“There is strength in numbers,
but organizing those numbers is one
of the great challenges.”
– John C. Mather
Are you getting annoyed over incorrectly placed payments when matching payments from your customers? If you suffer from this particular irritation, you are probably the administrator of a factoring company, bank or finance company. And the annoyance is justified…
The source of your irritation may have its source in incorrect specified OCR numbers. OCR stands for Optical Character Reading and is a series of numbers that should identify a payment as unique. Non-unique OCR numbers run a high risk of mismatching which often results in demanding deft. But what is OCR and why do you need this? To be able to identify a payment or invoice, an OCR number system created in the 1970s became the solution. Together with this number reference, date and amount, it ensured that the payment reached the right recipient. The OCR number was initially intended to be optically scanned by postal and banking staff using a scanner, and as everyone knows, there is reading support for OCR numbers built into most apps from our banks. OCR number is always delimited at the beginning and end of a # and can consist of Client number, Customer number, External invoice no., Internal invoice no., Ledger entry no, Ledger Register No.
So, what approach should you have when it comes to OCR? For example, in our system, Asitis Finance, you can set the length for OCR numbers; in other words, the number of digits in the series.
Keep in mind that trying to keep a reasonable length of the number series between 11-16 figures, otherwise it can easily become incorrect entries as the series becomes too long. If you have too little data or short customer numbers alternative external invoice numbers, there is the possibility to choose the control method, if necessary zero fills for the desired length of the payment reference. A recipe for a good OCR number could thus contain:
- Three figures from the customer number
- Three figures from invoice number
- Three figures for filling
There you have a 9-digit OCR number, but you also need to add 2 more control digits, since bank and postal giro require this. So then you will be given an 11-digit OCR number. When you design your OCR number in this way, you also provide clues for being able to match the payment against the correct invoice, i.e., you can in the number series get few clues to where it belongs. Absolutely perfect according to us. How to choose to build up your OCR depends entirely on the business and can vary from company to company.
But be sure to try to be as unique as possible by:
- Use number series from your internal system
- Avoid using reference numbers from the client’s invoice
- Build in is the client’s number and serial number customer accounts
- Keep in mind that you must be able to read out to whom invoice references are linked and what it refers to
For example, if you want to print out the invoices before posting to send for review to your client, it is important to remember that it is not possible to use some of the unique “building blocks” that are assigned to the invoice when posting. (These are boldly marked above). Good luck with creating a sustainable strategy for your OCR numbers, and if you would like to know more about our Factoring system and its functions, you are most welcome to contact us.