resource center/technology series

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1 resource center/technology series Accounts Payable Automation Technology: Workflow and Document Storage The Perspective of a Practitioner By Craig Simpkins, CAPP IAPP/IARP/TAWPI 615 East Colonial Drive, Orlando, FL The information contained in the Resource Center Web pages is for general information purposes only. The statements, comments, or opinions expressed within these documents and links are those of their respective authors, who are solely responsible for them. Inclusion of these documents and links in the Resource Center does not necessarily constitute or imply endorsement, recommendation, or favoring by IAPP/IARP/TAWPI. While IAPP/IARP/TAWPI endeavors to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, or services contained within the Resource Center.

2 Welcome to the White Paper Series on Accounts Payable Automation Technology. The series consists of seven topics, all from the perspective of a practitioner: Introduction to Accounts Payable Automation Technology Invoice Receipt Process Workflow and Document Storage Procurement Cards Travel and Entertainment Disbursements Other Accounts Payable Processes The reports will focus on current and emerging methods of automation used to streamline and optimize the accounts payable process. In addition, each white paper is structured to enable readers to challenge the current level of technology within their organizations. Throughout the series, the reports will refer to the 2009 IAPP Benchmarking Study and its findings related to accounts payable automation technology. Charts pictured in this series are from the results of the study unless otherwise noted. Overview This whitepaper, which is the third in a series of seven, will focus on Workflow and Document Storage. This paper will review and discuss the results of the benchmarking study, and correlate those results to options for workflow and document storage. Specifically, the paper will discuss centralization versus decentralization of the process, capabilities of current business systems, invoice mix and volume, workflow mechanism currently utilized, current archive process, and level of management support. The paper will also discuss other best practices for workflow and document storage, and wrap up with key performance indicators. [] 2

3 Why Workflow and Document Storage? In addition to being a green solution, workflow and document storage will allow and organization to gain the efficiencies, productivity, and cost savings from a streamlined process. In addition, the drivers of workflow and document storage include: Increased Compliance Requirements. In addition to having the ability to tighten the controls within the process, workflow and document storage will allow for business rules to be built into the process to tighten the compliance requirements. For example, an invoice associated with a supplier type requires additional approval from the legal department, and needs to be expensed a specific general ledger account number. The tool can be configured to ensure both of these steps are completed prior to the invoice being processed. Imaging and Workflow has evolved over the past several years. Just like any other type of technology, the process becomes easier and more efficient to use on a daily basis. Providers continuously use the feedback of customers to make improvements to upgrades. For instance, a customer has discovered that multiple accounts payable reps can access the same invoice simultaneously in the work queue. Therefore, both reps could be processing the invoice at the same time. In addition, providers continue to process or tune the overall tool, resulting in an increase in system performance from a processing time perspective. Optical Character Recognition (OCR) continues to improve. Similar to the prior discussion point, providers of OCR continue to fine-tune the process. Even though OCR has not come close to reaching its potential, several companies have implemented the technology and have seen the benefits from the gained efficiencies. Remember, the ultimate goal in the accounts payable process is to have an invoice flow through the entire process without being touch, OCR can be leveraged to achieve that goal. Solutions available for every budget. There are workflow and document storage solutions that can accommodate any budgets. The options range from a service-as-a-software solution, where customers will pay a variable cost per invoiced processed to a customized solution that will stored on their server, resulting in both fixed and variable costs to run the process. In addition, there are a plethora of solutions between the two ends of the spectrums. Obviously, the budget, volume and complexity of the business will determine the selected solution. Economic benefit is evident. By choosing the right solution for your accounts payable department, the economic benefit should result in self-funding the project. The overall goal would be for an organization to achieve efficiencies [] 3

