Imaging, Workflow and OCR: The Road to AP Productivity

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Imaging, Workflow and OCR:

The Road to AP Productivity

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Agenda

• Ryerson ‐ Background and Challenges • Best Practices in AP Processing • Ryerson Benefits of Imaging & OCR • Impact of Imaging & OCR on Data Entry and Information Capture • OCR & other products contributing to reduced costs • Lessons Learned

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Ryerson University

• 1 location – downtown Toronto, Ontario, Canada • Budget ‐ $450 million, • 7 Faculties, about 76 academic units; 14 Administrative divisions, • Approximately 4000 FT/PT employees • ERP Solutions: – Public Sector Oracle EBS (AP, AR, GL, Sys Admin, Iexpense, Iprocurement, Purchasing, Procurement Contracts) – Peoplesoft (Student, HRMS and Payroll) – MarkView Financial – Kofax (KTM, VRS)

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Ryerson AP Processing History

(prior to December 2004) Manual process, • Invoices received in AP and across campus ‐ forwarded to AP • Invoice approval was manual – invoices photocopied and sent through internal mail to departments for approval, distribution & receipt confirmation,

• Manual follow‐up – normal response – ‘never received the invoice”. Response – “we will send again” • Invoices were on & in AP desks awaiting entry, response and/or approval, • Completed invoices batched, entered and filed in cabinets; moved annually to storage. • When invoice was required ‐ manually pulled and re‐filed. • Archival boxes labeled with destruction date pulled and destroyed.

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Challenges of Manual Processes

Top 4 Challenges of Manual Processing:

PayStream Advisor – IWA Adoption Benchmarking Survey Report 2008

CHALLENGE SOLUTION RYERSON Response Paper invoices Electronic invoices Automated process for emails File Capture Imaged Electronic files

Manual data entry OCR OCR at header level Inefficient processes ‐ manual routing of invoices for approval Workflow Workflow Advisor Monitor Lost or missing documents Secure document storage & audit trail Audit trail – even cancelled documents are tracked

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Best Practice Truism

Less paper and more electronic invoicing is a characteristic of a

world class company (Hackett Group)

Imaging and Workflow are seen as the most useful technologies

Electronic technologies – workflow, imaging, OCR, electronic

approvals, etc. provides:

–

Access to timely and accurate information,

–

Opportunities for cost savings/avoidance,

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Allows for improved service & vendor relationships

–

Increases visibility

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Invoice Imaging & Workflow – The Reality

No “Silver Bullet” – Imaging technology does not instantly get rid of the paper – Need to build the pieces that allow you to change the process – Re‐evaluate & revise business processes – Scan upfront in your business processes •OCR technology ‐ captures invoice data with reduced manual effort. – Automatically scrubs data for identifiable problems ‐ missing or wrong data e.g. PO number. – Validates data to information in your ERP system e.g. invoice number – Delivers cleansed data to ERP for payment processing

– Delivers invoice or rendered images to archives for referencing

•File Capture technology ‐ coverts PDF/WORD attachments to images and

automatically moves into workflow.

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Electronic(E) Invoicing

E‐invoicing ‐ receiving of invoices via electronic means. Few companies are using e‐invoicing solutions. Methods of receiving invoices – Fax (7%) – Email(10%) – E Invoice system (14%) – Paper (69%) Benefits of Electronic invoicing – Fewer lost or missing invoices – Quicker approval cycles – Increase in on‐time payments – Reduced staff and processing costs

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Feeling the Pain in AP

Respondents were asked to rate the pain associated with each of the following on a scale of 1 – 5 with 5 being the highest

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Top

Financial Automation Goals - 2009

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Key Performance Indicators

• # of invoices processed per day per AP employee, • Percentage of exceptions, • Average cost to process an invoice, • Average time to approve an invoice • Electronic invoices received as % of total • Suppliers eInvoicing as % of total suppliers • Discounts taken as % of discounts offered • Incorrect payments as % of total payments

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AP Metrics

Despite increasing interest & adoption of solutions to automate AP, enterprises of all sizes are burdened by PAPER. • An average AP Department – Average time to process an invoice is 12 days. –Corrects 5% of supplier invoices because of errors, – 25% of invoices are paid late. – Invoice process cost range from under a $1 to over $15. – 1 in 5 invoices has a problem that delays processing and increases invoice costs by up to 50%, –AP FTEs to Organization size: mid size organization ‐ 1 AP FTE for 300‐ 600 employees

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AP Processing Costs

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Productivity by Level of Automation

Annual Revenue Profile of Participants

1st _Quartile _$64 million

Median $441 million

3rd Quartile $2 billion

Accounts Payable Network Study - December 2008

Level of Automation 1st _Quartile _Median ₃rd _Quartile

None 266 625 1042 Low 417 792 1250 Medium **Per Day (22 days/mth) 600 27.3 1,000 45.5 1667 75.8 High 438 1,021 2188

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Invoices Processed per FTE per month by % of Paper

Invoices 1st _Quartile _Median ₃rd _Quartile

100% Paper 417 808 1,250 81‐99% Paper 427 833 1,371 41‐80% Paper **Per Day (22days) 500 19.4 917 37.9 1,523 62.3 21‐40% Paper 551 1,147 2,405 11‐20% Paper 536 1,250 3,000 0‐10% Paper 775 1,979 2,920

Organizations - 18% are 100% paper; 46% are 80-99% paper & < than 4% are < 10% paper

•Real gains come when paper is reduced to 40% or less of invoices processed. •Those in 40-80% range show a 13.5% increase in throughput over 100% paper; •Those in the 0-10% range show a 145% increase.

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Basic Principle

If the original paper documentation still exists, then the

electronic document images are merely copies.

