Changing the ROI on Automated Invoice Processing
I regularly ask myself the question, "exactly how much does it cost a business to process an invoice?". Every time I go out and look through the research that is out there I always get the same answer: it could be anywhere from £5 per invoice through to £50, and maybe a bit more. To some extent there's a lot of fluidity in the answers because one company's concept of processing an invoice could be keying the information into the finance package, whilst another's could entail the full payment process including workflow, sign off and flexibility to enable suppliers to phone and chase invoice statuses.
This always leads to an interesting debate when I speak with potential customers about their requirements, about how automating the process can impact on their business. The simple answer is that every business is different and trying to label a cost for processing an invoice without really getting under the hood of how much is being processed and the workflows that go hand in hand with that is pretty much impossible. However, things have become slightly different recently with the pricing model Ephesoft are bringing to the market, using an Open Source business model and making the software available on an annual subscription basis means that there is a fixed entry point for most businesses.
A fixed point, based on an annual subscription as a point of entry, for an invoice processing solution makes things slightly different. There is no need to factor in CAPEX because everything comes from an OPEX budget. This, for instance, means that the process of deciding whether to use the software or not can simply come down to the following questions: Do I need to employ another member of staff to help with invoice processing? Or, can I reduce the staffing overhead within my finance function? To put this into perspective, I would say that the annual subscription for Ephesoft is roughly the same as a company would spend on a part time member of the finance team. I'm pretty sure that you can't, however, get a part-time member of staff to process in excess of 2 million invoices in a year!
Whilst this type of thinking makes the uptake of this type of solution more attractive to businesses than a traditional and proprietary license based solution, I don't necessarily think that this is a method that will get a business its maximum return on investment. I appreciate that staff members are the single most expensive cost to a business and that wherever possible business processes need to be 'human-less' in order to minimise mistakes and drive efficiency, so take a look at the additional benefits that come from deploying this type of solution. The main one will be the time it takes to sign off an invoice for payment.
With a paper-based process you could be looking at 20-30 days for the paper to be passed from person to person to gain sign off before payment is approved. However, with an electronic process it could be reduced to a 10-15 day turnaround. This depends on your specific business rules, which could make the process even quicker, but paying suppliers early does nothing to make you more profitable! This is unless you are able to negotiate early payment terms with them. Now there's a good use of time for the finance team, rather than keying and chasing invoices around a business! Why not have them working on additional discounts from suppliers for early payments. This directly increases your profits, cost of sales will reduce and you can become even more competitive in a very tough current environment.
Automating the process of paying an invoice isn't just about saving time and money on the input of data from supplier invoices, it's also about making better use of the 'intelligent' resources you have in your business (i.e. the humans). After all, if you are spending £100,000 per month with a particular supplier and can negotiate an additional 2% discount for paying early that will help pay for an Ephesoft solution. Now think about doing that with all of your suppliers!
The Electronic Mailroom (Part 3)
Here's the final part of my blog on the Electronic Mailroom.
So far we've been using the analogy of 'dirty washing' to highlight our process and bring it to a much simpler level of understanding for everybody.
In Part 2 of the blog we sorted the washing and washed it. In business terms, we worked out what the documents were and then extracted data. There are still two stages left for the washing: it needs to be ironed
and put somewhere ready for use.
The Ironing
We've completed the washing, it's all dry and the next step is to iron the clothes (after all, you wouldn't go out in clothes that were covered in creases!). What we are doing here, hidden away in the corner of our software solution, is verifying our data (ironing out the bits we don't want to be there). The documents are taken to other applications and databases and are checked to ensure what we have is correct. Making sure, for instance, that a customer reference number is already in our CRM system or a PO Number is allocated in the accounting package.
There is a lot of complexity under the hood here and, from a user's point of view, you should be assured that the right system will gather all the relevant information from line of business apps and databases without any human intervention. Meanwhile, we should remember that the dirt that was extracted is still sat in the machine and linked (invisibly) to the item of clothing it came from.
Putting The Washing Away
We're now ready to put the washing away in the right places, well, for the physical items/documents that invariably is a cupboard or chest of drawers. Think of these as databases. You're better off having on large cupboard to store all of your clothes rather than a number of different places. It just makes things easier to manage.
All of our documents now wind up in their rightful places, but how do users get at them? That's where the dirt comes in: the dirt (extracted data) is used to cross reference line of business applications, databases and which drawer (document type) it came from. Essentially, the data is used by users to start internal business processes and to manage their archives.
Well, there you go, that's a very high level, very simplistic overview of the Electronic Mailroom. This technology is here now. There are so many benefits to this type of solution and with the basis of understanding you have learnt from these posts you are now on the right path towards getting the most out of the Electronic Mailroom. It's a lot more than just capturing a document as it comes into a business, there's a whole load of intelligence there behind the scenes.
Click2Scan Limited have been working in this sophisticated niche of the document management marketplace for some time now and our expertise is utilised by businesses from all walks of life, including charities, manufacturers and universities.
The Electronic Mailroom (Part 2)
In Part 1 we started looking at the world of the Electronic Mailroom and how we best explain its uses to those people who have not come across the concept before. I tend to use a lot of analogies to cover this, and in this case we're using 'dirty washing'. I've used this on numerous occasions to speak with non technical people about, and place a seed of understanding as to, the processes we undertake.
