Avoiding the “AP Black Hole” | part two

In part one of my recent post about capturing invoices, I discussed scanning your invoices in-house. Today, let’s talk about outsourced (on-demand) scanning which includes what we call a digital mailroom.

With a digital mailroom your suppliers will send all of their invoices to a third-party for processing, scanning and OCR (Optical Character Recognition). Invoices can be sent via paper to a PO box, email (let’s say a PDF document) or fax. The digital mailroom provider collects the mail, scans the document (if it is a paper invoice), and captures the header and line invoice values via OCR software. In a perfect world, the provider also validates the OCR invoice data against the invoice image (often performed by a human) to maximize capture accuracy.

Why use a digital mailroom?

First, it puts you on a path to true paperless invoicing by outsourcing the receiving, opening, sorting, scanning and entering of invoices. That is a process that many solution providers (and some of the expertly) have figured out how to do really well at a cost that is very likely much lower than what the average AP department is spending. Elevate your organization by outsourcing paper shuffling and focusing more on strategic accounts payable.

Second, you’ll benefit from highly-accurate and up-to-date OCR technology to reduce the time & effort required to convert invoices into electronic format. Because of the high volume of invoice, digital mailroom providers invest heavily into technology and process optimization. That in turn reduces invoice cycle times and maximizes capture accuracy (the rate at which the extract invoice data matches the invoice image – with a goal of 100%). Which means faster and more automated matching and straight-through processing. Hello “touchless invoicing”!

Third, a digital mailroom eliminates the costly investment into scanning equipment and OCR software. And the associated IT staff that is typically required to maintain and upgrade both. Unless you are a scanning hardware or software vendor, you’ll probably rather focus on your mission and core competency.

Are you handling your invoice scanning in-house, or has your organization chosen to outsource your scanning? Share your experiences in the comments section below.

Tagged with → • •  
Author

Debra Warner

  • http://www.umt.edu Ian Robbins

    We handle our invoice scanning in house and leverage a third party to index and feed directly into our SciQuest solution. We also utilize a custom email address so vendors can send their invoices directly to this address and our third parrty vendor indexes and feeds them into SciQuest as well.

  • Larry Gammel

    Does SciQuest work with digital mailroom vendors, ones they recommend?

  • http://www.fhcrc.org Mark Burch

    With apologies to Willie Shakespeare, to outsource or not, that is the question….and an old one to boot.

    While at first glance outsourcing your lockbox and having your big vendors re-route their invoice stream seems to be a low cost approach to building and integrating an OCR tool, in-house does provide a better opportunity to automate a lot more of your AP paperwork allowing for further FTE re-allocation or reduction.

    With an in-house tool not only can you handle your large vendor’s invoices but almost all of your small vendors as well.

    In addition, you can pick up internal requests for payments, things like travel or entertainment reimbursement requests, small dollar purchase reimbursements and the like, activity that would take additional resources to bundle up and send to the lock box.

    The last area that out-sourced solutions sometimes miss is the ability to get an image of the original document into a solution where the departments or auditors or anyone well after the purchase can see this source document. Linking this to pages within your ERP solution proves to be very helpful when reviewing budget activity, ensuring that expenses are properly loaded into the appropriate budget codes and to provide proof of why this or that certain purchase was made and by whom.

    Of course all of this predicates you making a good case for the resources, hard when you up against shrinking dollars and some darn good scientific endeavors that should be funded as well.

  • http://www.sciquest.com/blog/?page_id=89 Max Leisten

    Whether to outsource or not is definitely a decision that depends on the organizational requirements, capabilities and costs. One argument I hear often is “is this a strategic task, a core competency that we need to do in-house?”.

    Larry, we will shortly be sharing more information on our SciQuest Digital Mailroom solution (to be launched in Q3) that may be an option for you. However, to Ian’s point, the solution supports integration of any solution provider that you may choose – our goal is to help you get all of your invoices into SciQuest for matching and approval (and supporting analytics).