If you work in accounts payable, chances are you have your share of horror stories when it comes to dealing with invoices — or as they’re known around here, the AP Black Hole. Dealing with the issues around paper invoices and a decentralized invoice receipt process can be extremely challenging for accounts payable professionals. There are any number of problems surrounding invoices that can result in the AP Black Hole — lost or misplaced invoices, invoices being held until they are past due, and frantically trying to locate invoices when suppliers call. Ultimately, all these issues mean one thing — loss of control for accounts payable.
In order to gain more control, eliminating paper is the first critical step towards AP automation so that you can locate invoices much more rapidly and reduce data entry errors.
So what are your options for paperless accounts payable?
The first and widely-adopted approach is to scan all invoices in-house. This method is great if you can also leverage other departments and do more scanning than just Accounts Payable invoices. Since scanning equipment is an investment, in order to get the best ROI it is recommended to set up a scanning center that can be shared across departments.
The AP department must determine the best indexing values they want to use. Once an invoice is scanned, you must determine which values you want to capture from the invoice and use either a manual keying process or an OCR software engine. You may decide to only index header information such as PO number, supplier invoice number, due date, supplier name or number and total amount of the invoice. The best option — which allows for a higher percentage of invoices to flow straight to approval — is for index values to be captured from the header and line.
Once the image is scanned and index data is captured, the data and image are converted to an XML format that is sent to SciQuest for invoice processing. Our Accounts Payable solution receives both the invoice data and image to create an electronic invoice with complete header and line level information. If enough data is available, then the invoice will go straight through to approval. If important invoice data is missing or is inaccurate, then it will be routed to a processor (determined by you) to review and adjust.
Throughout this entire cycle, both processors and approvers can readily see the invoices.
In Part Two, I will discuss the benefits of outsourced scanning. In the meantime, I would love to hear (leave a comment) about your invoice nightmares or how you’ve applied technology to avoid the AP Black Hole.