4 from the implementation of the new tool, which should cover the monthly expenses, whether fixed or variable. Components of Workflow and Document Storage In order to have a tool that can be leveraged to achieve the set goals, there are certain components that need to be evaluated. These components include scanning, data capture, content management systems, workflow systems, and error handling. Scanning. The volume and structure of invoices that are processed on a monthly basis will determine your scanning needs. For example, if your accounts payable department processes a small amount of invoices, it may be economical to have the invoices scanned by an outsource provider. In addition, an outsource provider allows for the flexibility of handling peaks and valleys of invoice volume, that otherwise would be handled within your team. Finally, an outsource provider specializes in scanning; therefore, the quality of their scanners will be top-notch, which will remove the burden of your company having to purchase and maintain the scanning equipment. Data Capture (manual or optical character resolution). There are many options available related to data capture, both in-house or outsourced solutions. The data can be manually entered into the scanning and workflow solution, the PO flip process can be simulated to minimize data entry, or optical character recognition can be utilized. As with many aspects of automation technology, the volume, resources, and investment will determine the ultimate direction. Content Management System. Some organizations have a content management system in place today. In most cases, the images need to be scanned and transferred to the content management system. However, scanning and workflow will allow for the invoice to be stored in the storage system via an interface between the two systems. Workflow systems. Workflow systems can be either manual or automatic, and are structured based on the current approval hierarchy in the organization. In addition, there may be specific business rules that will facilitate the complex approval processes that are in place today in most organizations. Error handling. Error handling utilizes the same methodology as workflow, and will allow for an invoice to be sent to a business partner for resolution. For instance, and invoice may be submitted with a purchase order that is billed-in-full; therefore, via the workflow tool, the error will be submitted to the individual responsible for the purchase order for resolution. Workflow and Document Storage: Key Factors to consider [] 4

5 There are several key factors that need to be considered when designing and implementing workflow and document storage. These factors will be contingent upon the complexity of your organization and account payable process and the amount of investment that management is willing to make towards the project. These factors include: Dispute resolution and collaboration. There are several solutions available from a workflow and document storage perspective; however, dispute resolution and business partner collaboration will be a key input in the decision making process. For example, if your accounts payable department handles several invoices that involve dispute resolution or further information is required to process, then you will want to consider a solution that can facilitate these needs. Document encoding. Based on the document storage system, you may want to develop a standard encoding methodology that will make it convenient to retrieve documentation for further reference. For instance, the invoice date, supplier number, and dollar amount, may be utilized to develop a reference number for further retrieval. Document history and tracking. Workflow and document storage will allow for an invoice and all applicable supporting documentation to be stored, and if necessary additional information can be added to the original file, for future reference. Therefore, instead of digging through several boxes in storage, one-click of the button will provide the bundle of document in an electronic format. Document notes. Even though the accounts payable department and the business partners try to keep details on an invoice, especially if there were challenges such as a dispute, the paper trail normally is lost in the shuffle. This solution would allow for the addition of multiple notes to the invoice, in the form of an electronic audit trail that will always be stored in the electronic repository. This can be helpful for both an internal audit and a third-party audit conducted by the customer, which usually stretches back a few years. Escalation. Within a traditional accounts payable process, which normally involves a manual or paper process, the escalation process is usually handled using intercompany mail or by scanning/ ing to the correct business partner for resolution/approval. The workflow solutions that are available, allow for the accounts payable department to escalate the invoice for further disposition. This not only provides an electronic paper trail; however, allows accounts payable rep to utilize the tool to manage the process vs. the alternative of a manual process. Therefore, the risk of losing [] 5

6 invoices or having to send an invoice multiple times is eliminated, and visibility and accountability become a key benefit of the initiative. Hierarchy administration. Based on the complexity of the organization and the approval process, you can either manually or automate the hierarchy within the tool. Simple solutions will require that each invoice is handle on an individual basis; whereas, higher-end solutions will accommodate a feed from a human resource business system. The human resource business system will feed the current hierarchy information into the workflow tool; therefore, eliminating the need for maintenance within the tool. Benefits of Workflow and Document Storage We have already discussed the overall intent of workflow and document storage, the components, and the key factors to consider. Now we will list the many benefits of the solution. Keep in mind, these benefits apply whether you implement a simple to complex solution, with the major difference being the magnitude of the benefits. The benefits include: Reduced amount of paper and storage Reduced invoice processing costs Efficient processing of invoices Decreased error rate Increased scalability Streamlined workflow and approval process Maximization of discounts for early payments Real-time visibility/access to invoices Strengthened internal controls Facilitates working capital initiatives Auditable process Barriers to the adoption of Technology Adoption The common them throughout this paper related to adoption of technology revolves around the complexity of the accounts payable process, availability of funding, and the commitment from management to implement a [] 6

