Harvest Housing discovered that it could measure and benefit from improving its accounts payable system. Simon Stammers of Formscan outlines why his company took the business and why calculating return-on-investment is important.

Given that document-related processes have long been a focus of efficiency initiatives in the accounts payable (AP) function, I am often surprised that there is still so much scope for improvement and automation in many corporations. In the credit crunch, we all know that there is a danger that corporations will be forced to defer their technology investment plans, but solutions that streamline the AP function should have an even greater attraction in an economic downturn.

The core benefits of improving efficiency, reducing costs and providing greater management transparency are always compelling advantages but even more so in times when credit is hard to come by and each penny is expected to count.

Renewed scrutiny on return on investment

One particular element of an AP solution has come under renewed scrutiny - return on investment (ROI). Although it has always been best practice for document solutions providers to work with potential clients to calculate a cost/benefit ratio, a precise ROI model has now become a prerequisite to the spend even being considered. Such models need to be highly sophisticated but user friendly.

Indeed Formscan took time to develop such a model with one of our strategic technology partners which makes it easy for the company to analyse the time it takes to process each step of their AP work flow and compare this to the time it will take using the new, proposed electronic solution.

It also takes into account the volume and type of invoices (e.g. with/without PO number, recurring invoices and so on) likely to be processed in the first couple of years. Based on these figures, it is possible to work out total investment costs and potential benefit of every element of an AP solution - from software licence fees, technical implementation, hardware, in-house staff costs, support and maintenance. A similar exercise can be done to calculate the cost/benefit potential of implementing a 'digital mailroom' operation at the front end of the AP process.

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This is the type of model that convinced one of our clients, Harvest Housing Group to go ahead with the implementation of an electronic, online AP solution. The model allowed us to confirm that Harvest would obtain their measurable ROI in well under two years.

Harvest Housing in focus

Harvest Housing Group is a not-for-profit group of housing associations and companies with 20 offices across the North West. At the heart of managing such a large group is the finance department. Specifically, it is critical that the organisation runs a highly efficient, organised and cost-effective accounts payable operation, which is not a simple task given the volume of supplier invoices handled annually.

Previously, many supplier invoices tended to be sent to one of Harvest's 20 offices rather than the finance department and this meant that the office would have to forward the invoice before it could be registered centrally. The problem was that the finance department did not automatically know whether an office had received an invoice and whether this had been approved.

Tracey Neale, financial transactions team leader, Harvest Housing Group, explained: "Our previous process of sending paper copies of invoices from office to office for approval was costly, time-consuming and inefficient - plus there was the chance of an invoice going missing.

"We started to search for a technology-led solution that would help streamline the process as far as possible, whilst satisfying HMRC's documentation requirements. We are legally required to keep invoices for six years, so digitising the majority of our invoices would contribute to reducing the future need for physical storage facilities. We knew that the right electronic solution would help us save money, time and office space as well as giving us a new level of financial control and compliance."

Richard Morris, the head of finance for the group, came to us at Formscan. We recommended a suitable mix of hardware and software to equip the finance department with a best-in-breed AP solution. Formscan oversaw the implementation of invoice capture software from AnyDoc combined with matching, work flow and approval software from Basware. A single Kodak i260 scanner and server hardware was also bought.

"Now, when invoices arrive, they are scanned and all crucial data (such as supplier, invoice number and date) is automatically captured by the AnyDoc software into the secure online repository. The captured data can be easily checked by our AP team, and then routed electronically to the reviewer in the local office who uses password access to log-in to the system via their web browser and verify the invoice details," explained Neale.

"Digitising the AP process will make a huge difference to us. For a start, we will reduce the need for manual data entry, which can be error-prone and labour-intensive. What's more, we now have tight control and visibility of our cashflow status, as well as a complete way to audit payment transactions. On a practical level, we save postage costs, speed up the payment process, reduce the risk of errors and introduce far greater efficiency into the process," she concluded.

Simon Stammers is the sales and marketing director of Formscan [1], which provide document related services and solutions. Established over 20 years ago we have supplied and supported over 500 clients in the UK and Europe