AP automation is a set of solutions that can convert paper and electronic documents into digital images for rapid input to ERP systems, efficient verification and approval processing, and ultimately greater vendor relationship management.
Let’s take a look at the various steps involved in AP automation and how this process can help free up your employees to concentrate on strategic tasks that more directly affect your bottom line.
- Invoice Scanning – Invoice scanning/imaging is the process of digitizing incoming paper invoices as well as faxes and email attachments. Once the invoices are scanned or converted to image, the invoice data can be automatically entered (using data extraction technology) into the accounting system, to be paid. Electronic images also are “indexed” to attach pertinent data to the images such as invoice number, PO number, invoice date, etc., and electronically archived for future reference. Imaging is often accompanied by an automated workflow system through which the invoices may be routed for matching, review, and approval.
- Document Classification – A challenge in capturing data from invoices is that invoice layouts vary widely and while the data fields (e.g. amount, invoice number) remain constant, they can be located anywhere on the document. Document classification helps organizations locate the data they need to capture on an invoice. Document classification is the process of automatically identifying a document by matching it against a database of previously received documents. By accurately classifying invoices, AP organizations can attach the vendor ID and locate and capture critical data fields to minimize the amount of human intervention required for invoice processing. Classification also can be used to determine the appropriate workflow to initiate, based on the data that has been captured. Document classification is a key technology for helping AP departments maximize productivity, increase efficiency and reduce costs. Document classification also is a cost effective alternative to using paper separator sheets to separate different document types during scanning.
- OCR/ICR – While scanning/imaging digitizes paper invoices, the real workhorse of AP automation is optical character recognition (OCR), a technology that interprets machine-printed data on invoices. Intelligent character recognition (ICR) interprets handwritten data on invoices. Implementing OCR or ICR automates indexing, reducing data entry and can help to lesson man hours spent in a traditional paper-based AP department by 50 percent or more.
- Image Enhancement – The quality of a document image is critical to the success of data capture, and invoices are among the most difficult documents to capture, since vendors will print on thin translucent paper, or use dot matrix printers, or they’ll have different colors; some arrive with food stains and coffee rings! Beyond delivering the highest data capture rates, image enhancement also reduces downstream errors caused by unreadable images, and eliminates customer service issues associated with unclear images.
- Workflow – Often implemented in conjunction with scanning/imaging software, workflow technology automates many of the manual steps in the AP process using a set of pre-configured rules. For instance, workflow technology will automatically handle document-routing for approvals, matching and exceptions management. Business rules can be used to drive “straight-through processing,” such as in cases where an invoice matches a contract and is within pre-defined dollar limits. Workflow technology also can be used to “fast track” invoices that are eligible for early-payment discounts. Workflow technology is especially effective in AP when it is used to conduct the PO match process (without human intervention) or when it is used to automate invoice approval. But workflow technology also can allow for the careful programming of approval routing for non-PO-based invoices to ensure that controls are properly in place. Ad hoc routing enables approvers to gather more information when reviewing invoices without abdicating their approval responsibilities. For example, when approving an invoice, an approver may want to verify that a job was completed and completed properly; approvers can digitally send the invoice to an individual for confirmation.
- Image Archival and Delivery – From a longer-term perspective, scanning invoices enables organizations to comply with document retention rules, while eliminating the costs of physical on-site and off-site storage. With an image archive, often called an Enterprise Content management (ECM) system, authorized personnel can instantly retrieve images of invoices and related documents, and easily print, fax or e-mail the information, all within accordance of a company’s business rules. Similarly, an image archive makes it easy for organizations to comply with auditor requests, such as producing all invoices related to a particular general ledger code. AP automation solutions track all retrieval and delivery tasks conducted by individuals and create an audit trail for compliance purposes. And, cloud-based image archival helps companies ensure business continuity in the event of a disaster.
Berkheimer OneSource (BerkOne) offers solutions within our AP|Connected suite of products to effectively capture and streamline your accounts payable process. So let us help you start saving time and money today!