7 streamlined solution. The following is a list of barriers that need to be considered when adopting technology automation. Volume. In the world of business case justification, volume is a key driver in the success of the project. If your accounts payable team processes a small amount of invoices, then a simple version of workflow will suffice. However, if you have a high volume couple with complexity, and higher level solution will be required. In addition, there are web-based solutions that are available for companies that need a simple solution, similar to use as you go. Alternatively, there are solutions in which you can purchase the software and configure to the needs of your team. Integration with legacy software. One of the main benefits of technology adoption is the ability to interface the solution with your ERP system. This will allow for an automated data entry process and allow your team to focus on resolving disputes and improving the process. Some organizations will make the decision to not invest in older or legacy systems; therefore, the economies will be lost. Available investment or funding. The key to an organization making the investment in technology automation is some type of payback. Therefore, the more technology that you can effectively utilize, the more savings you can generate, which will result in a quicker payback, and an easy sell to management. In addition, the company may be facing tough economic times and is not willing to make the up-front investment until a later date. Maintenance Cost. Maintenance costs are often underestimated or missed when evaluating a solution. It is imperative that the on-going costs are comprehended in the business case along with the savings to cover these expenses. Uncertainty of Return-on-Investment (ROI). In most cases, you are developing an estimate of the numbers that are driving a business case. If you take a conservative approach, then you should always be on the safe side of the line. Remember, it is always good to beat the numbers versus missing them. Difficulty selecting a solution provider. There are many solution providers in the market today; therefore, it is imperative to do a thorough job at evaluating their proposals. There will be many different opinions within your organization as to the best provider; however, at the end of the day, the individuals that will be utilizing and managing the solution need to have a heavy hand in the selection process. [] 7

8 Management/Leadership Support. In addition the up-front investment, there is a piece of change management that needs to occur in order to make the adoption of technology a success. It is imperative that management support the initiative and communicate the overall expectations to the organization. Lack of technical expertise within the organization. Regardless of the complexity of the solution that you choose for the organization, there will be some type of technical support required for the initiative. It can be as simple as providing on-going support to developing the interfaces between the solution and your ERP system. If the technical expertise is not available, then a decision will need to be made on hiring a consultant to help facilitate the implementation of the project. Cost factors to evaluate When preparing for the implementation of technology, there are several cost factors to consider. On a side note, there are cost factors that may surface that were not included in the original business case. These cost factors include. Hardware. Depending on the complexity of the solution, you may need to purchase need computers for the team, as older computers tend to not have the required memory to run the newer solutions. In addition, the method utilized to store the electronic images will pay a factor, as you may need to purchase a server to store the files. System maintenance/enhancements. One of the many goals of technology is to continually improve the overall process. Therefore, enhancements will be required to the solution to facilitate the continuous improvement project. For example, you may need support for the annual upgrade of the solution. Software licensing costs. There are several types of software licensing costs and they are handled on a solution-by-solution basis. For instance, a license may be more expensive for a user that needs read/write access versus a user that requires read-only access. In addition, there are solutions that will not require a license. Outsourcing of scanning. Based on the amount of invoices that are processed by the accounts payable team, there is the probability that you could outsource the scanning of invoices. This will need to be part of your business case, as it may be more economical to have a third-party manage the scanning process. Training. In order to have a successful launch of the solution, it is imperative that all users of the new tool are properly trained. This is one of the most [] 8

9 crucial pieces of the implementation, and if poorly executed, can lead to a very painful implementation. Outside Consultants. There are consultants that specialize in the implementation of automation technology. If there is any doubt in the ability of the internal team, then it is recommended to hire an outside consultant to help drive success to the project. Additional resources. Since individuals have their day jobs to perform, the successful implementation of a project will require additional resources. Keep in mind once implementation is complete and the learning curve is conquered, these resources can be redeployed to other areas of the organization. In addition, if these additional resources are consultants or contract workers, it is a simple as ending their assignment. However, these costs will need to be comprehended into the business case. Influencing factors There are many influential factors that can play a key role in the implementation of automation technology. These factors usually revolve around a broken process, pressure to lower cost, prior experience of implementing a similar solution, or improvement is required from a customer service perspective. Some factors that you may want to review prior to making a decision include: Internal Assessment. It is important understand if your organization has the correct people, processes, and technology in place to support the initiative. Basically, are all the right components in place for success? Increased reliability of the process. The implementation of this solution will resolve many inefficiencies within your current process such as the elimination of paper, the reduction of duplicate invoices, invoices will no longer be lost, and dispute resolution can be handled in an electronic manner. Decreased cost of the process. If you have the right level of support and resources in place, the implementation of technology will result in a lower cost per invoice. However, this will only be achieved if some form of automation can be incorporated into the process coupled with a successful implementation. Installation of a new ERP. As previously mentioned, some organization may not want to make an investment in developing interfaces between the solution and an older ERP system. However, the perfect time to make this happen is when you convert to a new ERP system. [] 9

