A few months ago, my father asked me to help him buy a new television. Now fully retired, he was looking forward to spending his Golden Years in HD. On a sunny Saturday afternoon, we headed out to Best Buy to pick one out.
We made our way to the television display, stacked three high and ten across, glowing like a neon casino sign. Before we could get our bearings, a pair of eager salesmen started reciting a catalog of acronyms like LCD, LED, HDMI, and DVR. My dad's eyes glazed over as he tried to make sense of what he was hearing. As they continued their sales pitch, I turned to see him slowly making his way for the door. "It's too confusing," he protested as I chased after him. "The one I have is fine for now."
I talk to a lot of AP departments who feel the same way about invoice automation. With well over 100 vendors selling various combinations of invoice automation technology, it's very difficult to sort through all the hype and choose a solution that truly fits your needs. The problem is that too many AP departments start shopping for invoice automation before they truly understand what they need. Like my dad discovered, you can't learn and shop at the same time. Before making that trip to invoice automation's figurative Best Buy, AP departments need to first look internally and answer four basic questions:
What are your functional needs? Although each AP departments is unique, they come in three basic flavors: centralized, decentralized and hybrid. Your AP department's setup will be a determining factor in what technologies you implement.
In a centralized setup, where all invoices are sent to one location, invoice volume will often be high and justify investing in OCR or other data entry technologies. However, if the same company has organized AP in a decentralized or hybrid fashion, having each AP group enter data from scanned invoices will be more cost effective.
- What are your financial needs? Invoice volume is a critical factor in selecting the right invoice automation solution. When you look at your total invoice volume, first separate out your high-volume, low dollar vendors. It's likely that these invoices may be transferred on a different track via e-invoicing through EDI or XML (provided your vendors support such technology). The balance represents your total invoice volume and will dictate how extensive of a solution you need.
What are your technical needs? When it comes to the technical side of things, there are a host of automation technologies like scanning and OCR that you'll need to consider. Also, for combining with your financial system for payment, you'll have several integration options to weigh as well.
As far as hosting is concerned, the good news is that your IT department can be involved with invoice automation as much -- or as little -- as they want or need to be.
For security, control, compliance or other reasons, some IT department prefer (or are required) to host all applications on their infrastructure, behind the company's firewall.
For IT departments that do not have the resources to manage another application, invoice automation can be delivered in an on-demand (also called software-as-a-service or SaaS) model where users login to the system from a Web browser.
There is a third option offered by a handful of software providers where their AP application is hosted on a dedicated server. Some IT departments consider this option the "best of both worlds" because they have the security of a safe, hosted environment without the time and costs associated with server maintenance and support.
- Are you ready for the culture change? From the sounds of it, you would think AP would welcome the culture change associated with invoice automation. But when you start using words like automation, centralization and digitization, it naturally causes fear and anxiety. The fear of change stands as one of the biggest hurdles invoice automation must overcome. When employees understand that automation is meant to empower rather than eliminate staff, they quickly become automation supporters.
After my father took the time to assess his television needs, he ended up with a beautiful 42" Sony Bravia HDTV. After enjoying his first "Modern Marvels" in HD, he turned to me and said, "We should have done this sooner."
When AP departments see that first invoice flow through from receipt to approval in less than in three days, they say the same thing.
- Mark Schaffner, VP of Marketing, Verian Technologies