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1.
What does a XInvoice system do? |
| XInvoice
provides a single source of access to purchase
invoices lodged in the process system for authorisation
and subsequent payment, giving appropriate users
immediate access to the invoice. XInvoice consists
of both software and hardware; the software
allows you to manage the invoices, associated
documents and electronic documents (such as
Microsoft Word, Outlook, Excel and electronic
invoices). |
| These
documents are held in a central repository that
allows authorised users to search and retrieve
documents and carry out numerous other activities
such as e-mailing and printing of the document. |
| The
hardware usually consists of a scanner that
will capture an electronic image of an invoice.
Scanners can vary hugely in terms of their throughput
and functionality from a basic Multi Function
Device (MFD) to high volume scanners for production
level volumes. Typical systems involve the scanning
of original paper documents, and then the storage
of the scanned image in the Document Management
System. The image is then “indexed”
against appropriate criteria in order to make
finding the image easier. For instance, a user
scanning a purchase invoice might want to index
the document against the accounts system’s
registration number, invoice number, date, value
and supplier name to aid future retrieval. |
 |
| Indexing
can be carried out automatically by performing
Optical Character Recognition (OCR) on the image,
storing the text along with the image without
the need for manual indexing. OCR along with
ICR (Intelligent Character Recognition) and
IMR (Intelligent Mark Recognition) allow a large
amount of data to be captured automatically
therefore saving a significant amount of time
otherwise spent manually indexing and warrant
separate investigation. |
| XInvoice
includes the ability to restrict access to certain
documents or groups of documents to ensure only
authorised users can access them. Along with
security controls, these technologies enable
users to be granted different levels of access.
Optional elements within XInvoice include ‘workflow’
where documents are moved through a business
process to various individuals in order for
them to make a business decision on that document.
This is particularly useful for things like
invoice authorisation processes where individuals
need to approve or reject invoices for payment.
By automating the approval process a significant
amount of time and subsequently money can be
saved. |
| 2.
What is automated Invoice Processing? |
| This
document explains how to remove the costly manual
labour from the processing of invoices by implementing
an automated invoice processing system. Every
business processes invoices and industry research
shows that as much as 96% of all invoices are
still received on paper. This means that everyone
experiences the costs associated with processing
invoices © Xpro Service DMS Limited June
2007 and research shows that as much as 70%
of all invoice processing costs are in document
handling and data entry processes. |
| Even
modest purchase invoice transaction volumes
pose a serious processing burden. The need to
manually sort invoices by department or company,
photocopy and physically match them with purchase
orders and GRNs or work out where to code them
to, or whom to pass them to for checking are
all onerous tasks. Furthermore, tracking ‘missing’
invoices after they are sent for authorisation
and approval can quickly turn into a massive
paper chase. It is one of the reasons that average
transaction costs, i.e. processing cost per
invoice, can be as high as £50 in some
industries. |
| Handling
invoices manually slows down the process as
well, adding to the costs. Statistics show only
44% of companies are able to process invoices
in the ideal time frame of one week, and almost
25% of companies need more than three weeks
to process invoices. That means companies can
face hefty charges from customers and/or trading
partners for late payments on invoices. Additionally,
original invoices must be retained for extended
periods of time, for business and compliance
reasons. This can require expensive off-site
storage facilities. |
| The
ability to automate the processing of invoices
has steadily improved over the last decade and
has now evolved from looking at solated boxes
on structured forms to capturing information
as it moves from document to document, which
makes it ideal for invoice processing. |
Automating
invoice processing will provide significant
productivity gains and a quick return on the
investment in the solution (industry stats show
a payback of 6 to 18 months on average). With
the evolution of data capture technology, up
to 95% of invoice anomalies can be corrected
without any human intervention. During the data
extraction stage, the business rules programmed
into the software
practically guarantee character recognition
quality. However, the data must be validated.
Integrating the invoice processing solution
with accounting systems or other enterprise
applications can achieve this.
|
| 3.
What happens to an invoice |
In
broad terms, XInvoice is the process that governs
the automatic capture and processing of supplier
invoices, from receiving a document in the post,
through data entry, checking, matching, authorising
and posting into the ledger. Furthermore, imaging
and storage of supplier invoices ensures that
an organisation no longer needs to retain the
physical documents but can retrieve faithful
images of the invoice on demand, using a variety
of search criteria. Integrated with accounting
or ERP systems, XInvoice promotes accounting
best practice by ensuring that the records are
updated as soon as practicable and that the
company has recorded all liabilities for
goods and services received. |
| The
XInvoice approach is complementary to accounting
systems because it leverages information held
in supplier master files without duplicating
data. Furthermore, XInvoice allows invoice images
to be circulated around the organisation without
the need to invest in accounting software licences
for every individual who merely requires occasional
access to invoices, for say, approval or query.
