Document digitization

What is document digitization? 

Document digitization is the process of converting physical records into digital files with the help of scanners, OCRs, and AI tools. Physical records including invoices, bills, financial records, and other physical documents into electronically accessible formats (PDF, JPEG, PNG, etc.), that could be stored, accessed, and managed on cloud or system storage. 

Document digitization isn’t only useful for personal records, but also has industrial applications across healthcare, banking & finance, retail, logistics, etc. With digital transformation being in force, many companies are prioritizing to digitize paper documents—inventory records, entry logs, KYC documents, customer application & feedback forms, delivery notes, shipping records, and more. 

Importance of document digitization 

Document digitization is essential for so many reasons.  

Cost savings: A company doesn’t have to worry about document storage: cabinets, files, printers, papers, and other physical storage for document maintenance. Even though cloud storage also needs money, it can be comparatively better than physically document storage and bundled paperwork maintenance.  

Disaster recovery: Physical documents can be easily vulnerable to destroying forces like fire, water, and other natural calamities. On the other hand, digitized documents have minimal data loss risk, and even that could be prevented through proper back-up and disaster recovery strategies. 

Digital documents are easier to access: You can access digital documents from anywhere – making it readily available even from remote locations. Hence, digital documents, combined with access controls, promote better collaboration and document retrieval, especially for global and remote-based companies. 

Eco-friendly: Usage of digital documents reduces paper usage, cutting down waste and enhancing sustainability & eco-friendly practices of the organization. 

Document digitization – challenges 

While document digitization looks achievable, one might face many challenges related to this.  

Inconsistent format 

• Document can be in many formats—varied layouts, sizes, and content structures. It can be challenging to convert this physical document into a digital one, standardizing the same format for all.  

• Similarly, a same document from different vendors could come in multiple formats and versions. This could pose a challenge while developing them into digital documents. 

Missing data 

• Physical documents having incomplete pages or sections, torn edges, missing components, and smudged ink.  

• There will be considerable challenges in extracting data from above type of documents. 

Poor image quality 

• Low resolution and poorly lit images and blurred scans could affect OCR output. 

• Similar problem could be observed with documents with handwritten notes, seal, and stamps.  

But these document digitization challenges are fixable with solutions like image enhancement, noise reduction, and advanced OCR technology. 

How to digitize a document 

The document digitization process involves 6 steps: document preparation, scanning, OCR, meta-data and indexing, access control, and storage. To make a digital copy of a physical document, the steps are explained in detail below. 

1. Prepare the documents: organize documents that you need to make a digital copy of, ensuring the pages are clean and flat. 

2. Scanning: with the help of high-quality scanner or camera, scan the physical document and convert into a digital format (Image, PDF, TIFF, etc). 

3. Optical Character Recognition: use OCR or other AI-powered extraction tools to convert scanned images into machine readable, editable, and accessible text. 

4. Indexing: take care of metadata for the edited digital document— document title, date, category. 

5. Access control: set up encryption, security protocols, role-based permissions if in case there’s sensitive data that everyone cannot access. 

6. Storage and maintenance: save your files in any digital repository or cloud platform. Integrate and connect the document with other cloud applications—CRM, DMS, or other ERP platforms. 

Document digitization examples 

The role of AI in document digitization 

AI plays more than the role of data extraction in document digitization. Here is how it helps here. 

Data extraction: OCR intelligently extracts key information from physical documents and integrate them with existing cloud data. Example: capture invoice billing data and upload in accounts payable applications.  

Data classification: AI can be used to categorize and manage documents: example: invoices, financial statements, employee records, etc., all being digitized and managed separately. 

Error detection: Can minimize errors and reduce human oversight, by identifying and imputing missing values, errors, formatting mistakes, etc. 

NLP: Natural language processing could be applied to enhance the context and accuracy of whatever data captured. This specifically applies to legal documents, healthcare records, etc. 

Smart search: With the case of large, digitized documents databases, AI can ease data retrieval and searching by piecing together keywords, clues, and access patterns.