With automation, a school district in Ohio has cut labor costs by the millions. An energy company was able to save $240,000 in annual labor costs - and cut their processing cycle from 22 to just three days. A distribution company has nearly tripled the number of invoices processed each day per operator, from 250 to more than 700. And an international manufacturer is now able to process an increased invoice volume of more than 65 percent - without any additional staff.
No doubt your company, just like many others in today's economy, is looking for ways to cut costs without sacrificing productivity. Consider that hundreds of organizations just like yours have implemented automated data capture in their AP departments and realized dramatic results. Historically, the typical AP process has been heavily dependent on a series of paper-based, time-consuming manual tasks. And while other areas of the company may have been transformed by automation - replacing manual processes - traditionally the AP department is the last to be automated. However, in the current economic environment, we should re-think the "way we've always done it" and remember that some traditions are made to be broken.
Automated document, data capture and classification technology is a critical piece of business process management (BPM) - the use of technology to improve a specific process - within your AP department. Although a gut reaction to the current economic environment can be to freeze all capital expenditures, it may be a strategy that can actually backfire. In times of economic distress, technology can be a great vehicle for boosting the ability of your company to stay fiscally healthy without sacrificing productivity, customer service, or quality of work.
The event chairman for the international Business Process Management Europe 2008 event, held in London, UK, agreed. In a written introduction, he stated that BPM shows "strong evidence of becoming a mainstream capability required for competitive advantage … and a realistic choice for implementation." And as your competitors become more efficient, and leverage technology that affords them the ability to do more with less, you certainly will not want to be left behind.
With limited resources, it makes sense to deploy available technology in the areas where it can make the greatest impact - and deliver a significant ROI. Physically managing a large volume of paper invoices creates challenges as stacks of invoices pile up in someone's inbox, or worse, get misplaced. Compounding the paper issue is the need to efficiently capture the critical data contained on these invoices and quickly and accurately get it into your ERP or accounting system. The information contained within the invoices must be collected and verified in a timely manner in order to process payments according to the most favorable terms. But using manual data entry as a primary method is tedious and time-consuming, thereby making it difficult for a company to take advantage of early payment discounts and avoid late payment fees.
Although electronic data interchange (EDI) - a paperless method of delivering and receiving invoices - was originally expected to revolutionize invoice processing, most companies still receive the majority of their incoming vendor invoices in a paper format. In fact, a recent survey, by analyst firm PayStream Advisors, of more than 320AP departments indicated less than 20 percent were even equipped to receive invoices in an EDI format. This can be attributed to several factors, but one common concern is that it is not feasible for smaller vendors to submit invoices in an EDI format. As a result, AP departments have been resistant to invest in the technology required to receive EDI transmissions knowing they would still need a method to process paper invoices. But contrary to EDI, automated document and data capture has evolved into a highly effective solution for processing invoices from both large and small vendors alike.
First-generation data capture technology was introduced nearly twenty years ago. Although effective, the first data capture technology was template-based, and limited users to capturing data only from structured documents (i.e., where the same information is found in the same place on each document such as on a credit application). While template-based data capture is still widely used to eliminate the manual data entry previously required to process structured documents, data capture technology has evolved to enable efficient data capture from semi-structured documents - including invoices.
Considered to be semi-structured documents, invoices contain common data elements, such as "invoice total" or "account number," located in uncommon places from invoice to invoice, depending on the specific vendor's invoice format. These data location differences make it impossible to use a single static template for processing, and it is not efficient to create a template or "map" for every vendor invoice format. However, in the past decade, data capture technology has evolved to the point where it is now able to efficiently process semi-structured documents - without the need to create a static template for each document format. Instead, the data is located - regardless of where it resides on the document - by searching for defined data labels, such as "amount due" and "invoice number"; data format, such as MM/DD/YYYY; data type, such as alpha, numeric or both; and/or location, such as "just look in the top half of the document for this data," and using many other methodologies. Even better, a good solution also contains a "memory" technology, which remembers the location of the data for each document type such as a specific vendor's invoice, reducing the time needed for processing when that particular vendor invoice is encountered in the future.
In addition, the most effective solutions have the ability to look up data already contained in a company's existing databases, and automatically perform two-way matching of purchase order (PO) information to a specific invoice during processing. Using this detailed information to auto-populate and verify data fields pertaining to a specific invoice - or to flag problems for review - creates a more complete and accurate data record available downstream. This increase in data accuracy also eliminates the bottlenecks previously caused by missing or inaccurate data.
By virtually eliminating manual data entry and verification, an automated document and data capture solution provides a boost to productivity levels that would be unachievable by existing staff - and at a lower cost. Replacing the need to hand key the data from paper invoices into an ERP or accounting system with automated data capture, not only results in increased processing speed and data accuracy, but labor costs can be dramatically slashed. Backlogs can also be avoided, making month-end processing a much smoother process. Applying this automated document and data capture technology as a part of BPM, companies have realized dramatic reductions in turnaround time. In some cases, processing times of 10 days have been reduced to three to four hours, saving companies up to 65 percent in annual processing costs.
The paper-based nature of the AP department makes it a logical place for the deployment of an automated data capture solution. And, the current economic environment makes it an even more critical time for you to take action. If you haven't taken a recent look at document, data capture, and classification software, you may be surprised at how the technology can save your company money year after year, while delivering increased efficiency and improved data accuracy. It can make you the one who makes your AP department a better place by rescuing employees from the perils of manual processing and never-ending piles of paper - and save your company from rising costs and falling behind in a competitive marketplace.
[Source: TAWPI]
