Handling Incoming Documents and OCR Functionality

Typically, in case of purchases, incoming document files represent payment receipts for expenses or small purchases. Many a times these transactions are not recorded in Microsoft Dynamics NAV from the outset. Instead, an external business document comes into your company as an e-mail attachment or a paper copy that you scan to file.

Other examples of incoming document files are electronic documents from trading partners with whom you have agreed to exchange documents electronically.

The generic version of Microsoft Dynamics NAV supports incoming invoices and credit memos in the PEPPOL format. From PDF or image files representing incoming documents, you can have an external OCR service (Optical Character Recognition) generate electronic documents that can then be converted to document records, like for electronic PEPPOL documents.


Subscribe to OCR Services

Microsoft has paired up with Lexmark to provide their OCR technology to read images of invoices and import them into Dynamics NAV 2016.

You must register the service with Lexmark. You can choose between two plans (free and subscription based) and set up an account with Lexmark for their OCR services.

NOTE: Following section uses example from a free account created by me with Lexmark.

If you are registering with Lexmark, you will get all the necessary details about the credentials and settings in the welcome mail.

Sample File

You would need an electronic document to work with this example. We are using a sample Super Amart order confirmation file (PDF) in this example. You can download the following example.

Create a Vendor

For this example, create a vendor with the following details:

Field Value
Name Super Amart
Address Oxley Bedding Superstore
Post Code 4075
State QLD
Country/Region Code AU
Phone No. 07 3723 3333
E-Mail oxlybedding@superamart.com.au
Gen. Bus. Posting Group EXPORT
GST Bus. Posting Group EXPORT
Vendor Posting Group DOMESTIC
Exemption Certificate No. 65009810324

How to Setup OCR Service in NAV?

  • Click Departments/Administration/IT Administration/Services.
  • Click OCR Service Setup (or just search for it).
  • The following field information is provided by your OCR service provider (Lexmark in this case).
    • User Name
    • Password
    • Authentication Key
    • Service URL
    • Login URL

  • Click the action Test Connection. The fields in Status fast tab are filled automatically for you. If the connection is successful, you will get a confirmation dialog as well.
  • Select the Default OCR Doc. Template (Australian Invoices in this example).
  • Select the Enabled field. Job Queue entries are created for you.

NOTE: You can set up the job queue to automate the process, however in the following sections we will discuss manual process to check the functionality.

How do I handle Incoming Documents?

Companies typically receive business transactions such as purchases as electronic documents by e-mail or even through document exchange.

The incoming document function allows you to record these documents and link or convert them to the relevant documents into Microsoft Dynamics NAV.

Create Incoming Document from File

  • Click Departments/Financial Management/General Ledger/Incoming Documents.
  • Click Create from File, browse to the network location and select the file.

  • A new incoming document is created. By clicking on the main attachment link, we can have look at the PDF invoice.

Create Document Manually

Once incoming document is created, you can manually create a journal, sales or purchase document by using the Create Manually action.

Example – Purchase Invoice

Lest say we choose to create Purchase Invoice.

After you create a purchase invoice, click OK and you will see that a link to the incoming document is created.

Example – Journal

In case you are creating journal, you must first setup the General Journal Template and General Journal Batch.

Once the template and the batch have been specified, you can create a journal.

You will see that a General journal is created and a link is also provided in the incoming document.

You can complete the General Journal and post it.

Using OCR Functionality

Instead of creating documents manually from the incoming documents, you can use the OCR functionality. After you create an incoming document from file, use the action Send to OCR Service. You will receive a message if it was successful.

Now, wait for Lexmark to review the Invoice and Identify the fields needed to process it, as there might be a delay.

After the file has been reviewed by the OCR service, the Receive from OCR field will be editable, indicating that it is ready to be received. Click the Receive from OCR Service action to import the document coding.

If there are any fields that need correction or could not be identified by the OCR service, you can correct them prior to attempting to create the document. You can click Correct OCR Data.

After reviewing the scanned document, you can create the Vendor Invoice from this page by clicking the Create Document action.

Go ahead post the open purchase invoice.

NOTE: If there are any errors or warnings on the document, you can correct them by reviewing the Errors and Warnings fast tab and address as needed.

How Do I View Incoming Documents?

Once transactions have been posted from incoming documents, you can easily retrieve the incoming document from these posted transactions.

For example:

  • View from Posted Purchase Invoice

  • View form Vendor Ledger Entry

  • View from General Ledger Entry

So you can trace the incoming documents through the transaction.

Handling Incoming and Outgoing Payments

By default, Cash Receipt Journals are used to post incoming payments from customers and Payment Journals are used to post outgoing payments to vendors.

Working with Cash Receipt Journals

  • Open the Cash Receipt Journals. Here you can see various journals created with balancing accounts.

  • Select one (BANK in this example) and Edit Journal. Here you can simply enter the payment, for example in this case you have received a bank statement on which you see that a customer has paid an invoice. Fill in the following details:
    • Posting Date
    • Document Type (which is Payment)
    • Document No.
    • Account Type (which is Customer)
    • Account No. (which is a Customer No.)

  • Click Apply Entries. The concept here is to link the payment entry to one of more open customer entries. When you click on the Apply Entries, the system will list down all the open entries for the customer. You can then make an application.

  • You can now make an application, for example, you can specify that the customer here paid the invoice number 00-11 and then click Set Applies-to ID action. Note that system will enter the Balance.

  • You can also change the Amount to Apply, which will be reflected in the Balance. So let us say in this case the customer paid an advance of 25,000. Click Ok.

  • You will see that the Amount is applied and now you can post the cash receipt journal.

What is the result?

The payment will create ledger entries. Open the Customer Ledger Entries (for which the cash receipt journal was posted) and note the following result:

  • Here you can see the payment of 25,000. The Remaining Amount depicts if the ledger entry is closed or not. In this case the remaining amount is 0.00, which means that it not open anymore. The Open field is also not selected and the entry is closed.
  • However, as you just saw that the customer has paid an advance to a specific invoice, which you can see here. So this was an invoice of 185,039.38 (Amount field) and based on the advanced payment of 25,000 (see point 1), there is a remaining amount of 160,039.38(Remaining Amount field). This of course means that the invoice is not closed completely. The Open field is still selected.

It is interesting to see how the system processes these entries. You can say that Ok, the previous remaining amount is REPLACED by the new one, but what you will see that the system will NEVER replace, it will just add entries. You can see the details in the Detailed Customer Ledger Entry. This is explained in the following picture:

  • A Customer can have multiple Customer Ledger Entries.
  • Each Customer Ledger Entry can have one or more Detailed Customer Ledger Entries. So you can see the detailed customer ledger entry as the history of the customer ledger entry.

Working with Payment Journals

  • If we have paid a vendor, we can open the payment journal and make the payment.
  • Fill in the details in the payment journal such as:
    • Posting Date
    • Document Type (which is Payment)
    • Document No.
    • Account Type (which is Vendor)
    • Account No. (which is Vendor No.)

  • Click Apply Entries. You can apply the payment to the invoices that you have paid, for example invoice 200 in this case, by using Set Applies-to ID action.

  • The system will calculate the balance. You can click OK. You will see that the amount is now added in the journal line.

  • You can go ahead and post the payment journal.

What is the result?

You can check the result in the Vendor Ledger Entries. Also you can use the Applied Entries action to see on what documents the payment was applied to.