Importance of capture rate and process management.

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Is a capture rate of 99.5% the key? 

Before Capture Rate…

Before we talk about capture rate and process management, we should first highlight how the information from an invoice is captured and processed into a finance system. There are various options, but the most common three are; manual entry by an accounts payable clerk, outsourcing your invoices to be processed off site and a finance automation solution. Each have their benefits and pitfalls. As we’re discussing the importance of capture rates and process management, we will be focusing on finance automation solutions and the way that they capture and process the information.

How do you capture information?

OCR (Optical Character Recognition) is the most common capture technology found in finance solutions, but you will also find barcode recognition and template based capture. More recently, the most advanced solutions are using ICR (Intelligent Capture Recognition).

ICR technology is designed to capture as much information on an invoice as possible. In order to do this the solutions will normally scan and capture each of the characters on a document. The information captured is then matched against a database of keywords for reference (Invoice Number, Inv. No. Etc.). Once the key words have been found, the technology will then look for corresponding information based on historic rules (to the left, right etc.) This information is then extracted and sent to be matched against information held within other systems.

Template-based capture works very similarly, leveraging more traditional OCR, but first a template must be created by the user, the template is created with boxed parameters and any information inside the boxes will be captured. If the location of the information is changed on the document then a new template will have to be created. This is fine if you are dealing with one or two suppliers, but it can quickly add up and the automation you were trying to achieve, quickly turns back in to a manual process.

A barcode on an invoice works in a similar way that a barcode would work at a supermarket, the bars in the bar code represent numbers and letters. When the bar code is scanned the information will be cross referenced, and will normally return an image of the particular invoice or document.

What are capture rates?

So now you know how the information is captured, what are the capture rates? Well, put simply the capture rate is the accuracy of the information pulled from an invoice by the OCR technology.

Most, if not all finance automation solutions that use OCR can, and have claimed a capture rate of 99.5% and above. Importantly, these figures normally reference the capture rates at character level, and not field or document capture rates, which often vary.

With the technology ever improving will we ever see capture rates hit 99.99%? Quite probably, but at this stage the big financial wins become smaller, and the focus starts to shift to other parts of the automation process.

The effectiveness of process management and rules

Arguably as import as capture rate, is the process management of the information. How the solution automates the information received through the capture piece. It’s all well and good that you can capture information from an invoice but what do you do with that information in order to generate further benefit?

An important factor in process management are the rules and workflows you have set up to indicate where a piece of information needs to be sent to for checking and/or validation, and how flexible these are for your business needs.

A good example would be an invoice coming into the business, the OCR captures the information and applies the details against pre-set business rules. If the invoice is over a set amount, the rules you set in place will indicate if it must be sent for validation. If so, the invoice is then sent to the relevant person for checking and approval. At this stage most solutions will require that the invoice is approved (digitally) before it is then returned to finance for any final steps, or is posted to your ERP for payment.

What happens if that person is on annual leave? The invoice may just sit there waiting for the them to get back but how long could the invoice be waiting? Implementing rules means the solution would recognize that the invoice hasn’t been touched in a set time period and then the invoice would be sent to a second validator for approval.

This ensures that finance aren’t waiting on the invoice, with a good solution in place, they can also see where the invoice is at any given time using analytics tools. This frees up accounts payable clerks to do more important things, rather than chasing invoices around the business, or talking to suppliers who are following up on late invoices.

Importance of a clean master data

Another common factor that a lot of people forget about is data maintenance, this requires a person to take time out of their day to make sure all the supplier information is correct. If the data isn’t accurate this can cause any number of issues during the processing of invoices, or the payment of suppliers. Unfortunately, we find that a lot of organizations fail to maintain the quality of their supplier master data.

Reliance on technology to automate processes, without first ensuring that the information it will try and match against is clean often results in low through put rates and dissatisfaction with the solution selected and implemented.

Is one more Important than the other?

The goal isn’t to have to choose between these benefits, but to find a provider that offers strong solutions for both. When you start looking at automating your invoices remember not be impressed by the guarantee of a 95% capture rate but to dig deeper and find out how finance solutions use the information.

How does the system process and manage what is captured? What visibility does a solution offer the wider business? How easy does the system make it for you to engage with your suppliers? What are the real, or unique, benefits of the solution you are evaluating?

In the meantime, check out: Robots Launch into Financial Departments

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Post by Francesca Timpson