With 86% of invoices still received on paper or as PDF documents, Chris Haden argues that it’s time to take finance departments out of the dinosaur age and into the digital era.
Creating streamlined business processes should be a priority for all business leaders – regardless of industry sector or size of business. After all, what company director isn’t focused on the goals of reducing costs, creating efficiencies and increasing competitiveness?
Optimising business processes leads companies on the right path to achieve these ambitious goals. According to a recent report by IDC, the dominant trend last year and in the next 12 months is to work out how to streamline back-office processes in particular. This shows that businesses are starting to wake up to the significant opportunities that lie here to drive competitive advantage and keep down costs.
Out of all the back-office processes to automate, there can be no doubt about which one to prioritise. To my mind, automating invoice processing is a no brainer – for any size of organisation. After all, this is the process that directly impacts payment cycles and cash flow.
With Automated Invoice Processing (AIP), paper invoices are scanned and loaded into the software solution, along with electronically delivered invoices, such as email attachments. The system extracts the data, validates the information on the invoice and sorts documents into electronic ‘queues’ according to the next required step, such as approval by a certain person in the business. Business process management (BPM) software allows certain rules to be set up in order to implement an efficient approval, payment and query resolution process.
Effective automated invoice processing doesn’t stop there, as there may still be layers of approval requiring human intervention that can lead to invoices being paid late or in some cases being mislaid to the detriment of supplier relationships.
The solution is AIP technology, which can check if an invoice matches (or very nearly matches) the purchase requisition of works order and send it straight through to the accounting or ERP solution for payment. This means that only invoices with recognisable errors or problems will require clerical or managerial attention.
At the other end of the process, the archiving of documents in a centralised system helps businesses improve traceability. This is becoming an important consideration in regulated vertical sectors, but is actually beneficial to all organisations. It means that if a supplier phones up to find out about the status of an invoice, authorised personnel can quickly and easily find it on the system. Gone are the days of having to sift through piles of paper to locate a specific invoice. That concept belongs to a bygone era.
ABBYY recently surveyed Accounting and Finance professionals and asked them what benefits they thought AIP offered their business. Around two thirds of respondents identified both financial (65%) and operational (67%) benefits, highlighting how automation can address tangible and intangible goals.
When asked to identify AIP’s top operational benefit, faster processing (19%), improved accuracy (18%) and reduced burden on management time (19%) all received a similar number of votes, demonstrating the diverse benefits it can bring to an organisation.
In financial terms, savings from improved business processes came out on top, with 23% of respondents selecting it as the main financial benefit. One in 10 (11%) singled out savings from headcount reduction, highlighting how easy it is to produce a business case for investment.
In many countries, finance departments are deploying automation in response to a European directive to control and reduce payment cycle times between companies. It might not be too long before a similar mandate is introduced in the UK, starting with public sector authorities.
Compliance or no compliance, it’s clear that the operational and financial benefits on offer mean AIP should feature on all businesses’ IT spend lists for 2015. It’s time to take the finance department out of the dinosaur age and into the digital era.
Chris Haden is managing director of Formscan. An ABBYY partner, Formscan is a leading supplier of solutions to improve the management and processing of business documents.