What’s the first thing you do when your paycheck is credited to your bank account? (Other than spending it, of course…)
I immediately rush to review my pay slip to understand the pay and deductions in detail.
In this article, we will understand this document that has become an integral part of our monthly work ritual.
We will briefly discuss payslips and their various components and, more importantly, how employers can read or extract data from bulk payslips with OCR.
What is a liquidator?
Payroll receipts, commonly called wage certificates, are basic documents that employers provide to employees.
These documents provide a detailed account of an employee’s earnings and deductions for a given payroll period. Pay slips are vital for both parties as they serve as proof of payment and a record of financial transactions.
Payment receipts are important to employees
- PROOF of income
- tax filing purposes
- loan applications to assess financial stability
- resolve disputes related to discounts
- personal financial planning
For employers, banks and businesses, pay slips are important for
- pay slip or income verification
- background checks
- compliance with tax forms such as W2 (in US), Form 26AS (in India)
- fraud checks
- record keeping
Are you looking to extract or analyze data from pay slips and W2 forms? Try it Nanonets OCR Exporter.
What is Payslip OCR and what does it do?
![](https://nanonets.com/blog/content/images/2020/09/new-sample-paystub-2019-2.jpg)
It is important to extract and digitize critical information from payslips.
Payslip OCR is a technology that automates the extraction of text from physical or scanned payslips and converts them into a machine-readable format.
With utilization OCR (Optical Character Recognition), data on payslips can be automatically captured, making the payroll accounting process much easier by facilitating the storage, retrieval and analysis of employee payslips.
OCR is primarily used in payslip processing to sort payslips, extract key value information from payslips and convert scanned payslips into digital formats.
An advanced OCR accurately captures and extracts different key-value pairs from a payslip.
A typical pay slip usually includes fields such as:
Employee information: Name, employee ID, employee department and social security number
EMPLOYER INFORMATION: Company name, address and other information
Payment period: Monthly, Bi-weekly or according to the company’s payroll cycle
Payroll period: Number of working days or hours and leave taken
Profits: Salary breakdown, including basic pay, overtime, bonuses, etc.
Reservations: Taxes, insurance premiums, pension contributions, etc.
Net earnings: Amount on hand after all deductions
Year-to-date (YTD) totals: Total earnings and deductions for the current year
Conversion of payment slips
OCR can convert payment slips to PDF, TXT/Doc, CSV, XLSX, XML or JSON formats.
You can use digital payslips in PDF, JPEG or PNG formats received directly via email or downloaded from your employee portal.
To convert scanned copies of physical pay slips into digital forms of payment receipts, you need an advanced, powerful OCR. The scanned payslip must be clean, well-lit and free of distortion for accurate conversion.
read more: How to extract data from scanned documents
Benefits and Challenges of Payslip OCR
Reasons to use Payslip OCR
Payslip OCR offers many advantages for both businesses and employees:
Efficiency: It eliminates the time and effort required to copy and paste entries from hundreds of payslips into different applications.
Accuracy: It minimizes the human errors that commonly occur when typing data, improving data quality.
Ease: It makes payment slip data more accessible, making it easier to locate and retrieve
Cost saving: It eliminates the costs associated with handling and maintaining physical payslips, making the process easier and more efficient.
Integration: It can be easily integrated with accounting, payroll and HR tools to set up approval workflows.
Scalability: Speeds up payment slip processing for large companies.
Challenges for OCR of payment slip
While pay slip OCR is an absolute plus, to make it work best, companies need to overcome some challenges, such as
Low quality scans
Many pay slip analysis tools only work with properly scanned documents. Poorly scanned, blurry or distorted images and documents in low light are difficult to process for OCR.
OCR tools may have difficulty reading such payslips, often resulting in poor extraction and inaccurate results.
Fraudulent invoices
Companies must check that pay slips are authentic. Be careful
- payment slips with bent or distorted parts;
- low quality images
- blurred or text with many fonts
Handwritten pay slips
Handwritten scanned payslips are difficult to analyze for traditional OCR systems.
Difficult formatting
Payslips differ between employers and countries in format, currency and designs. Traditional OCR tools or pattern matching often fall short and cannot handle them accurately.
Payroll Complexity
Not all OCRs are the same.
Especially for international companies dealing with multi-language payment slips with different standards, OCR needs to be strong and robust to adopt flexible standards and extract key information accurately.
Data Security
With the rise of free OCR tools, data security is at great risk. Payslips contain sensitive information about employees and companies. Check the company’s privacy policy before choosing an OCR tool to process payslips.
Initial training
Some machine learning-based OCR solutions require training to recognize and understand payment slip layouts. This can quickly become resource-intensive and expensive, as manual copy-paste efforts are diverted to model maintenance and monitoring.
How to use a payment slip OCR?
To give you a quick overview of how pay slip OCR works, I use the Nanonets OCR tool to extract key fields from a standard pay slip. The process remains the same for almost all tools.
I signed up for the Nanonets app for the first time.
Step 1: Upload your pay slips to the OCR app.
Step 2: The OCR Payslip Extractor will automatically scan, extract, highlight and categorize the data on the payslips.
Step 3: Verify the exported data and adjust the fields as required.
Step 4: Download the data into a new document or set up an approval workflow for further processing.
You can integrate a pay slip OCR API directly into your payroll system for seamless data flow and easy approvals.
Choose the right OCR API, obtain the API key, and thoroughly review the API documentation before integrating with your existing tools.
Check out this popular OCR payslip extraction software:
- Nanonetworks
- Clip
- Verifi
- Hypertension
A pay slip OCR tool must be equipped to recognize and categorize complex pay slips in bulk and identify uncertain income for large companies and businesses that process hundreds of thousands per year.
Such companies prefer specialized wage and payroll verification software that includes built-in OCR, such as:
- BambooHR
- ADP
- SurePayroll by Paychex
- Perfius
Automated payment slip OCR workflows with Nanonets
Nanonets is an intelligent AI-based document processing platform with built-in OCR software.
Nanonets can automate payroll processing, from creating payslips to automating end-to-end approval workflows, using a powerful OCR engine and seamless integrations.
Features of Nanonets OCR for Payment Slip Management:
- Calculate wages and deduct taxes
- Manage employee benefits
- Create payment receipts
- Set up automated rule-based payment slip approval workflows
- Timely alerts and notifications
- Extract key information from payslips
- Keep payroll records and be audit-ready
- Ensure regulatory compliance
- Pay-as-you-go pricing model with first 500 documents free
While payslip OCR is a key aspect of payroll management, Nanonets also automates end-to-end accounting and payroll management for businesses.
Automate recruiting and hiring, onboard new employees, seamlessly process payroll, and simplify employee benefits management with HR Nanonets solution.
Last word
Payslip OCR technology has made it extremely easy for employers and businesses to process and verify payslips
By leveraging artificial intelligence and advanced OCR, organizations can easily automate payroll data extraction and management. and improve the efficiency, accuracy and scalability of their payroll functions.
Frequent questions
How do I convert a payment slip to PDF?
You can convert a pay slip to PDF using an online OCR pay slip converter or an automated data extraction tool like Nanonets.
How to automate payment slips?
You can automate your receipt extraction and approval workflows using an AI document OCR tool such as Nanonetworks. Follow the steps: Register > Upload Payslips > Verify the exported key-value pairs > Customize fields if needed > Download/Send for approval.