10 Attend seminars and workshops. Seminars and workshops usually focus on success stories from the implementation of technology; therefore, the attendees can walk away thinking, this would be great to implement within our organization. Sales presentations. There are many solutions available today with differing level of capabilities. Therefore, it is imperative to understand what capabilities that the organization is looking for, so the right solution is implemented. The saying goes, why buy a Cadillac when a Yugo will suffice. Testimonials. Testimonials are a key driver to the decision making process. Solution providers would not provide a reference if the implementation of the solution was not a success. However, there is valuable information to be gained from testimonials in the form of lessons learned. Even though it was a success, what went right and what went wrong? New management. New management may have experience with a solution in a prior company, and has a goal of implementing it within their new role. Since they are well aware of the process of selecting and implementing a solution, there is a high level of probability that they will want to repeat success. Workflow and Document Storage Benchmarking Data We will now spend a few minutes reviewing some benchmarking data related to workflow and document storage. Document imaging on the front-end of the process results in the invoice being scanned upon receipt. The key point with the slide is the companies implement automation technology to improve the workflow and reduce throughput time. Ultimately, this will lead to improved visibility. [] 10

11 However, as shown below, if a company makes the decision to implement imaging on the back-end of the process, there is an equal distribution of benefits achieved. These benefits include reduce search time for an invoice, allows for multiple individuals to view an invoice at one-time, reduction in lost or missing invoices that may queried for in the future, provides for a secured storage repository for invoices, and leads to a reduction in storage costs for invoices. Vendor Selection Process for Automation Technology There are several factors involved in the vendor selection process for automation technology. These factors include vendor selection drivers, vendor selection preparation, and vendor selection criteria. Vendor Selection For vendor selection drivers, there are three factors to consider. 1. It is imperative to understand if accounts payable will enter the invoice into the ERP system. 2. Outsource invoice data entry to a third-party and integrate the results with the existing ERP system. 3. Automate the data extraction process from the scanned invoices. As you will notice, the three factors above take into consideration the different phases of implementing automation technology. In order to drive success in the process, it is recommended to begin with the manual entry of AP into the ERP system, and then work towards the automated data entry process. Vendor Selection Preparation In order to begin the process of selecting a vendor for automation technology, it is important to take the following factors into consideration: [] 11

12 1. Gain an understanding of your process, including invoice content, purchase order vs. non-purchase order mix, and volume. 2. Future growth plans for the accounts payable departments (i.e. centralization) 3. Understand and define your requirements. 4. Document current workflow. 5. Create the Request for Proposal. 6. Review proposals and answer questions from vendors. 7. Perform due diligence. 8. Select vendor and implement. Vendor Selection Criteria The implementation of an imaging and workflow solution is very big commitment to make within the organization from a time, cost, and commitment perspective. Therefore, the following criteria need to be evaluated when selecting a vendor. 1. User Friendliness. It is imperative that the AP team is comfortable with the new solution that will be implemented. In addition, it is important the user community within the organization is comfortable with the new process as well. 2. Technical Capability. In addition to having a reliable and functional solution, the vendor needs to provide the technical support required to support the implementation. It will be important that the new solution is compatible with the hardware and software that exists with the department and organization. 3. Functionality. At the minimum, the solution will need to provide the functionality that current exists within the company. In addition, to justify or solidify the business case, it would optimal if additional functionality is available. 4. Ease of implementation. Perception is reality; therefore, it is important that you have a smooth implementation. This will drive a positive [] 12

