For Accounts Payable (AP) Departments in every company, the manual reviewing and keying-in of Supplier Invoice data, including rows and rows of line items, is a repetitive, tedious, and often “soul-destroying” process. This time, cost, and manually-intensive process results in low employee productivity and high employee turnover. To overcome this massive burden, many AP Departments have turned to optical character recognition (OCR) solutions to automatically extract data from Supplier Invoices, however they soon discover that OCR is no “silver bullet” to resolve this challenge nor is it a very strategic investment. In spite of the perceived benefits that OCR solutions are supposed to provide, the requirements for precision and data accuracy that AP processing demands, renders these benefits redundant.
Manual Work is Still Required
While many OCR solution providers will make grandiose claims in their marketing collateral regarding their data accuracy, the reality is very different. For example, even if an OCR solution could promise 90% data accuracy, that means 1 out of every 10 characters would not be accurately extracted. In a company where an AP Department is responsible for processing tens of thousands of invoices from thousands of suppliers, the accumulated result will be an overwhelming amount of inaccuracy. Each and every Supplier Invoice will still need to be manually checked and data input to ensure this inherent inaccuracy does not have a devastating affect on the financial integrity of the company.
Wide Variety of Supplier Invoices
Procurement Departments are managing supplier ecosystems consisting of thousands of different companies of various size, infrastructure, and technical resources. These suppliers are sending their invoices in a wide variety of document and data formats and transmission channels. Furthermore, this supplier ecosystem is constantly changing with old suppliers departing, new suppliers being on-boarded, and ad-hoc suppliers being required for one-time projects; while all the suppliers are frequently revising their invoice designs and data fields. OCR solutions are simply unable to cope with the processing demands of this dynamic and forever evolving supplier ecosystem.
Not a Holistic Solution
Every finance executive will tell you that AP is the most painful and manual process in their day to day financial administration activities. If a company is going to invest in a solution to truly resolve this “pain point” then they need to ensure that unlike OCR, that it is a holistic solution that addresses all the idiosyncrasies of AP operations, ensuring that the entire process is digitalised, automated, and streamlined. In order to eliminate the pain and friction that has traditionally come with approving and processing Supplier Invoices, new cutting-edge technologies and solutions must be applied where the whole is greater than the sum of its parts.
“Our experience shows that the characteristics of Supplier Invoices make demands on our Finance Department and OCR Solution that simply cannot be met“ explains Michael Felix, Head of Service Centre Supplier Traffic at the Otto Group. “That’s why we opted for a specialized solution provider like ivi, enabling significantly better data quality and providing greater savings potential for us.” Michael continues, “We have been able to greatly reduce the personnel and material costs involved in processing an average Supplier Invoice. The cost reduction has occurred very quickly, with savings of 76 percent!”
– The Otto Group is one of the world‘s largest e-commerce companies operating in over 20 countries with 52,000 Employees and Annual Sales Revenues of 14.3 billion Euros.
Contact us to learn more about how ivi can save your finance department countless hours of wasted time and energy by automating, digitalising, and streamlining your financial processes.