures, and routes that data—without human involvement.
Why This Matters for Businesses
As document volume increases and teams become more distributed, the limitations of manual processing become clear:
- Data entry takes time and introduces errors.
- Paper and image-based documents slow down automation.
- Inconsistent formats require human oversight.
IDP helps solve this by enabling touchless processing of structured, semi-structured, and unstructured documents. The result? Faster workflows, fewer errors, and more time spent on high-value work.
| Industry | Common Document Types | IDP Use Case Example |
| Finance & Accounting | Invoices, receipts, bank statements, checks | Extracts line items, validates totals, and automates GL coding and reconciliation |
| Construction | Supplier invoices, delivery receipts, timesheets | Captures job codes, tracks materials to projects, and automates AP workflows |
| Healthcare | Claims, EOBs, insurance cards, medical bills | Extracts CPT/ICD codes, verifies patient info, and accelerates claim processing |
| Retail & CPG | Receipts, loyalty program submissions, rebate forms | Validates purchases, extracts product data, and detects fraudulent entries |
| Real Estate | Leases, utility bills, maintenance invoices, tax records | Extracts lease terms, tracks expenses per property, and automates vendor payments |
| Tax & Accounting | W-2s, W-9s, 1040s, 1099s | Automatically extracts structured tax data for processing, compliance, and reporting |
Where to Go From Here
OCR is where document automation starts—it captures the what. But for industries like finance, construction, healthcare, retail, and real estate, where documents drive critical business decisions, OCR alone isn’t enough.
These industries deal with high volumes of complex, variable-format documents—from invoice approvals and expense audits to claims processing and vendor reconciliation. This is where Intelligent Document Processing (IDP) becomes essential.
IDP doesn’t just recognize text—it understands context, extracts meaning, and automates action. And that’s where the real return on investment begins—not just in time saved, but in:
- Reducing manual data entry by up to 90%
- Lowering document processing costs significantly
- Minimizing human error and improving data quality
- Accelerating workflows from days to minutes
- Freeing staff to focus on strategic, high-value work
At Veryfi, our IDP platform takes this a step further—transforming unstructured documents into structured, actionable intelligence in real time. Whether it’s a scanned invoice, a bank statement, or a medical bill, we don’t just digitize the data—we extract insights that fuel automation, compliance, and growth. Start your free trial today!