Invoice Creation and Capture – Paper invoices creeping out the back door!

This article considers the real cost of processing paper invoices, examines a variety of e-commerce alternatives, and proposes a flexible and innovative solution for the REAL world.

Introduction

Most companies run a pretty tight ship. A typical manufacturing company may have streamlined its staff costs, reduced administrative overhead, set up shop, established manufacturing partners in China, and perhaps started selling products and services over the web. They have worked hard to stay competitive and are proud of their achievements…and they should be.

But walk into any company, large or small, and you’ll still find an accounting team processing paper invoices. Well, some of the big organizations have invested heavily in e-commerce initiatives, document management software, e-commerce portals, or perhaps EDI (electronic data interchange); but when you dig a little deeper, there are still paper bills trailing out the back door. Often it is the small suppliers and customers that create the problem. They cannot and do not want to invest thousands of dollars in new technology and business procedures. They don’t have the volume, cash or inclination to make it work. We all agree that processing a paper invoice is crazy nowadays, but how do you create a strategy to deal with the real world?

the little boy
So, here’s the rub: We need an eCommerce solution that can cope with our largest vendors, but we also need an eCommerce solution that can cope with the “little guy”, a company with 5 employees running Sage Line. fifty.

What’s out there?
Before we can consider a way forward, we need to consider what billing methods already exist. So, let’s consider the pros and cons of each. The following table is not designed to be a definitive guide, but rather a way to consider each option and suitability for the “Little Guy”.

Publish paper invoices
Shipping Cost: High – at least £0.5 per invoice.
Processing Cost – High – Everyone quotes different figures, but £10-20 to process an invoice isn’t too far off the mark.
Pros/Cons: Anyone can issue a paper invoice. Simple setup with little technology required. Environmentally friendly: cost of paper, cost of printing and postage. Processing costs are high and automation is difficult.

EDI
Shipping Cost: Low, but there may be a transaction fee.
Processing cost: Low – >£1 per invoice
Pros/Cons: Automated. The use of an agreed standard. Some setup cost both in terms of technology and human input. Ongoing Charges.

Email or FTP XML files
Shipping cost: low, no transaction fee (email is free).
Processing cost: low: >£1 per invoice.
Pros/Cons: Easy to automate and no transaction fee. High installation cost both in terms of technology and human input. What XML schema do you use? You may need to support multiple schemas.

Email or FTP from CSV, ASCII text, or other structured data formats
Shipping cost: low, no transaction fee (email is free)
Processing cost: Low – >£1 per invoice
Pros/Cons: Easy to automate and no transaction fee. Low technology cost for the sender, but the receiver bears the cost of processing. Less reliable than XML.

web portal
Shipping cost: Low.
Processing cost: Low – >£1 per invoice
Pros/Cons: Once set up, the process can be automated and process large volumes automatically. It can be custom written, which implies a high cost of installation and maintenance.

Data Translation Office
Shipping cost: low
Processing cost: Low – >£1 per invoice
Pros/Cons: Easy to set up – someone else does the work! There is usually a setup fee and often a small transaction fee.

live with paper
One approach is to accept things as they are and accommodate paper bills. In other words, capture the information from the paper and make it available to your AP system (accounts payable system). In recent years, a lot of time and effort has been invested in improving document management software and the technology behind scanning and recognition software. The goal of this software is to reliably convert a paper document into electronic text. This type of system combines OCR (optical character recognition) technology and contextual logic that looks for keywords within the document and associates them with the document title data. For example, when you find the word “Date”, the closest data is usually a date field. With this knowledge, it can guess the possible formats and possible values ​​for the field you just captured, and can automatically rule out some possible OCR results (for example, the value of a month will never be greater than 12). By combining technologies such as artificial intelligence, multiple OCR engines, and contextual/fuzzy logic, these systems provide better results than using fixed OCR templates; some vendors claim character recognition rates of over 90%. However, they are expensive to purchase and often complex to set up and refine. Many use a knowledge base that must be taught to recognize the type of bills you receive. No matter how much effort you put into implementing your document management software, no system is 100% accurate, and errors will always show up through all sorts of factors: dirty, wrinkled, or torn paper, changes to invoice layouts, or even glitches. of the scanner.

