Is digitizing invoices the solution to the AP problem?

Mar 28, 2016 | Electronic invoicing

Among all the initiatives that are taken to improve the procedures of the provider invoice process, there is one that stands out: invoice digitalization.

What is invoice digitalization?

Invoice digitalization is, basically, a process by which your paper invoice data is transferred to an electronic environment

Without doubt it is a good step, but clearly incomplete if it is not accompanied by other solutions. Digitalizing allows working with images and data (it is taken as given that, as well as digitalization, data extraction is also carried out). Additionally, if a certified digitalization is carried out, the digitalized document is valid, and the original can be discarded.

To make use of this information one must have the applications that allow: determination of approval routes, help in the automation of account allocation, invoice to order/delivery note matching , redirecting incident management, eliminate data entry in the accounting system...And remember the use of electronic invoices in different formats (those which contain the data and are legally valid) is more and more common, and will reach a point when the use of paper is negligible.

Tools for invoice digitalization

The previous paragraph points out that digitization means working with images and data, and that to convert paper or PDF invoices into images and/or data the following is necessary:

  1. Scanner to obtain the images from paper: It requires an investment in hardware, nor is the maintenance cheap.
  2. OCR (Optical Character recognition) software so that the data can be extracted from these images: The OCR software, as well as being expensive purchase, demands a permanent dedication by specialists for its configuration and maintenance.

They are very powerful applications, but very specific and require much configuration and adaptation to get the best results. In summary, it is an investment that requires a detailed analysis as the cost is high (much higher than initial budget) and yields results if there is high number of paper and/or PDF invoices. To this you have to take into consideration that the tendency is to substitute PDF invoices for paper invoices (making only data extraction necessary) or even moving directly to electronic invoices (data which does not require image or extraction).

In order to achieve greater success, other elements must be added to invoice digitalization: electronic invoice processing capacity, invoice workflowswithout these additional considerations, digitalization will be an incomplete solution.

The conclusion is that digitizing invoices is not a solution in itself. It is one of the first steps to improve the AP process for a specific type of invoices, but it needs other complementary solutions to really obtain an efficient improvement of the process. Regarding the implementation model, if you do not have a representative volume of invoices, higher than 250,000 - 300,000, outsourcing this phase of the process and together with the automation of matching, coding, exception resolution and approval is the most cost-effective option. In addition, an outsourced model to expert companies that manage the entire process cycle guarantees faster implementation times and independence from regulatory and technological changes.

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