Advanced Invoice Processing: One Step at a Time. Sam Abadir Solu.on Manager Accoun.ng Percep.ve So7ware

Transcription

1 Advanced Invoice Processing: One Step at a Time Sam Abadir Solu.on Manager Accoun.ng Percep.ve So7ware

2 AutomaAon of Accounts Payable With only about 5 % of the world s invoices truly automated end- to- end, the poten.al for AP automa.on is high. Are we there yet? AP automa.on in 2011 AP MaKers, Jan- Feb 2011 Over half of those surveyed s.ll rely on manual processing for more than 75 % of their payable invoices AP Automa.on Study Interna.onal Accounts Payable Professionals 2

3 AutomaAon of Accounts Payable 77 % of all business invoicing is s.ll done on paper. Add invoices, which are typically printed out and handled as paper, and old- school invoicing s.ll accounts for 86 % of the big picture. More than a third of all companies scanning documents said they were s.ll keying in at least 75 % of their data manually. Invoice Automa.on Benchmarking Report 2010 PayStream Advisors, Inc. 3

4 AP AutomaAon Tools Front- end data capture Scanning invoices when they come in Back- end data capture Archiving documents by scanning them in a7er they re used OpAcal character recogniaon (OCR) Scanning documents and mining informa.on, such as words and numbers, then electronically moving them into the database Approval workflow Rou.ng tasks based on a user s role and access Electronic invoicing TransmiXng invoices to suppliers electronically Electronic payments TransmiXng payments to suppliers electronically 4

5 AP AutomaAon Tools PO flip Electronically genera.ng invoices from purchase orders Electronic data interchange (EDI) Sharing informa.on between computers using standard formats for purchase orders, invoices and payments Electronic funds transfer (EFT) Genera.ng electronic payments and collec.ons Evaluated receipt seolement (ERS) Conduc.ng a transac.on without an invoice, using only a purchase order and a receipt Dynamic discounang Working with a sliding scale of payment terms depending on.ming of remikance Supplier/vendor portal Using a web- based interface that allows suppliers to see and update the status of their transac.ons and electronically communicate with the purchasing company 5

6 Goals of AP AutomaAon 1. Make the rou.ne things happen automa.cally 2. Handle the excep.ons efficiently 3. Turn AP from a cost center into a profit center 4. Enable AP professionals to be more strategic than tac.cal 6

7 Why Don t We Achieve Those Goals? 1. Lack of line sponsorship 2. Success is not pre- defined 3. Compe..on for priori.es 4. Training 5. Change management 6. Lack of encouragement from management 7. Lack of incen.ve for employees to change behavior 8. Lessons learned not iden.fied 7

8 Levels of AutomaAon Advanced SoluAon for AP Intermediate SoluAon for AP Basic SoluAon for AP No AutomaAon 8

9 No automaaon Very paper- intensive processes Success depends on accuracy and efficiency of data entry by many people Low supplier sa.sfac.on High costs for storage, retrieval and processing Challenges of retrieving paper documents, especially in disparate offices 9

10 Basic SoluAon for AP Standard invoice processing Scan, key invoice from image and link Route invoices for GL or cost coding and approval via workflow AP keys GL or cost coding into ERP Invoice Entry Supplier: Invoice: Date: Amount: /11/11 $

11 Basic SoluAon Benefits Opens the door for automa.on Eliminates paper from the approval process No wai.ng necessary in the approval queue Wait states can be determined and boklenecks accurately iden.fied Retrieval of documents across the organiza.on is instant and involves fewer people Higher compliance with audits 11

12 Intermediate SoluAon for AP Advanced invoice processing with electronic forms Use invoice electronic forms to streamline the data entry process for Non- PO invoices Invoice header/footer data entered into electronic forms by AP Route to buyer using workflow Buyer enters GL distribu.ons directly into electronic forms Route invoice for approval(s) using workflow Approved invoices can be routed back to AP for review and upload or uploaded directly into your business applica.on 12

13 Intermediate SoluAon for AP Advanced invoice processing with electronic forms Use invoice electronic forms to streamline discrepancy resolu.on for PO- based invoices Invoice header/footer and line item data entered into electronic forms by AP Invoice data is validated against PO data Discrepancies (PO vs. invoice) are reviewed by AP (could route to procurement if needed) Once discrepancy is resolved, invoice is ready to upload Invoice(s) are uploaded to host applica.on 13

14 Intermediate SoluAon Benefits Advancement on basic solu.on Workflow can speed up process and beker discounts can be taken, if applicable Advanced approval queues can be created and automated Valida.on of cost code (GL, cost center, internal order, WBS, etc.) entry at the beginning of the process, reducing rework Greatest impact on non- PO invoices BeKer compliance and easier audits 14

15 Advanced SoluAon for AP Advanced invoice processing with electronic forms and fuzzy logic OCR processing Streamline invoice data entry and PO line pairing process Fuzzy logic OCR processing extracts header/footer and line item data Captured data is loaded into electronic forms and routed into workflow For both Non- PO and PO- based, data entry reduced to excep.ons For PO- based invoices, line pairing is automated Invoice transac.ons uploaded to business applica.on 15

