What is a QR code?
The use of QR codes in Cash Automation is an interesting development. A QR code is a type of matrix barcode. QR codes can store information in both horizontal and vertical directions. This allows them to potentially hold a huge amount of information. QR codes were previously used in advertising, upon scanning a QR code on an advert, it would bring you directly through to the company website or specific products and offers.
QR codes are the information portal of choice for Moyee Coffee, who are the world’s first blockchain coffee project. One scan of the QR code and you are transported on the fascinating journey of the product origins, production process and even the wider global implications of its evolution and existence. It’s aims are – “to bring about a revolution in transparency that certification programs cannot currently offer”. QR codes in cash automation are becoming more and more popular.
They are now being used in finance to speed up the whole payments process. A QR code is added to each invoice (as below), and once scanned it can be paid directly through your phone, an ATM or at the Bank. The QR code can also be extended to include extra invoice item codes as required. It can easily store any number of invoice items.
The significant financial shift that happened in Switzerland in 2018, was referred to as ‘The Swiss change’ (CAMT). This meant all banks, software vendors, and individuals had to adapt their payment systems. Credit transfers, direct debits and electronic payments now all use the same standards, languages, and formats so that they are compatible. Following on from that, from 30th June 2020, a new QR-bill will replace all current Swiss payment slips. It shows the QR code with a Swiss cross as the identifying feature. This Swiss QR Code contains, in digital form, all of the information necessary for payment, and can simply be scanned digitally. Because a large amount of data can be stored on a QR code, it opens up huge possibilities in cash application automation.
QR codes in AR/AP and Bank Reconciliations
How is this useful in the areas of AR/AP and Bank Reconciliation? Addressing potential security concerns over confidential information, a number of companies now issue invoices with encrypted QR codes. Use of proprietary technology to generate encrypted QR Codes means no bank, credit or debit card information is shared during transactions. A single-use PIN code ensures customer confidence. Payments are received electronically and debtor account information is automatically updated, as the QR code is linked to the company ERP or accounting system. On your customers (AP) side, the same benefits apply. AP accounts are updated making them easier to reconcile.
Optical Character Recognition (OCR) is currently the main tool used in automating an invoice. OCR is a technology that recognizes text and numbers within a digital image. It is commonly used to recognize text in scanned documents. Remittance details are digitized using OCR and re-associated with payments. However, it does have limitations or restrictions, for example: “too small” text, blurred documents, and formatting. Exact “matching” and “reconciling” are the keys to timely and accurate accounting information. If QR codes contain all the line items in an invoice along with the vendor information, then OCR would be needed less and less to identify these.
There are a lot of benefits to having more information stored on a QR code. Matching percentages would increase, reconciliations would be easier and quicker, all with the knock-on effect of reducing costs and debtor days. This ultimately leads to a more steady and consistent cashflow within your business. QR codes provide higher quality information thanks to more structured digital data. They could definitely help to provide increased automation in the areas of Accounts Receivable and Accounts Payable, thanks to this additional billing information.
Are QR Codes the way forward in the world of Finance?
As we have seen, there are many key advantages of having QR codes on invoices. The main advantages of QR codes in finance are listed below.
- Extremely fast to scan and process.
- Speeding up of the reconciliation process.
- High fault tolerance.
- Storage of large amounts of information.
QR codes in Cash Automation are becoming more prevalent. They were once a useful method of advertising, and are now providing new levels of speed, security and convenience in the world of finance. You can expect to start seeing them a lot more on your invoices in the near future.