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From Document Manager Magazine Vol 17 No 04 - July/August 2009

Which processes can be restructured quickly to reduce costs and boost efficiency?

Which processes can be restructured quickly to reduce costs and boost efficiency? ITESOFT's Bill Webb looks at how cutting out paper delivers benefits

Right now, many organisations must feel as if they are suffering death by a thousand cuts. Sales revenues are down, cost bases are high, profit growth is stalling or turning to losses, cash flow is weak and credit is difficult  to get. he question is, what can those organisations do quickly to stop the pain inflicted by the business climate? What changes can be made to structures and business processes to reduce costs and deliver ongoing savings through improved efficiency - yet without ripping out and replacing existing systems?

Inevitably, IT teams are finding themselves under intense pressure to deliver and support changes to infrastructure and processes, yet with static or reduced budgets and resources. So it's no surprise that those projects that are getting short-term investments are the ones that can deliver significant, proven savings, quickly, by automating business processes. 

Paper jams
Where do you find the most resource-hungry, costly processes?  They're usually in labour-intensive areas of the business, where skilled staff must devote time to relatively menial tasks. One such process is purchase-to-pay, which is traditionally very labour intensive, with thousands of paper invoices being manually processed monthly by teams of AP clerks. 

The average processing cost per invoice is around £15 - an obvious target area for significant cost reduction. What's more, an average full-time AP employee can manually process around 15,000 invoices per year. Yet with full automation, advanced companies can process upward of 80,000 invoices per person, per year - a giant leap in efficiency.

Automated invoice processing solutions enable paper invoices to be scanned, checked, verified, matched and posted ready for payment to the back-end finance system with minimal human intervention: only exceptional invoices, such as invoices without purchase orders, need manual checking. Furthermore, such project implementations can be done quickly, in the region of 3 months, giving rapid 'time to value' for an IT project. Typical paybacks generated are within 18 months, with ROI well over 100% in 2 years.

From paper to practice: Northern Rail
One company that is enjoying significant benefits from deploying an automated invoice processing solution is Northern Rail, the biggest train operator in Britain. The company provides 2,600 local and regional train services every day across the north of England, serving a population of nearly 15 million and carrying 85 million passengers a year.

Northern Rail chose ITESOFT.FreeMind For Invoices to streamline its purchase-to-pay process and automate invoice processing into SAP. Previously a manual, time-consuming and labour intensive task, the matching of the 90,000 supplier invoices Northern Rail receives each year to purchase orders and goods received notes is now streamlined, with minimal need for manual intervention. 

The solution integrates with their SAP accounting system. Invoices are scanned upon receipt, and through the use of OCR technology ITESOFT.FreeMind For Invoices captures key invoice information and images. Once scanned the software automatically analyses the data, validates it and matches it against the PO, before posting it into SAP via the ITESOFT.Balance integration module.

This module ensures that any query invoices are automatically sent to the business for resolution prior to releasing for payment. This accelerates the invoice process, making it less labour intensive and far more accurate. Invoices are stored as electronic images, enabling financial staff to easily track the process, assisting query resolution and speeding up search and retrieval.

With its advanced image capture features, the solution is also removing the need for paper-based archives of invoices, giving further savings in storage costs and easier access to older documents.

Spreading the benefits
The type of process automation described here can also deliver similar benefits in other transaction areas.  For example, in customer services where it can automate receipt and processing of B2B orders, and processing of inbound customer documentation. This can shorten the time taken to process sales, leading to better customer service and improved cashflow. And as mentioned earlier, direct efficiencies from the automation of manual processes in the region of 50% are typically realised.

So if you're a hard-pressed IT, finance or customer services director looking to make an impact on costs in the next 12 months, it's well worth looking into automation of core paper-based processes. It's a paper cut that can relieve a lot of business pain.

More info: www.itesoft.com

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