13 image for the production from the beginning versus the battle of hitting bumps in the road. 5. Estimated time to completion. The estimated time to completion is important; however, it is imperative that realistic timing is communicated. Even though timing to completion is important, the quality aspect of the implementation is a main focal point. 6. Industry specific track record. The track record of the vendor related to prior implementation is an important piece of information to track. The solution may drive success for other companies; however, the lessons learned aspect of the implementations is important to comprehend. 7. Vendor demo. The vendor needs to understand your requirements and then provide a demo to reflect your request. This is a very important step of the process, as it allows for your team to identify any gaps or shortfalls that may exist. 8. Vendor financial health. It is important o utilize a vendor that is financially strong, as you are making a big commitment for the organization; moreover, it is not a process that you want to repeat as the result of a bankruptcy. 9. References. Similar to industry track record, it is important to obtain references and interview those individuals involved with the process. The solution may be a success in other companies; however, they may have had challenges with the implementations. It is important to understand these challenges, so they can be avoided during your process. [] 13

14 Utilizing Technology to streamline and control As shown be the chart below, workflow and document storage are implemented during stage two of the automation technology process. Similar to challenges in life, there is a phased approach to implementing technology within the organization. It requires that success has occurred in the prior phase, before moving to the next. You can equate it to the chunking approach one step at a time. The four phases include: Phase 1: Centralize the accounts payable process, scan invoices, manual indexing and approval. In this phase, you can implement file uploads, EDI, front-end imaging, or back-end imaging. Phase 2: Optical Character Recognition/Key from image, approval workflow, and automated reporting. Phase 3: Outsourced data capture, PO flip, automated matching, online dispute resolution. Phase 4: 100% electronic invoicing, supplier self-service, supplier onboarding, integrated purchase-to-pay process. Now, we will review some of the key process that can be implemented with AP Automation Technology: [] 14

15 Purchase Order (PO) Flip Process Within stage three, there is an opportunity to implement a PO flip process. The PO flip process entails the supplier, flipping the PO information into an invoice. The following are the key components of the process: 1. Supplier enters information manually into a portal. 2. Supplier performs the PO flip in a web-based tool. 3. Software-as-a-service (SaaS) model provider can perform the PO flip. 4. Approval workflow can exist to ensure that invoice is approval prior to interfacing with ERP system. 5. Data integrity is imperative to ensure accurate data flow to ERP system. 6. Workflow based on purchase order or general ledger account number scheme. 7. Can result in a cost savings if orchestrated correctly. Electronic Data Interchange (EDI) EDI can be implemented in stage one of the process; however, data accuracy is imperative to ensure an efficient process. Some of the key factors to consider include: 1. Checking the syntax( format) of incoming invoice. 2. Acknowledgment of acceptance. 3. Business rules for communication. 4. Middleware. 5. Error Resolution. 6. Workflow based on purchase order or general ledger account number scheme. 7. Can result in cost savings is orchestrated correctly. [] 15

16 Uploads Similar to EDI, uploads can be implemented at any stage in the process. In addition, it is imperative that a template is created to ensure the uploaded data is compatible to the fields within the ERP. Key characteristics of uploads include: 1. Uploads are associated with a purchase order or general ledger account scheme 2. Upon successful completion of process, payments are made based on terms in business system. Front-end imaging Front-end imaging can be implemented in stage one and requires scanning of invoices, receipts, and other documentation at the beginning of the payables process. The benefits of front-end imaging include: 1. Elimination of paper at beginning of process. 2. Can reduce or eliminate manual entry. 3. Streamlines the role of AP Personnel. 4. Accelerates the function of applying costs or expenses against Purchase Order s or account numbers. 5. Provides real-time access and/or visibility to the scanned image. 6. Allows for image-enabled workflow/approval process. There are three different methods that can be utilized when implementing front-end imaging: 1. Front-end document capture that is not integrated with workflow, meaning that manual data entry will occur. 2. Front-end document capture which is integrated with workflow; however, not integrated with business system. Again, manual data entry will occur. 3. Front-end document capture that is integrated with workflow and with business system. In this case, the data entry process is automated. [] 16

17 Optical Character Recognition Optical Character Recognition (OCR) can be implemented in phase two and converts an image file into machine- readable text. Once this is complete, data capture will occur which reads the text and converts into useful information. In most cases, OCR makes financial sense when the invoice volume is 100K or more. OCR Utilizes a: Structured Semi-structured, or Unstructured process Forms of Image Recognition Template-based Recognition Free-form recognition Memory Recognition Intelligent Data Capture Back-end Imaging Back-end imaging requires imaging of invoices, receipts, and other documentation at the end of the payables process. Key points related to back-end Imaging include: Eliminates physical storage space which is a cost savings Facilitates simultaneous document retrieval for post-entry review Improves responsiveness to inquiries Provides secure electronic storage for invoices Can be housed on local or external server [] 17

