While outsourcing invoice processing offers significant benefits with its low up-front cost, zero capital expenditure and ensuring best use of your knowledge workers, there are circumstances when it makes sense to automate accounts payable in-house. These include:
- Confidentiality: some documents may not be able to leave the premises because of regulatory compliance, legal issues and/or heightened security requirements
- Speed: physically getting your documents to an offsite document scanning service bureau may not be fast enough, such as in distributed capture environments where documents need to be scanned where they originate such as a branch office
- Corporate Culture: some companies just prefer to do it themselves rather than outsource, particularly when they have low invoice volumes
To that end, you will want to find document imaging products and services that meet in-house requirements for accounts payable automation. A document management solution is comprised of several technology components:
- Document scanner hardware
- Document scanning and OCR software
- Document management software
- Workflow automation software
- Integration with your ERP or accounting system
Document Scanner Hardware
The document scanner choice is a critical input into the entire system, otherwise it’s garbage in, garbage out. Many issues affect the right scanner choice. Will there be a single place where invoices are scanned, or will they be scanned throughout the organization? How many invoices are going to be scanned? What are peak invoice volumes?
From a purely hardware perspective, there are many elements to consider as well. Cleaning and maintaining your scanners on a regular basis is important to prevent jamming, double-feeds and damage to the scanner. Does the scanner come bundled with image enhancement software like Kodak Perfect Page? If OCR-optical character recognition is being used in the process, high quality images generated from image enhancement software are a must. Can you use a network scanner that does not require a PC, or should you use a standalone scanner with a PC? Finally, consider the person who is prepping and scanning. Of the time needed to scan documents, document prep is 80%—this includes pulling documents from envelopes and files, removing staples, bindings and paper clips, batching, and inserting separator sheets and barcodes.
Document Capture Software
There is considerable effort within the document management community to put more intelligence into document scanning software, which drives the scanners. OCR and indexing technologies also continue to improve. These technologies enable invoice header and line-item information to be automatically pulled from the page and used to populate your accounting system so that the documents can be scanned, indexed and managed faster. These improved capture software solutions enable documents to be processed with fewer human touch points (i.e. no manual data entry and in less time with less effort). Make sure that you have the right capture application to meet your current and future needs.
Document Management Software
Document management software enables organizations to store scanned invoices and support documentation in a central repository for easy and quick access. A number of factors should be considered when choosing a document management system for invoice processing. If you have people in multiple physical locations, a cloud document management system or an in-house system accessed via a web server is critical. You should also consider the IT and programming requirements, the ease of use, speed of installation and cost. Do you need to consider document retention capabilities? Do you need to import documents directly from other applications, such as email, Word or your ERP system? Asking (and answering) these questions enables you to narrow your software choices, since no system is a dominant choice.
Workflow Automation Software
Workflow automation software allows you to electronically route invoices throughout your organization for action based on your business rules. It tracks who received what document at what time and date and any actions taken on that document. It eliminates the need for inter-office mail, and provides full accountability when processing invoices. For example, by using workflow, you will be able to determine how long exception invoices has been sitting in a workflow process without being touched. More importantly, it provides the ability to measure your processes, and take steps to improve them.
Integration with Your ERP or Accounting System
Initially, you may only be using your solution to store documents. The brass ring is to integrate these technologies with your accounting system. Integration takes several forms. In some cases, it is being able to view a document from within your accounting application. In other cases, it may be a complete straight through processing application, whereby documents get scanned, the information is pulled from the document and compared to the ERP, and then posted to the ERP. Depending on what processes you already have in place, an integrated solution can provide significant benefits when processing invoices.
The information presented above provides you with some guidelines on elements to consider as you evaluate your options. Make sure that you spend some time on these elements when making these decisions, and have your vendor show you how their approach will solve these issues.