Evolving finance: eInvoicing and document capture

Mark Kirpalani, managing director at Capital Capture, looks at the role of document capture and eInvoicing technologies for finance and accounts payable

Mark-Capital-CaptureAs many corporates are now discovering, automating document management processes using digital mailroom and document management technologies can significantly speed-up the distribution of incoming documents within the organisation, as well as contributing to improved financial visibility.

Whether implementing a new document capture system or improving an existing one, invariably finance and accounts teams can expect inherent process improvements. By minimising the reliance on manual invoice entry, the technology helps to reduce instances of human error and make finance teams better able to cope with processing peaks – all of which can enable the organisation to reduce debtor days and improve cash management.

Faster invoicing processes
Each day, accounts payable teams receive a constant stream of invoices, which are often initially sent to different sites and departments and frequently appear in different formats. Managing these high volumes invariably presents an administrative burden, with little or no opportunity to predict when the billing will occur.
Without this transparency, it can be difficult for finance to accurately manage cash flows and gain insight required for cash forecasting – an important capability in the current static market.
In addition to improving incoming document management, moving away from paper-dependent manual processes, and replacing them with speedier, tailored electronic systems can have a positive impact for corporates, their customers and supply chain partners.

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Whether electronic or paper-based, invoices are subject to automated invoice routing, which sends them directly to either a centralised internal or outsourced production bureau. From here, each invoice is run through capture software and as many fields of data as necessary are extracted into an XML or other data file. This data, along with the individual invoice in PDF format, are returned together ready for automatic import into the accounts payable system.

eInvoicing: faster finance, better interoperability
The potential that the current and ongoing drive to paperless invoice processes offers to businesses and public sector organisations has been recognised by EU Directive 2001/115/EC. Essentially, the directive credits eInvoicing as an important means of promoting more efficient cross-border creation, validation, transmission, acceptance, storage and retrieval of invoices.
In June, the European Commission issued a further draft directive aimed at improving interoperability between different, mainly national, eInvoicing systems, stating: “eInvoicing… offers the potential for significant economic as well as environmental benefits. The Commission estimates that the adoption of e-invoicing in public procurement across the EU could generate savings of up to €2.3 billion.”

While eInvoicing is not yet mandatory in the UK, the government is encouraging its use among central government transactions and has committed to improving the interoperability of e-invoicing for SMEs.

However, for the true value of eInvoicing to be realised, information must be able to flow smoothly not just within an organisation but also from one organisation to another, regardless of the software being used. For this reason, wider-scale acceptance will be a key factor in determining how quickly eInvoicing becomes the norm for businesses of all sizes.

Supporting compliance
For the document-intensive finance department, better document management and capture processes can also support compliance, improve productivity and overall efficiency in records management.
The Data Protection Act 1998 (‘the DPA’) sets out clear guidance on hosting and storing records, including those relating to employees that have left the organisation. By helping organisations remain compliant with the requirements of the DPA, an electronic capture solution can offer important cost-saving advantages by contributing to a reduction in storage costs.

Archiving documents electronically also brings the added advantage of ensuring better security than manual storage, with less risk of loss or damage. Using document classification alongside an archiving solution will guarantee that the correct retention and disposal policy can be quickly identified and data cleansing can be carried out on existing records. This important capability ensures compliance whilst further increasing the level of process automation.

End-to-end workflows
In conjunction with eInvoicing, electronic document capture and management systems typically enable finance users to extract relevant data more easily. Using a tailored solution, it’s possible to ensure that data is accurate, while the use of document classification enables the measurable data to be quickly identified and instantly passed to the right business stream or workflow.

From an on-going business perspective, the technology offers distinct advantages for the modern finance department and the wider business, not least the opportunity to support compliance, ensure disaster recovery, increase staff productivity and facilitate the cleansing of historical records.

With automated document capture in place, users not only gain more time – potentially to spend on more profitable activities – but can also benefit from greater certainty surrounding accuracy of transactions and cash flow forecasts.

Meanwhile, for accounts payable, the potential to use eInvoicing support greater financial transparency will no doubt prove its worth in supporting and maintaining future cashflow visibility.

Mark Kirpalani is managing director at Capital Capture, a specialist in the provision of intelligent document capture solutions and services to organisations throughout the UK.

www.capitalcapture.com

 

 

 

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