by Tom Beasley

For years, whenever enterprise content management systems have been touted, one of the most frequently cited examples is their application in accounts payable departments. And since millions of invoices arrive daily at businesses worldwide, it's no wonder that a department inundated with such massive amounts of paper is the perfect candidate for automation. This issue of The AccuView seeks to serve as a primer on automated invoice processing.

Traditional invoice processing is labor-intensive and time-consuming at each step along the way. Every invoice must be opened, sorted, reviewed, approved, routed, matched to the purchase order, processed, and filed and stored for months, if not years. It's not uncommon for thousands of man-hours to ultimately be wasted as a result of manually entering the data into a system for payment. And even more time will be wasted dealing with the results of incorrectly keyed data.

The benefits of invoice processing automation are clear and plenty:

• Reduced receipt-to-pay cycles
• Decreased data entry costs
• Reduced physical storage costs
• Quicker access to information
• Advanced knowledge of discount deadlines
• Improved vendor relations

Invoice processing solutions commonly require the seamless integration of scanning hardware, document management software and automated workflows - all working together to reduce the need for manual intervention. We have always said that no two AccuImage systems are ever the same, and while some of the components may be identical, no two automated invoice processing systems are ever the same - even if both are designed, developed and installed by AccuImage.

We recognize that, even though every company receives and processes invoices, each has slightly different needs, goals, pain-points and processes to address. AccuImage is in the unique position of offering a variety of products and services to fit every scenario. We welcome the opportunity to speak with you directly to discuss your AP operation.

Please call 615.242.7226 if you would like to learn more, or to schedule a consultation.

Best regards,

Tom Beasley
tom.beasley@accuimagellc.com

No matter what you do, at the end of every month your staff always seems to be putting in extra hours rushing to get those final invoices processed and into your accounting or ERP system. Not only do they need to make sure everything is in balance, but there always seems to be a pile of invoices that have gotten misrouted and show up in their inbox needing to be keyed into the system and processed at the last minute. And then there are the invoices that leave your company's mailroom, never to show up again - and only are discovered to be missing when an angry vendor phone call is received!

Studies show that the cost to manually process an invoice is, on average, $35. If a company is processing anywhere from 2,000 to 10,000 invoices a month, it can cost anywhere from $75,000 to $350,000 a month. That's $840,000 to $4.2 million a year!

The majority of the escalating costs of manual processing are derived from two tedious, labor-intensive processes. Incoming invoices must be manually sorted and physically routed to the correct location, such as to a specific accounts payable employee or to a group of employees who may be assigned to process only certain vendors. As stacks of paper invoices travel through your interoffice routing system, delays may occur due to misrouting or backlogs; if an employee is out of the office, the whole routing process may stop with invoices piling up in an unattended inbox.

The second - and possibly even larger - impact on escalating costs is paying workers to spend the better part of their day keying the critical information off the incoming paper invoices into your AP or ERP system, and checking incoming invoice calculations for compliance with tax regulations or against the related Purchase Order. Again, backlogs and bottlenecks may occur if an employee is out of the office unexpectedly, and time constraints at the end of the month may necessitate paying overtime or bringing in costly temporary help. Plus, because each vendor invoice is unique and the formatting can change, employees must take the time to search for the correct data to enter. Manual data entry and calculation errors can happen, requiring corrections to be made downstream - also a time-consuming and expensive task.

The manual sorting, routing and keying processes are part of a slow and inefficient system that is all too often riddled with delays and human error. And while you may have considered implementing an EDI system to alleviate the paper-pushing problem, not all of your vendors will be on board with the idea, which still leaves you to deal with stacks of paper invoices. In fact, studies show that AP departments are still receiving an overwhelming majority of their invoices in paper format. While the exact percentage of invoices received in a paper format differs based on variables such as company size and number of vendors, the number hovers around 75 percent.

To escape the rising costs and inefficiencies of manually processing incoming mail and in particular, AP invoices, many companies have turned to an automated document classification and data capture solution. By virtually eliminating manual sorting, routing and data entry, automation provides a boost to productivity levels that would be unachievable by existing staff - and at a lower cost. Companies have realized dramatic reductions in turnaround time - in some cases, processing times of 10 days have been reduced to 3 to 4 hours.

Automated Classification and Data Capture Solutions

After scanning your documents, good solutions import the scanned document images, automatically identify and sort them by document type, and recognize any document sets (all pages related to a single document). Your mission-critical document images, including invoices, are classified automatically and placed where they matter most - on your network, ready for automated data extraction and not trapped in an inbox.

How it works … a top-level solution will use a multi-level classification approach to automatically identify and classify documents - even on a page level. Documents are classified based upon your customizable keywords and/or document tags. You can define keywords such as "Terms," "Amount," or "Qty" to help identify documents as invoices. A document such as a vendor invoice can also be classified by importing a sample invoice image into the solution and applying a tag to the image that identifies it as a specific vendor's invoice.