Law of Diminishing Returns OCR
Since no document management software system will give you 100% recognition rates, double check all your results or accept a strange one slipping off the net. Unfortunately, it’s the stranger who slips through the network that costs money to track down. It makes sense to aim for as high a recognition rate as possible, but this type of approach has a major drawback, it follows a law of diminishing returns OCR. The more time and money you spend trying to improve OCR performance, the smaller the increase in recognition will be.

If your document management software is achieving an 80% recognition rate, you may need to spend £5,000 to achieve a 5% improvement. Once you hit 90%, that same 5% can cost you £50,000.

Paper = Cost
When you look at the costs of creating and processing a paper invoice, one thing stands out: COST. Do you spend time and money trying to read paper, or spend your time taking it electronically and processing it through your back-end systems with document management software?
On so many levels, environmental, speed, cost, and reliability, eCommerce is the way to go.

Ecommerce: Don’t Intimidate the “Little Guy”?
Well, if you agree that some form of e-commerce makes sense, how do we connect with the “Little Guy” who has no investment in document management software? What is needed is a new approach, one that complements the existing infrastructure, but gives us more flexibility. Focusing again on the “little guy”, 9 times out of 10 you will use a computer system to create an invoice. So why convert your computer data to paper, only to have the recipient convert the paper bill back into an electronic file, or at least re-enter it into an AP system, at the other end?

Stipulating, requiring or even forcing a custom EDI / e-Commerce solution on the small vendor will not work well. Why should “The Small Guy” go through the pain and cost of implementing EDI, when your customer reaps all the benefits? The only time this tactic works is if you are a very important client, with a lot of power!

Is there a simple answer that everyone has been missing so far? No, not that we know of! What is needed is a variety of low-cost eCommerce options.

Responsive Options
A responsible partner should offer a number of eCommerce options and a good starting point is to ask what your provider can offer. Have you already invested in document management software, and if so, what is it capable of?
• Can your supplier send any of the following formats, XML, CSV, EDI format or ASCII text?
• Can you send an Adobe PDF image of your invoice?
• If the answer to the above is no, then it may be worth considering a simple alternative. A simple, low-cost “print capture client” is available, which will take the data from the printer and convert it to an electronic format (eg, ASCII text) which can then be automatically e-mailed.
• For vendors who do not have a computer system, provide them with a spreadsheet to fill out, which can be emailed to them, or perhaps a web portal/HTML form that can capture invoice data.

thinking fresh
If you’re going to offer a variety of billing methods, you need the tools to process these options efficiently. Output management software (eg formatting software http://www.formate.uk.com) is an ideal “document translation centre” for doing this.

When used for simple e-commerce, the outlet management software (OMS) performs 3 main functions, which are:

1. Import – OMS will collect virtually any type of data, be it CSV, ASCII text, XML, EDI files, email data, web page data, or even MS XLS spreadsheets.
2. Acknowledge and Validate: OMS will read the data and verify what has been received before any further action. Errors will be detected and resolved through a workflow process.
3. Translation: OMS will translate the invoice and make it available to virtually any business back-end system (from SAP to Sage). It will also create human-readable copies for long-term archiving, which can be automatically sent to a document management software archive – UK invoices must be retained for 7 years for VAT/tax legislation.

Some providers can only email an image of the invoice in PDF format. In this case, most OMS systems can extract the PDF attachment from an email and send it to a document recognition system. It can then go through an approval process before being filed with a document management software archive (http://document-management-software.co.uk/). For those vendors who can only print a paper invoice, there is even a low-cost capture client that will take the data from the printer and email it to the OMS server for processing.

For companies already using EDI software, OMS can be used to create human-readable copies of EDI transactions (typically in PDF format) and store them in a document management system. When errors occur in an EDI process, OMS is an ideal way to detect the error and initiate a workflow procedure to resolve the issue.

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