Sorting the Washing
When we receive the washing it's all muddled up. It contains lots of different colours and they need to be sorted because we can only wash colours together if they are the same colour. This is a pre-washing process and would be undertaken by a human. However, in the electronic mailroom world the software is intelligent enough to identify the different colours. Now, remember that the colours I'm referring to are your different document types. The first thing the software will do is use its business-specific logic to find out what 'colour' the 'washing' is. Is it blue? (maybe an invoice), is it red? (maybe a letter), is it yellow? (maybe an application form).
So, sorting the washing is the same as identifying the document types. This is important because we need to know what the document type is for the next stage of the process.
Doing the Washing
This next stage is where we put each different type of washing in for its specific wash.
Before we put on the load we need to remove the dirt from our washing. The 'dirt' is the data that we need to extract. This part can be really complicated as we may need to verify that we have removed the right dirt by looking at samples from elsewhere. But in its simplest form we just want to remove the dirt!
Now, we have an item of blue washing – it's an invoice – and we need to extract the PO number, invoice number and many more different types of data. There's only one thing holding us back at this point: we don't know where on the page this information is, because we may have different 'shades' of blue for different suppliers or the dirt may be in different places. In an electronic mailroom scenario the software uses business logic to find the dirt, or data, and remove it automatically.
So, there we go, we've Sorted our washing and washed it. In a practical world though, theres still more to do. It needs to be ironed and placed into the cupboard, ready for use. These two final stages I'll cover in part 3 of the blog.
The Electronic Mailroom (Part 1)
There are many points of entry for documents into a business today. It's fair to say that most businesses have developed a method for managing these documents. These processes tend to involve human intervention, which involves tasks like logging incoming post or putting questions from e-mail into a case management system, keying data from incoming invoices or remittance advices to an accounting system.
However good your staff are, any process that requires human intervention is prone to error, delay and can be time consuming. If the information is keyed wrongly or held up there is a strong possibility you will upset a customer or not pay a supplier. The happiness of both has a significant impact on day to day business, especially if the mistakes are happening over and over again.
On top of this, people are expensive – the single most expensive overhead to your business. I think it is fair to say that if somebody offered you a software solution that carries the same overhead as a human being and has the potential to delay day to day business or make significant errors your business would never invest in that software. In this modern, technology-led era in which we live there must be a better way and, indeed, I believe there is. The Electronic Mailroom is a realistic option for many businesses.
The Electronic Mailroom can become a big, complex solution and it's best to start by explaining what exactly the Electronic Mailroom is. I'm specifically aiming this article at people who have no knowledge of this particular type of solution. I've always found the best way to get the message across is by using analogies, so in this case I'm going to describe documents coming into the enterprise as 'dirty washing' and we're going to go through the whole 'washing' process in order to get our documents sorted.
As part of the background, we need to understand that the 'washing' in question has been collected straight out of the 'dirty washing basket'. It could be all different colours and, if you do the washing regularly, you'll know that they need to be separated into their individual colours. We're not going for darks and lights, we need each colour by its own.
There, we go, the scene is set! In part 2 we'll take a look at what happens next. We're going to 'sort the washing' and start the individual 'washes'.
Distributed Capture the Easy Way
Capturing documents in a complex or multi-site business has always been a point of debate. The question being: centralise or distribute the scanning? If you centralise you benefit from economies of scale but have to get all of your incoming documents to pass through a single point in. Distributed capture empowers the workforce and makes them responsible for their own documents but requires massive buy-in from IT (who have to install, maintain and support applications on every site, or in various departments).
You also have to bear in mind that these days documents don't just enter the business in paper form, they are e-mailed in and faxes are still going strong. Its a complex conundrum to try and come to terms with. How do you satisfy the requirements of individual sites or departments and users without creating the type of support headache that IT Managers and Directors have nightmares about?
In an ideal world we want to put in place a funnel that takes all documents in, processes them and places them into the corresponding repository and workflow. It would be a solution that has intelligence and verifies information with line-of-business apps. This minimises human intervention, and errors, until knowledge workers take over. But in order to relieve a chunk of the headache for IT it needs to be free from client install, reside in a central processing site and be easy to use with minimal human intervention.
Until now this has been a serious issue and, in my view, has held back the concept of the electronic mailroom and, to some extent (but less so), automatic purchase to pay systems. Now many businesses are finding the Cloud and understanding its uses. It has enabled businesses to relieve pressure on IT whilst meeting the individual requirements of departments and users. All of this without having to bust the bank on proprietary solutions with high license costs.
Ephesoft could easily be the answer for many. This intelligent capture solution, which is 100% Cloud ready, has no license fees and unrestricted volumes. This is a true platform of capture solution, which transforms the process of capturing documents from a specific process for a specific department to an enterprise-wide capture service. As the solution is designed using the latest technology and up to date methods, cost of ownership is also less. New processes, forms, documents and the like are deployed up to 90% quicker than document types with proprietary solutions.
In my view, Ephesoft is going to make a significant impact on the document capture market. Any business looking to streamline document-based processes should take a look at this offering. Not only that, but if a solution is already in place you may find that the cost of ownership and annual subscription is significantly lower than that of your current system.
This really is a very easy way of of achieving a distributed capture environment, mixing ease of use with cost effectiveness.