16 Advanced SoluAon Benefits Straight- through processing possible Higher impact on PO invoices two/three way match can be instant Highest level of efficiency, more invoices processed more accurately by fewer people Increase early payment discounts Highest compliance with audit staff, easier audits 16

17 Features to Look For in Advanced SoluAons Fuzzy logic OCR processing Advanced OCR for invoices Context- based extrac.on without templates, keywords or dic.onaries Fuzzy search technology used for: More accurate vendor iden.fica.on Automated PO line pairing for PO- based invoices Proven results with line item extrac.on In use, not just demonstrated One- to- many learning capability No one- to- one templates necessary Invented to handle unstructured documents 80% extrac.on out of the box vs. 40% - 60% 17

18 Features to Look For in Advanced SoluAons (cont d.) Op.ons Header/footer only Header/footer and line item Low Total Cost of Ownership Including low cost to train employees Including low cost of change management Intui.ve and easy to operate both func.onally and technically Must be easy for line to operate Must be easy for line management to modify without burdensome technical changes 18

19 Cna yuo raed Ahs? Fuzzy Search Technology cloud û could ü i cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinerv.sy, it dseno't mtaetr in waht oerdr the lkeres in a wrod are, the olny iproamtnt.hng is taht the frsit and lsat lkeer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it whotuit a pboerlm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Azanmig huh? yaeh and I awlyas tghuhot slpeling was ipmorank! Human thinking has built- in fault tolerance and context- based interpreta.on 19

20 Example Vendor Assignment IdenAfy the vendor with a high level of accuracy Through the use of patented fuzzy logic, OCR processing evaluates all names/addresses found on the invoice and accurately determines which one is most likely the vendor. Pine Tree Lumber Company 1600 Maple Avenue Chicago, IL Pine Tree Lumber Company 1600 Maple Avenue Chicago IL

21 Example Invoice Line Matching Match invoice lines to their related PO lines with a high level of accuracy Through the use of patented fuzzy logic, OCR processing evaluates data on the invoice line and accurately determines which PO line is most likely the correct match. 21

22 Example VerificaAon Process Low Confidence Data bad characters, ques.onable data, etc. Invalid Data vendors, purchase orders, dates, etc. Cross checking of amounts captured e.g., subtotal plus freight, plus misc. charge, plus tax = total invoice amount Easy for scan operators to complete the QA process 22

23 PO Line Pairing Process Example Automa.cally associate each invoice line with corresponding PO line using fuzzy search technology. 23

24 PO Line Pairing Process Example Match discrepancy checking for each line compare quan..es, units of measure and unit price. If everything checks out, the invoice is ready for uploading. That s straight- through processing! 24

25 PO Line Pairing Process Example Use the invoice electronic forms to manage invoice line items not paired and/or match discrepancy issues with quan..es, units of measure or unit price. 25

26 Review of Benefits and ROI Cost reducaons/savings Increase vendor discounts/early payment rebates Reduce/eliminate overnight delivery costs Reduce costs for paper storage (onsite and offsite) Reduce costs for offsite storage retrieval Reduce audit costs Cost avoidance Process more invoices with same number of employees Reduce cost per invoice Benefits Streamlined invoice process Hold approvers accountable for.mely ac.on Respond to inquiries faster Simultaneous access to documents by mul.ple users Reduce/eliminate filing du.es Eliminate searching for lost files 26

27 Advanced SoluAon for AP Best PracAces Should I do header/footer or line item? What s the percentage of non- PO to PO- based invoices? How are PO- based invoices processed today? Following best prac.ces for crea.ng POs and pos.ng receipts? Are you dealing with lots of match discrepancies? Is it realis.c to expect to use OCR for all invoices? In an ideal world yes, but reality says NO einvoicing or EDI may be beker for high volume suppliers 27

28 Summary Develop a Vision Understand the issues facing your company and their costs Understand how your company will grow in the future Partner with an experienced so7ware vendor that has exper.se in Business Process Management (BPM) and Enterprise Content Management (ECM) to develop a roadmap for your company that fits your needs and budget. 28

29 Summary 1. Lack of line sponsorship Your company sent you here! 2. Success is not pre- defined Understand how much your issues are cos5ng you today; understand the level of the solu5on before you buy it 3. Compe..on for priori.es Work with real figures and strong management (see #1 and 2) 4. Training Choose a simple solu5on that eases training and lowers overall TCO 5. Change management Choose a project champion from AP to smooth the way 6. Lack of encouragement from management Communicate what you ve learned here and start draking your plan 7. Lack of incen.ve for employees to change behavior Understand issues from the line point of view and plan ways to energize staff 8. Not iden.fying lessons learned Choose a technology partner with experience and learn from others. Document your implementa5on. Use these lessons when expanding the solu5on on your own. 29

30 Q&A SAM ABADIR Solution Manager Accounting Perceptive Software direct mobile 30