As such, XInvoice can help to keep a lid on
infrastructure costs as an organisation grows. |
| Essentially,
XInvoice can be viewed as a subset of the wider
‘Purchase to Pay’ cycle since the
captured invoices form the foundation of an
invoice authorisation and review process followed
by © Xpro Service DMS Limited June 2007
payments to suppliers. This is particularly
valuable, for mid-market accounting packages,
which often have limited functionality around
invoice routing, approval and authorisation. |
| 4.
Barcodes |
| The
simplest form of XInvoice is to employ a barcoding
system for data capture. |
| Invoices
received are registered onto the accounting
system and automatically assigned a transaction
reference. This information is used to generate
a self-adhesive barcode that is generated by
a specialised printer. The barcode displays
the supplier name and the transaction reference
in human readable format alongside the barcode
in machine-readable format. |
| The
barcodes are peeled off the ribbon and fixed
to each invoice, which is then scanned at rates
of up to 50 pages per minute or more. The scanner
and software are intelligent enough to cope
with double sided invoices, blank pages and
all manner of sizes and shapes. Once scanned,
the exact images are stored in a database and
cross referenced to the transaction number allocated
to the invoice when it was first registered.
This process creates an unalterable image and
audit trail that satisfies Her Majesty’s
Revenue and Customs and allows the paper document
to be destroyed. |
 |
| For
many mid-sized companies, that use a manual
purchase order and signature process, the barcoding
system provides an ideal solution. It ensures
that invoices are captured, paper storage is
eliminated and if required, the invoice images
can be circulated for authorisation without
delay |
| 5.
Optical Character Recognition (OCR) |
| A
more automated and comprehensive approach in
utilizing XInvoice is to take advantage of OCR.
Over the years this technology has become extremely
dependable and more affordable. Previously the
preserve of large organisations, intelligent
data capture software and the attendant hardware
is now an operationally and economically viable
proposition for organisations of all sizes with
even modest monthly purchase invoice volumes. |
| Unlike
the barcoding approach described above, inbound
invoices are scanned straight away upon receipt.
The system takes advantage of the fact that
the vast majority of organisations use standard
invoice layouts, for example, the position of
their VAT code, company registration number,
and postcode, appear in the same place on every
invoice. The position of this static data is
recorded and retained by XInvoice when a new
supplier’s invoice is received for the
first time. |
| Thereafter,
the system automatically recognises a supplier
from a scanned invoice image and can associate
any of the relevant accounting data with information
held in the integrated ERP system. So information
from any invoice can be automatically captured
by the purchase invoice registration system
prior to being authorised and subsequently posted
to the purchase ledger. As before, the image
is rendered digitally and automatically filed
away in a database that is crossreferenced to
the accounting records. In so doing, the process
reduces manual data entry considerably. |
| The
best OCR is capable of returning around 70%
accuracy straight away, i.e. without human intervention,
and with minor operator intervention this rises
to virtually 100%. Image © Xpro Service
DMS Limited June 2007 enhancement helps to recover
data from spoiled invoices and incomplete or
inaccurate invoices can be rejected and sent
electronically back to suppliers. |
| As
well as providing a complete audit trail from
ERP systems to invoice image, XInvoice enhances
control over the completeness and accuracy of
input – a key control in any finance setting
– as it validates invoice calculations.
Furthermore, the database of images is amenable
to searching from within the accounting systems
so that individuals can quickly retrieve the
‘original’ invoice for any expense
in the general ledger or purchase ledger. |
This
is a major benefit to external auditors as well.
In fact, it is likely that the overall control
environment is stronger and more dependable
with XInvoice than the equivalent manual process.
|
| 6.
Routing |
| Regardless
of the method of invoice capture; barcoding
or OCR, the invoice images are then available
to be circulated for authorisation. Typically,
popular mid-market accounting systems only permit
one method of routing for authorisation whereas,
in practice, companies may need to vary the
routing depending on, for example, the type
and value of the invoice. |
| Using
the XInvoice process allows for a virtually
unlimited number of permissible routings. Routings
can be changed ‘on the fly’ to cover
for individuals unavailable through sickness
or holiday leave. Business rules can be embedded
governing the authorisation levels required.
For example, purchase invoices greater than,
say, £5,000 may require more than one
signature and of course any of the potential
signatories can access the underlying image
of the original purchase invoice, if they need
to see it. |
 |
| This
is particularly valuable for multi-site operations
since it completely avoids the problems of physically
distributing hard copy and the potential delays
and problems of invoices lost in transit. Furthermore,
purchase orders can be decremented in total
for approved invoices received. |
| If
invoices cannot be approved for any reason,
XInvoice’s technique allows the reason
for rejection to be recorded, with as much annotation
and commentary as required. This can then be
forwarded electronically for information and
action to the supplier as a PDF document. |
| Those
invoices approved are simply processed in the
normal way using the information on the retained
invoice image. |
| 7.
Ten Reasons why you should look at XInvoice |
| List
below are ten reasons why any company of any
size should consider implementing XInvoice: |
- Paper
copies of invoices are hard to locate. In
the simplest form they are approved and
filed, but they can sit at the bottom of
an in-tray, they can go missing in the internal
or external mail, they can be thrown away
by mistake.