Once an invoice has been identified, it will be automatically processed. Instead of operators manually keying in data from paper invoices, your invoice solution will use optical character recognition (OCR) to "read" or recognize the different types of print on a scanned invoice image. The data is captured and "normalized" per your accounting rules such as extracting a date in a DD/MM/YYYY format. Both summary and detail line items can also be captured and auto-verified, ensuring items such as subtotals and columnar math are correct.

If the invoice is related to a PO, sophisticated invoice solutions will automatically compare the invoice with the original order and the merchandise entry data, if available. If no discrepancies are identified, the invoice is automatically booked into your accounting or ERP systems. Non-compliant invoices can optimally be returned via e-mail to the vendor for dispute resolution. Invoices not related to a PO are sent to the appropriate ordering department or employee for approval using a digital process.

Accurate invoice information can be delivered to your accounting or ERP system faster, allowing your organization to start the approvals process sooner. You'll also realize substantial competitive advantages in reduced labor costs, higher productivity, and improved vendor relations, and be able to capitalize on negotiated payment terms or take advantage of early payment discounts. Working nights and weekends can become a distant memory and employees can concentrate more on value-added tasks.

[Source: AnyDoc Software, an AccuImage Partner]

Every business is familiar with the arduous process of paying bills for goods and services, not to mention the sea of paper and the information management challenges it creates. Regardless of a company's size, nearly every enterprise must respond to invoices for utilities, rent, and goods or services in order to perform without interruption. Failure to pay promptly can result in severe penalties or, worse, no lights!

The approval of invoices and resolving of billing discrepancies can require many man hours. Inefficiencies may prevent organizations from taking advantage of invoice discounts and may result in late payment fees, or even damage to a company's reputation. Invoice digital capture and automated workflow address these challenges. Together, they provide a seamless flow of accurate and timely information, expediting processing and saving precious human capital for more important projects.

Accounts Payable Challenges in a Paper World

Bills come in all shapes and sizes, with structured and unstructured data located at varying places on each vendor's invoice. This makes it challenging to review and relay information quickly. Considerable time is required to extract relevant data, match invoices with required backup information, and collect approvals and signatures. With paper-based processes, it is often difficult to make payments in a timely manner. Waylaid papers can result in late fees, and the cost of processing keeps staff focused on the paper chase instead of more valuable activities.

In a paper environment, large volumes of invoices are fraught with the potential for human error. Considerable time can be spent on manual data entry. This inevitably results in mistakes, as well as delays between the time an invoice is received, matched, approved and entered into the accounting system. This time lag can result in duplicate invoice payments. In addition, some invoices that are marked as paid may become misfiled, making it challenging and costly to search for information when it is needed.

Electronic capture and storage of invoicing information, coupled with automated workflow, ensures that the right information is available to the right people for action at the right time. It dramatically reduces errors and makes information accessible, while providing more security than is available in a paper-processing environment. Automation saves considerable staff resources and ensures prompt payment. In addition, it provides the details needed for easy audits, regulatory compliance and process improvements.

Here are six benefits of improving the process with electronic capture and automated workflow.

1. Eliminate paper at the source: make information available instantly.

Digital capture of invoices, including those that contain unstructured data, paves the way for easy invoice processing. The scan and OCR of invoices saves time and money. High-quality capture systems provide the ability to locate and capture data on multiple pages, regardless of location and paper size. These robust systems provide a rules-based process that goes beyond data recognition. They provide instant, thorough validation and lookups to outside databases and ERP systems, math checks, and recognition confidence ratings, flagging items for and easing the review of items in question. The optimal capture solution can apply a number of technologies to immediately recognize whether an invoice is one that has been previously received. If so, the system will "remember" where all the pertinent data is located. If it's new, the system will use a number of algorithms to find and store these field locations for maximum capture speed and accuracy the next time this invoice appears.

2. Expedite approval: enable quicker decision-making and greater data security.

After an invoice is received, the invoice has to be approved for payment. Invoices may need to be matched to purchase orders, and written approvals or signatures may be required before payments can be made. Some invoices may result in suspension until a condition is met or proof of product receipt (or services) is given. Other payments may be denied. With automated workflow, invoices can be matched to purchase order numbers during the capture process and then sent into a queue to export for immediate approval, suspension or denial. Authorized parties can review, annotate or sign the invoices appropriately from remote locations, making it possible to elicit decisions almost instantly. Not only does it remove the delay of interoffice mail, but it also removes the need to wait for authorized persons to return to the office to render needed approvals, and eliminates the possibility that the papers will be overlooked or delayed.

3. Save money: take advantage of quick-pay discounts and avoid penalties.

We've all heard the old adage that states "a penny saved is a penny earned." Even though this is not necessarily the most important incentive for most organizations to automate, those with the cash flow to support early payments and avoid late ones may take this to heart as they scramble to take advantage of early payment discounts. In order to make the most of discounts, invoice information has to be entered into the payables system quickly so that payments can be made before the discount due date. In a paper world, "2/10, Net 30" can be challenging because of the time needed just to enter the invoices into the payables system. With the proper capture and automated workflow solution, large volumes of invoices and their discount and penalty information can be entered as payables within hours of their receipt, and approved and processed in time. A penny saved is truly a penny earned … and the savings can be significant.