18 Workflow and Document Storage: Centralized versus De-centralized structure The structure of the AP can be centralized, decentralized, or a combination of both strategies, and is a key driver to the level of automation technology. In addition, the strategy will determine the amount of investment required in order to support the required resources involved with the level of automation. Based on the results of the benchmarking survey, 79% of the respondents were involved in a centralized environment, 13% were decentralized, and 8% supported a mixed model. Nature of AP Department Centralized 79% Decentralized 13% Partly centralized 8% 0% 20% 40% 60% 80% 100% The strategies related to the structure of the AP department are defined as follows: Centralized Process Invoices are received, processed and paid from a single location. Decentralized Process Invoices are received, processed, and paid from multiple locations. [] 18

19 Partially Centralized Process Invoices are received in a single location, but are processed and paid from multiple locations. Workflow and Document Storage: Current Business System Capabilities There are four key points related to current business system capabilities, and include the following: Number of instances of business or ERP systems. The number of business or ERP systems will influence the level of investment and complexity that will be required to implement a solution. If you are processing AP invoices utilizing one SRP system (i.e. Oracle), it will be less complex than if you were utilizing three ERP systems (Oracle, Lawson, and SAP). Compatibility of data to current system. The main question will evolve around the use of workflow as it relates to your current ERP system and document storage solution. You will need to determine if you can utilize the workflow software to prepare the invoice to be interfaced to the ERP and document storage system with minimal data modification required. Interface between systems. In order to automate the workflow process within a software package, it is imperative that an interface can be developed with the database that contains the employee information. For instance, you may utilize PeopleSoft to manage the human resource aspect of the business; therefore, it is important that it can feed the workflow software to ensure that updated information is being utilized to facilitate the exception and approval process. Upgrade Capabilities. In order to make your process more efficient and effective, upgrades may be required to further streamline processes. It is imperative to understand the current capabilities of your current system to determine if future upgrades are possible. If not, then the only efficiencies that you will gain with the new software, are those received during the initial implementation. Workflow and Document Storage: Invoice Volume In order to develop a viable business case related to the implementation of workflow and document storage, the following factors would be important to consider from an invoice volume perspective: If volume is greater than 2,000 invoices per month, consider outsourcing. [] 19

20 For lower volumes, the advantages of outsourcing do not outweigh the costs. For medium and large companies, up-front costs, economies of scale, access to the latest technology may make outsourcing a good decision. However, not to be contradictory, there are Service-as-a-Software (SaaS) solutions that are available to accommodate lower invoice volumes. Workflow and Document Storage: Invoice Mix (PO versus Non-PO) If the overall goal of workflow automation is to streamline costs and minimize costs, then it is imperative to analyze the mix related to invoice volume. In order to manage the mix of invoices, it is important to identify the current tools utilized to coordinate the approval process, and the business partners involved in the process. Once this understanding is gained, then you will need to determine how the process can be automated utilizing the proposed solution. If you have a high-volume of PO-based invoices, which involve a two- or three-way match, then it is imperative to develop an interface between the workflow solution and your business system or ERP, as you will want to automate the process. On the flip side, if the PO-based invoice volume is low, then the automated solution may not be the best option, and you will want to revert to a SaaS. In addition, it is important to understand the invoice volume related to non- PO related invoices, as those normally require approval from the appropriate person(s) within the organization. Therefore, the analysis will be required to determine the source of approver information and the process to maintain the data, and the strategy to incorporate the approval authority structure into the new solution. For either invoice type, it is important to automate the logic that was developed around the business rules, as that will drive the approval process. In addition, the ultimate solution and a best practice for non-po invoices would be to ensure that the approver list is maintained and updated within the workflow solution. Workflow and Document Storage: Error Handling Automation technology can help facilitate invoice billing errors through the use of business rules. These invoice billing errors include: Pricing. Invoices related to PO s can be processed if they are within a certain tolerance (i.e. the lower of 15% or $50). [] 20