-
Paper invoices are difficult to move around
organisations, particularly those with multi
site offices.
-
The content of the Invoice is hard to manipulate
and/or repurpose. Fax copies may be difficult
to read and photocopies may be difficult
to obtain with ease.
-
Invoices can be difficult to annotate due
to the nature of the paper or the content.Multiple
annotations may not give a clear audit trail
as to who and when added the annotation.
-
It is not possible to share Invoices without
expensive photocopying and distribution.
Discussions between offices or departments
often result in the holder of the original
either faxing a copy or photocopying and
sending to the other part
-
The invoice content is hard to publish consistently
due to the multitude of formats in which
invoices arrive.
-
Invoice authorisation can be long-winded,
prone to mistakes and delays. Invoice
review by management is unstructured and
dependent on staff providing the invoice
and supporting documentation.
-
Paper-based distribution and storage is
costly in terms of storage, copying and
printing.
-
Paper Invoice filing is an expensive and
time-consuming process. Paper-based archiving
is expensive to maintain and inefficient
for retrieval.
|
| 8.
Invoice Management statistics |
Companies
can save at least half of the time and money
now spent on non-automated DM.
Implementing XInvoice can thus provide an ample
Return on Investment (ROI), paying for itself
in six to twelve years. How can this be cost
justified? : - |
- Workers
now waste 20 percent to 30 percent of their
working hours managing documentbased information
outside automated systems and this is expected
to grow. © Xpro Service DMS Limited
June 2007
- Gartner
research from 1997 forecast that the amount
of time wasted would continue to rise. They
wrote that workers were spending about eight
hours a week on DM tasks, or 20 percent
of their time. They forecast that this would
rise to 30 percent.
- The
average document is copied, either physically
or electronically, 9 to 11 times at a cost
of about £10.
-
There are many hidden and not-so-hidden
costs associated with unmanaged documents,including
costs for on-site and off-site storage,
electronic media, physical plant (e.g.,
filing cabinets and floor space), postal
and other distribution costs. Today the
average company stores about 90 percent
of its corporate information on paper and
it is costing them money and resources.
-
Documents cost about £12 to file.
-
To fill a four-drawer filing cabinet cost
about £15,000 of company time and
money is spent.
-
An additional £1250 is required to
maintain that filing cabinet for one year.
-
One in 20 documents are lost.
-
Three percent of the remaining 19 documents
are misfiled.
-
On average, companies spend £70 searching
for every misfiled document.
|
| 9.
Return on Investment |
| List
below are the processes that the adoption of
electronic invoice processing will affect. Each
individual company will have there own percentages
to feed into the calculation of overall savings.
The savings shown are typical percentages of
cost, based on past cases. |
| Filing |
50% |
| Filing
Administration |
R/P |
| Filing
Retrievals |
90% |
| Document
Reprints/Photocopies / Faxes |
40% |
| On-Site
Storage Space |
R/P |
| Archive
storage |
R/P |
| Archive
Retrievals |
90% |
| Internal
post |
99% |
|
Lost Document search |
100% |
| Invoice
Received / logged |
30% |
| Invoice
Distributed for approval / action |
50-99% |
| Invoicing
instructions issued |
50-99% |
|
| R/P
= Redundant process and can be regarded as a
100% saving. |
| 10.
Where can you get the best advice? |
| The
best advice is to use a proven methodology -
that is talk to other people who have already
implemented an invoice processing solution .
They can tell you what productivity gains they
have achieved, what effect it has had on their
processes, how it has helped with their customer
service and, ultimately, what the savings have
been. Xpro’s experience coupled with its
impressive customer list is testament to the
success we have had and the methodologies employed.
If you want some sound advice based on real
customer experience then we can put you in touch
with one of our customers. Xpro can share experiences
with you and help to provide the most efficient,
cost effective solution for your requirements. |
| 11.
Summary |
| The
implementation of XInvoice affords enormous
benefits on an organisation and as the price
of hardware has fallen, the total cost of a
solution is now within reach of all but the
very smallest businesses. The ability to store
invoices electronically and integrate them with
popular accounting and ERP systems is central
to an organisation’s success, especially
when coupled with automatic routings for authorisation
and approval. |
| 12.
Next Step |
| Contact
with an Xpro salesman (see below) will result
in an in-depth discussion of your requirements
and a demonstration as to how XInvoice can fit
into your organisation. |
| Following
your decision to move forward to contract, Xpro
will carry out a comprehensive study of how
the system will work for you. This is fully
documented for both parties to agree. Upon mutual
agreement the system will be built at Xpro’s
Reading offices and tested. Arrangements will
then be made to load onto your own server and
undertake user testing and training. |
| A
typical 50 user system will take five to six
weeks from contract to live date. |
| pro
would welcome the opportunity to discuss your
requirements in more detail so please contact
us on 01189 950 5626 or e-mail sales@xpro-services.co.uk |