4. Integrate with accounts payable systems: leverage data and remove errors.

Too frequently, organizations have valuable information in disparate silos that can not communicate with each other, making management of this information daunting - even when it is all stored electronically. Integration of automated workflow with line-of-business applications such as a payables system makes it possible to extract and share data between applications. This helps companies to do more with the data they already have on file. By integrating automated workflow with your invoice processing system, another layer of data entry can be removed. Payment data that has been captured and approved for disbursement can be entered into the payables system, making the process considerably faster. At the same time, the possibility that an approved invoice will have an error in the corresponding check or payment can be eliminated.

5. Comply and audit more easily: prove payments in a snap.

Many of us have faced the dreaded moment of a creditor informing us that payment has not been made when we were sure it was paid on time. Proving this with facts can take hours in a paper system, especially if an invoice never was filed, or - even worse - was filed in the wrong location. When information is stored digitally, authorized persons can get an overview in an instant. Digital workflow makes it possible for staff to see where any invoice is in the process, to track who was responsible for which actions, and at what time. Detailed reporting assists the staff in tracking down information quickly and accurately. In addition to internal tracking, workflow reporting leaves digital trails that show every action related to an invoice.

6. Maximize productivity: process, analyze, evaluate, improve.

Effective deployment of digital capture and automated workflow means that the time previously spent on processing invoices in a paper environment can be redirected toward more meaningful work. Instead of handling inquiries, staff can spend their time strategically reviewing and analyzing data related to payments made, and project future costs and trends more easily. The consistency and completeness of information facilitates thorough analysis, helping management to make informed decisions more quickly. Workflow reporting also enables managers to gain an overview of productivity and processing in an instant, and enables them to improve procedures continually. Bottlenecks caused by extreme volumes or individual inefficiency can be discovered before they become problematic, and changes can be made to improve the routing of documents. Management can also adjust workload of individual staff members whenever volumes increase or if there is a concern about productivity or meeting deadlines.

Summary

Invoice capture facilitates information accuracy, consistency and completion. Workflow ensures that this information is accessible to the right people at the right time for the necessary action. A company's work can continue without interruption regardless of the location of the workers, as long as they have access to the Internet. Less time is spent on the grand paper chase, and as a result, payments go out the door more quickly. Detailed reports and analyses contribute to continually improved processes, leaving more time for other, more meaningful pursuits.

[Source: ECM Connection]

Back in the 1980s, Robert Crandall, former president and chairman of American Airlines, had taken a single olive out of each salad, saving some $40,000 a year for the airline. Innovative? Somewhat. Effective? Absolutely. Cost savings don't need to be particularly innovative like Mr. Crandall's olive-elimination, but they do need to be effective.

Regardless of a company's size, nearly every enterprise must respond to invoices in order to conduct business without interruption. The trend toward automating invoice processing is an effective, cost-savings solution that ensures bills are paid promptly to avoid late fees and penalties, and errors are identified quickly. The end result is that organizations can reallocate resources elsewhere geared toward more revenue-generating activities.

So Long Paper

Taking control of this back office pain-point begins with removing paper from the process. The sheer volume of invoices an organization receives makes it neither feasible nor efficient to conduct an accurate checks-and-balances. A company receiving 50 invoices spread between five accounts each month exerts a tremendous amount of time identifying errors. The time spent verifying unauthorized charges and contract rate compliance further exhausts resources. Moreover, once errors are determined, the time spent contacting vendors to rectify the error takes a significant amount of staff time. By the time all of this is resolved, or at least somewhat resolved, next month's invoices have already arrived.

Expedite It

There's nothing more aggravating than hearing from a vendor "we never received the payment." In a paper-based system, it may take hours to verify payment, especially if the invoice was never filed or filed in the wrong place. Eliminating paper and adopting electronic methods to automate the process means fewer errors and less scrambling. It also means not having to wait for authorized persons to render payment approval. Data on invoices allows organizations to have a complete overview of payables in process. Automated workflow eliminates the possibility that invoices are overlooked or, worse, forgotten.

Closing the Loop

With the increased scrutiny from SOX compliance, it is necessary to accurately track invoices. Automated invoice processing makes it possible for staff to guarantee appropriate action is taken regarding payment. The assurance that bills are promptly addressed promotes quality within financial operations. Electronically tracking the invoice, from the moment it is received until the moment it is remitted, creates a concise audit trail. Automatic alerts can be set to notify the appropriate party when a specific action must be taken. Detailed reporting assists in tracking down information quickly and accurately.

[Source: MBG]

AccuImage, LLC is a systems integrator that empowers their customers with solutions designed to gain the maximum value from their information at every point in the information lifecycle. Founded in 1996 and headquartered in Nashville, Tennessee, AccuImage specializes in the design, installation and support of document and content management systems, forms processing solutions, and electronic workflow systems. The company offers hardware and software from leading companies - AnyDoc Software, Böwe Bell+Howell, Canon, Captaris, Captovation, EMC Documentum, Fujitsu, Hewlett-Packard, IBM, Kodak, Kofax, Panasonic, Plasmon and Verity - as well as consulting, document conversion and professional services.