2015: The Year You Finally Unify Your Paper and Electronic Purchasing Processes

Over the past 5 years organizations have looked to workflow, eForms and other solutions to streamline Accounts Payable and Purchasing processes.

Invoice SampleThe benefits can be compelling.  The cost of transactions may be less than half when you remove paper from the process.  Moreover, the ability to accelerate processes yields further savings due to discounts, elimination of routing delays, the reduction of data entry errors and the like.

Yet many of the benefits of these solutions are not truly realized because there remains a need to accommodate manual processes for the customers, vendors or other business constituents who still require paper as part of the process.

For example, you may have an online procurement system, but you still want to do business with customers and vendors that require a “wet signature” on their documents.  The issue is now you have to maintain two workflows: the online process that saves you time and money for each transaction, and the manual processes that still meet business requirements.

In the end it turns out that for many organizations, the blended rate of transactions–that is the total cost of processing all orders divided by the number of orders–is about the same as manually processing all orders, once the vendor costs for the application are factored in.

The Partial Automation Conundrum

To give you an example, I worked for a fairly large software company that offered cloud solutions for business communications, data storage and document transmissions.  This is a multi-billion dollar company.  Yet despite their success in helping companies improve operations, when it came to in-house processes there were some sacred cows that slowed approvals to a snail’s pace.

Any order above $100 required a signature from a director; orders above $1000 required a VP signature.  New contracts needed to be reviewed, stamped and signed by Legal before submission to a VP for approval.  Accounting required a signed W9 form for any new vendor.  The originator of a process was expected to keep a copy of all of these documents in their own files after of course submitting the original to Legal, Accounting, Purchasing, IT or other involved department.

Before you get the idea that this is an isolated case of the cobbler’s children having no shoes, I invite you to consider your own organization and the other companies, government entities and institutions that you deal with.  Some may have more automated processes, but I suspect you can find inefficiencies in any of them.

I will share another example: UCLA*, one of the most prestigious learning institutions in the United States.  Every day tens of thousands of processes are initiated by the students, faculty and administrators at UCLA.  If we look at just one sub-group—purchasing, you can see where the dual processing issue comes into play.

UCLA has set up an impressive eCommerce site called BruinBuy to coordinate procurement for the University among various vendors.  They also have a Visa Pcard program for staff and faculty to simplify the purchasing of routine goods and services.  While I’m certain these systems offer some economies over a completely manual Accounts Payable process, take a look at the links to the on-line procurement programs at UCLA, and you will see a host of supporting forms and documentation that need to be downloaded printed, signed, and mailed or faxed to Procurement to participate in one of the programs (for example, the Pcard application.)

There is also a resource for some of the more commonly used Accounts Payable forms for purchases outside the BruinBuy or Pcard programs: Check Requests, EFT Authorization, Wire Transfer Request, Petty Cash, Stop Pay, W9, 1099, 529B, and 590 Withholding (Form 590 is the only form that can be filled out online.)

*Full disclosure, I’m using UCLA as an example as I have a daughter who is a prospective incoming freshman and I welcome the opportunity to help the University reduce costs and operate more efficiently.

The Early Process Onramp

I can assure you that both the corporation and University in these examples have invested millions in Transact Resource Planning (ERP) and business process automation (BPA) systems. The challenge—and resulting inefficiencies–come from either accommodating paper transactions as an alternative system, or introducing supporting processes that require paper documents.

UCLA at least offers an online repository for their AP and Purchasing forms, but how is that information introduced into their ERP, accounting, ordering and other systems? More than likely there are office workers manually keying data.

Process improvement—saving the costs of manually keying, reducing data entry errors and accelerating the approval of purchases–can be achieved when manual processes are automated and the data from documents, no matter if they originate in paper, email, on-line or even via fax, can be captured as early as possible.

With UCLA, the capture system could include a document classification and data extraction program that reduces manual intervention to exception handing.  There is commercially available software that can identify structured documents (W9s, 1099s, request forms and the like) as well as semi-structured documents (invoices, bills of lading and delivery receipts) extract the information and map the data fields to multiple back-end applications.

The good news is that implementing a front-end capture solution is much easier today than it was five years ago.  At that time to classify and extract data from paper documents you would need to create a template for each document, and map the fields on each document to an associated database field.  This was acceptable if you only had a handful of document types to capture, but as you can see from the UCLA website, one department in a larger organization can easily encounter hundreds of distinct documents.

The next iteration of document capture introduced dynamic document identification, where you could provide a capture application with 50-100 examples of each document type, and the software would use this experience to “learn” what Stop Payment Requests, Invoice Correction Notifications and Petty Cash Requests “looked” like.  This was an improvement over template building, but the large sample sizes needed to train the systems, combined with the substantial ramp up consulting fees and per page charges, led to only a few organizations seeing significant ROI from these investments.  The ideal candidates for this technology were large organizations that dealt with few vendors but in high volumes for each document type.

Smart Capture for Any Size Organization

Today, with the application of advanced algorithms in an open architecture environment, any size organization can easily set up a system to identify documents and capture data without high start-up costs, ongoing per page charges, or the need for high-volume sample sets to train the application.

Ephesoft, for example, offers a browser-based application that can operate on either a public/private cloud or on-premise environment. This powerful project, is being employed today by hundreds of organizations to on-ramp invoices, purchase orders and hundreds of other financial document types into their automated AP processing systems

The Ephesoft solution allows business processes that are initiated by documents to begin sooner, improving approval cycles and leading to greater user satisfaction. The platform independence of the Ephesoft solution includes other unique benefits, including no initial licensing fees, no per page charges and included barcoding, OCR engines and APIs for which traditional capture vendors typically apply add-on charges.

You can learn more about this advanced capture technology on the Ephesoft website or via the many video demos available on our YouTube channel.