Building a Document Management Plan Part III
November 21, 2008 nnyq.com editBuilding a Document Management Plan Part III By Ray Griffiths
Accounts Payable, Workflow and Data Extraction
Despite the availability of EDI, 96% of all corporate invoices are still received as paper documents, costing companies on average $10.15 to process each one. With advances in software technology that allow for invoice processing and data extraction to take place without need for predefined templates, the time is right for automating Accounts Payable. Scanning and capturing semi-structured data significantly reduces data entry costs and speeds up productivity.
As organizations look to drive down costs and improve efficiency, manual and time-consuming processes in accounts payable (A/P) are an ideal place to start. A/P processes are sometimes distributive in nature, may require approval on many levels, and generate huge volumes of paper and electronic documents that are difficult to effectively manage. Document imaging systems enable companies to achieve process efficiencies and cost saving in three key areas:
1. Capture, storage and retrieval of data and documents
2. Automation of critical business processes to drive efficiency
3. Sharing of information and extension of processes to internal and external resources
Integration with ERP and LOB applications allow companies to seamlessly enable a single interface to all payables transaction content, and extend automated processes into these applications. Integration will significantly improve response times, eliminate time-consuming duplicate data entry, reduce errors, increase processing efficiencies and enhance levels of service.
Implementing document management/imaging technology helps managers and employees identify, classify, track and manage all forms of A/P information, from inception through the end of the content lifecycle. The technology manages all types of corporate records regardless of whether the record is in the form of a physical document, an email with attachments, or an electronic spreadsheet. The solution allows users to establish retention periods, organize and retain these documents and other assets for legally required amounts of time, and provide quick, on demand access to them.
In Part II of this series we talked about six problem areas in accounts payable that could be addressed with an entry level document imaging system.
§ There are 5 or more payables clerks
§ They are manually matching checks
§ Invoices have to be approved after they are received.
§ Receivers are being printed and sent to accounting.
§ Some payables become receivables.
§ You process hundreds of invoices every week from the same vendor(s)
This article discusses how workflow and data extraction can reduce the number of payable clerks by a significant amount. In addition, workflow will provide better control of the payables process.
Workflow
By automating workflow of documents and processes, invoices can be scanned and indexed at point of receipt and routed through the approval/resolution process. When information flows electronically, organizations can better track payables and optimize cash flow. Integrating payables information with purchasing, for example, can speed up the review process by enabling purchasing agents to quickly reconcile invoices received with PO's issued. Through use of integrated COLD technology, invoices can be more easily reconciled with inventory reports, if those reports reside in the system.
Basic Workflow
Basic workflow can be achieved with an entry level document imaging system. The following is a brief overview of a basic workflow process. Invoices that only go to the payables clerk to be paid can use this simple workflow process.
Scan invoices and automatically route them to a work queue using patch codes and/or bar codes. The purchase order and receiver can be captured by the COLD module of the imaging system and sent to the work queue. If there is a packing slip, it will have to be scanned and routed to the queue.
There will need to be a control number for each invoice and that is usually the PO number. The invoices with all the supporting documents are then retrieved from the work queue for processing. When the check is printed a copy is captured by the COLD process and electronically filed with the rest of the documents. This process eliminates much of the paper handling by the clerks. They will be able to respond to vendor questions much faster because they can retrieve an invoice and all the supporting documents in seconds.
Advanced Workflow
Automated workflow expedites routing invoices through the approval process and exceptions through the resolution process. Automated workflow allows for invoice rendezvous, parallel processing, alerts and e-mail notification, escalation, etc. No longer will files sit without action on someone's desk. Approved invoices are routed back to A/P for final preparation and payment on a timetable you specify.
Invoices that need to be routed to other personnel in the company to be approved will need a more complex workflow process that will require a software application to drive the process. This software application should provide, at a minimum, the following:
§ Invoice tracking - once data is captured from an invoice, the invoice should be able to be retrieved from the work flow system.
§ Queue monitoring - to alert if invoices are not processed in the required time frame. § Rules based routing. § Ad hoc routing.
§ Queue manager - for supervisor to work within any queue and reassign invoices.
To utilize workflow in accounts payable, invoices need to be categorized so that they can be assigned to a work queue. Workflow is defined by work queues, not clerks. Some examples of invoice work queues:
Vendor number
Alpha
Amount
Date due
Operation expenses
Once you have set up the categories you will assign one or more categories to a clerk or a group of clerks. The work queues will be processed on a predetermined set of rules established by the needs of the department.
The purchase order, invoice, receiver and packing slip will get into the system as described in the basic workflow above.[1]
Data Capture
Millions of invoices arrive daily at businesses worldwide. Each invoice must be opened, sorted, reviewed, approved, routed, and matched to the purchase order, processed and ultimately filed and stored for months, if not years. The data from each invoice has to be entered into the accounting system for payment. Typically invoice data entry is a manual process.
In the last few years OCR and forms reading technology has made significant advances. As a result several companies have developed solutions to automate invoice data entry. Invoices can be scanned locally or from anywhere in the world via the Internet. The images are then sent to an OCR engine. Using pre-defined keywords and a topography unique to invoices, the system automatically locates and captures the essential data - invoice number, invoice date, total due, detail lines, terms, due date, etc., without the need for templates. The data is fed into the accounts payable system as an EDI invoice. Comparing the extracted data with data already in the system will allow some of the invoices can be process with out human intervention. If the data does not match up, the invoices will be sent to an exception queue for processing. Invoices that require approval would be sent to a workflow process.
Invoice data extraction systems are a big investment in time and money. The payback is being able to process some portion of the invoices without human intervention. By combining data extraction and workflow a company could expect to increase their productivity 50-60%. If that relates to 7 or more payables clerk in your company you should be looking at the technology.
If you have any questions contact me at ray@1filesb.com or visit our web site www.smallbusinessdocumentimaging.com
[1] The larger the payable department the more import it is to automate the document input process. One method of sorting invoices is to use a PO Box number for each category of invoices, and then attach a barcode to identify each invoice for scanning.