21 Incomplete Documentation. The solution will be able to determine if required backup is attached. For example, a temp agency is required to attach detailed information for each employee that worked during the week. Shortages. The workflow can developed to send invoices to business partners to notify them that we are being billed for more product then what was shipped/received. Late Deliveries. Business rules can be developed to generate error messages when product is delivered outside the agreed upon parameters, and a notification can be sent to the appropriate individuals. Quality. If there are quality issues that are identified through a credit memo or a returned goods authorization (RGA), a notification can be sent to the appropriate business partner for further action. Non-Compliant Transportation. If a supplier includes transportation on an invoice, where it should not have been charges, or if the correct mode of transportation was not used (i.e. air versus ground), then an error message can be generated and the invoice routed to the correct individual for further disposition. Workflow and Document Storage: Archive Process There are many factors to consider when evaluating the solution that will be chosen for the archive process, these factors include: Paper copy in storage. How will you handle the current hard copies in storage. Will you let the retention period expire, or perfrom a mass scan into the storage system. Back-end imaging. Are you utilizing a back-end imaging system today? If yes, then you can transfer the electronic records to the new solution. Legal requirements. The legal requirements in the US indicate that a hard or soft copy is required; however, on a global basis, the regulations related to records retention vary by country and region. Hosted solution. If there is a concern related to storage requirements or capacity, third party companies offer a hosted solution at a minimal cost per gigabyte of storage. Security requirements. Some invoices and their associated backup contain sensitive or confidential information; therefore, it will be required to ensure access is controlled based on invoice type. For example, legal invoices can only be viewed by the legal department. [] 21

22 Integration with accounting systems. With some ERP systems, there is a feature that will allow for the invoice to be viewed by clicking on a hot button. Therefore, if you are reviewing the ledger and want to review the associated backup, you would be a click away from viewing the information. Workflow and Document Storage: Affect on Key Performance Indicator s We have discussed several methods related to the implementation of workflow and document storage. Whether you implement a partial or full solution, there is a benefit that will be received. Below are some of the benefits that can be realized through the implementation of automation technology related to workflow and document storage. Key Performance Indicator Cost Per Invoice Time to process (Cycle Time) AP Departmental Cost On-time payment Captured Discounts Credit Holds Supplier Satisfaction/Morale Electronic Invoicing Electronic Payment Duplicate submission of invoices Affect Decrease Decrease Decrease Increase Increase Decrease Increase Increase Increase Decrease The key performance indicators directly related to the workflow and document storage will enable the management team to audit the work of the purchase to pay process, as a trail will now exist related to the flow of an invoice. This is especially important and useful as root cause and corrective action will be identified and used to develop preventative measures for future process. Summary A common theme of this whitepaper was to emphasize the importance of qualitative (i.e. enhanced visibility) and quantitative (i.e. cost savings) benefits. Therefore, it is imperative that you receive buy-in from your management team to approve all or part of your automation technology initiative. In addition to the buy-in from management, it is imperative that you receive the financial support for the initiative and that change management is driven from the top-down within the organization. Looking Ahead [] 22

23 The next white paper in this series will focus on the procurement card process, and will discuss the alternatives and benefits related to its automation. [] 23

24 About The Institute of Financial Operations The Institute of Financial Operations is a membership association comprising four affiliates: International Accounts Payable Professionals (IAPP), International Accounts Receivable Professionals (IARP), the National Association of Purchasing & Payables (NAPP), and The Association for Work Process Improvement (TAWPI). Based in Orlando, Fla., with offices in Boston and London, The Institute serves as a global voice, chief advocate, recognized authority, acknowledged leader, and principal educator for people in financial operations, with a particular focus on accounts payable, accounts receivable, payments, procure-to-pay, automation, data capture and document management. Combined, the affiliates have more than 6,000 members. Under The Institute, the affiliates share one board of directors, one staff, and a single portfolio of member benefits available to all, including Financial Operations Matters magazine and a website re-engineered and relaunched in late [] 24

25 About the Author Craig Simpkins, CAPP, has held positions in shared services for several years, in addition to experience in accounting and finance management. Simpkins holds a Bachelor of Science degree in accounting and finance, and a master of business administration in entrepreneurship, and is both a certified fellow (CFPIM) with APICS and a certified supply chain professional (CSCP). Currently, he is a member of the IAPP s Ask the Expert team and has presented webinars in AP technology for the IAPP. In addition, he has developed and presented courses on CAPA and CAPP Certification and Best Practices. Simpkins has taught CPIM and CSCP review courses and has written several Internet-based CPIM review courses for APICS and Accenture Software. Additionally, he has presented several times on the topic of lean accounting and has several years of experience with new system and technology implementations. [] 25