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May 2010 >>
Benefits of Document Imaging and Invoice Routing Technology
As most contractors are painfully aware, when paper documents travel through the project life cycle—stopping at many desks and jobsites along the way—the process can be slow, inefficient and costly. This is especially true for accounts payable invoice processing. And yet, the majority of contractors continue to live in a world ruled by paper.
In the U.S. construction industry, an estimated 75 percent to 80 percent of invoices are still paper-based. Despite the availability of technologies designed to manage mountains of paperwork, many contractors think the solutions are either too impractical or too costly to use. Neither could be further from the truth. To help evaluate the potential cost and time savings, contractors should consider the following benefits of construction-specific document imaging and invoice routing solutions.
Eliminate the Paper Chase
Paper documents introduce inefficiencies that increase costs, including shipping documents from office to jobsite, manually processing and handling documents, and physically storing documents in file cabinets and warehouses (as well as relocating them). They also increase the likelihood of costly processing errors. As long as paper remains an essential part of the process, an efficient and automated workflow method cannot be achieved.
When it comes to invoice processing, capturing the document is the first step to improving workflow automation. Document imaging systems allow users to scan invoices upon receipt and attach them directly to jobs—removing paper from the process entirely. The key is to capture the invoice as soon as possible and enter the data (at the front end of the process versus the back end) into a fully integrated job cost accounting system. Once an invoice has been scanned and entered, the system should allow authorized users to easily locate the original document at any time.
Streamline Workflow
Beyond paper management, the greatest benefit of a document imaging and routing solution is its ability to improve overall process efficiencies. In construction, that means allowing accounting staff to quickly route invoices to the appropriate project managers, superintendents, controllers or others who need to review, revise and approve them. Most systems designed for contractors provide customizable and built-in defaulting of job cost codes, job numbers and contact lists for faster processing.
A construction-specific system also provides a central location for viewing pending documents, as well as a user-friendly interface to approve, reject, revise or re-route the invoice.
Improve Productivity and Quality
Project managers, who spend much of their day at the jobsite, have little time to review and approve invoices at the office. But when invoices travel to the field, they easily can become lost or misplaced, causing delays in the approval process. Contractors then face unhappy (and impatient) vendors or subcontractors that are waiting to be paid.
With document imaging and invoice routing solutions in place, workflow is automated so everyone knows who is responsible for what, where and when. When invoice processing is tightly integrated with accounts payable, it’s easy to track every invoice throughout the approval/payment cycle.
Optimize Cash
Research shows that paper invoices cost companies around $5 each to process compared to just $2 for electronic invoices.
Construction-specific document imaging and routing solutions help construction companies save money in numerous areas. Because invoices are captured and processed in a timely manner, contractors can maximize available discounts and minimize late-payment penalties from suppliers and vendors.
Equally important are the cost savings that result from improved processing efficiencies. For example, a fully integrated solution (with no duplication of data) significantly reduces errors, including those that lead to duplicate payments or overpayments. Significantly reduced invoice cycle times also means staff has more time to spend on value-added, revenue-generating work.
Strengthen Control and Accountability
Document imaging and routing solutions can provide greater control and visibility over the entire document life cycle. When invoices are captured and entered at the front end, data can be validated against existing information in the accounting system. This helps reduce errors and ensure data integrity.
Automated systems—including those with direct routing to authorized individuals and due date notifications—help accelerate processes and hold personnel more accountable. Not only is it more convenient for staff to view and approve invoices, but knowing the process is controlled and tracked, employees are more likely to respond quickly.