Catalyst: – Tri‐Council grant review occurred at same time as Imaging Go LIVE. – CIDA grant monitoring visit (Feb 2005), – Initial reactions indicated some audit discomfort. Recognized better further explore these uncharted waters. – Chose key agencies to obtain written acceptance ‐ NSERC, SSHRC, CHIR, CIDA, AUCC, HRSDC, CFI, MEDT

Acceptance of Imaged Documents

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• Certification by an independent organization that the Ryerson Document Management & Imaging system complies with Canadian General Standards Board (CGSB) standards – CGSB 72.11‐2000 ‐ Microfilm and Electronic Images as Documentary Evidence, – CAN/CGSB 72.34‐2005 ‐ Electronic Records as Documentary Evidence. • Certificate of Image Authorization – statement from senior management that university relies upon electronic record keeping in the “usual and ordinary course of business. • Imaging Policy ‐ approved and issued in accordance with university policy. Ryerson’s Electronic Imaging and Document Management (May 17, 2006) • Imaging Procedures Manual ‐ Formal procedure entitled “Electronic Images Procedure” draft was August 2, 2006. eVida suggestions were incorporated into

Final approved procedures. Recently concluded 2nd _{certification.}

Compliance Requirements

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• Management Authorization & Accountability – Usual & ordinary course of business – Approval by senior management • Documentation – Sufficiently detailed procedures manual – Evident to all parties and followed – communication, training • Reliability – Authenticity (of records & documents) – Integrity (of the electronic system)

Elements of Compliance

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Why Did Ryerson Automate?

• Space needs, • Budget cutting, • Desire to access invoices –anywhere, anytime, • Facilitate Audit and invoice retrieval. • Leverage existing automation (hierarchies & electronic signature) • Gain benefits of an automated capture & associated workflow process ‐ Imaging/Workflow that automates review and approval and eliminates manual approvals. • Departments were retaining invoice copies resulting in duplicate filing systems.

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What We Wanted ‐ December 2004

• Tight Integration & functionality that worked in conjunction with Oracle eBusiness, – Leverage Oracle iExpense workflow – Users to access documents (images) from transaction inquiries & drill downs • Streamlined business processes, • Implement best‐practice automation & workflows: • Supported workflows – security, approval hierarchies • Users to work anywhere, anytime – AP Rep working from Sweden (2006) – AP Reps work from home (2008‐2010) – Option & strike contingency

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Ryerson Initiatives to Eliminate Paper

Financial Services:

• 1996 ‐ ERP Go Live: Oracle EBS ‐ Online inquiries, reporting, electronic signatures • 1998 ‐ Online electronic purchase requisitions submissions & approvals • 2001 ‐ Excel Journal Template submission & ADI • 2003 ‐ Purchasing Card – BMO online review & approval • 2004 ‐ Document management, imaging & workflow • 2005 ‐ AMEX, Travel Card, iExpense • 2006 ‐ Online Training ‐ UPK • 2008 ‐ Journal Entry online approval • 2009 ‐ Electronic Funds Transfer (EFT) vendor payments • 2010 ‐ Optical Character Recognition (OCR) • 2010 ‐ Markview Advisor • 2010 – Electronic Invoices • 2011 – File Capture • FUTURE – Self Service Invoices & OCR PO lines

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Overview ‐ Current AP Processes

Accounts Payable:

• 5 Workflows (invoices go through OCR)  PO Invoice Entry  Non PO Invoice Entry  Pre‐Approved Invoice – need to minimize use do to manual approvals  Previously Entered  Invoice Gateway • iExpense (AMEX card integration) • P‐Card Program • Uploads from other systems (Student system (PeopleSoft), Bookstore)

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AP Invoice PROCESS AUTOMATION Computer generated invoices go through OCR Collaboration with Buyer to resolve holds. Automated process in some instances or ability to send for comment. RU does not have online receiving. Invoices over $5000 forwarded to requestor for authorization.

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I-EXPENSE AUTOMATION End user create expense report Upon submission barcode Receipts attached to expense report Approver can review receipts if approved goes to AP for Audit

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AP ‐ Audit Reporting @ Ryerson

• 2 % of all invoice transactions go for Quality Assurance (QA) review • Invoices over $5,000 are sent to Senior Financial Analyst for audit review ‐ Capitalization. • Invoices over $100,000 are sent to the AP Supervisor for review prior to payment. • SOX type reporting on output per user & violations of criteria (e.g. invoice cannot be approved by same person who entered it.) • Automatic escalation of transaction to next approval level after specified number of days OR within X days of payment due date.

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Ryerson’s Results of AP Automation

• Improved productivity for AP staff & managers – Reduction in lost documents,

– Reduced errors & duplications ‐ Results in Reduce costs

– Fewer inquiries from users ‐ Ability to view invoice images themselves

– Reduce Cycle Times – workflows eliminated manual processes ‐ Email notices inform users when they have documents waiting their approval – Ability to identify and get High Priority invoices processed first – Audit Trail All of these result in reduction in FTE processing costs – Increased visibility – know details of invoices outstanding from the minute they are scanned – Ability to track the invoice through the workflow, identify bottlenecks • Ability to move an invoice or increase priority

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Lessons Learned

• Get buy‐in at the highest level – Need Execs to sell benefits, • Set Expectations – All parties must take ownership and share in the processing • Train by job function • Upfront effort is required to ensure scope of project is as complete as possible, leave nothing to assumptions. • After implementation REVIEW your processes again – may find ways to streamline processes – individuals fall back into ‘bad habits’ We have not stopped learning ‐ Technology continues to advance

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Further Automation Opportunities

I Supplier • Empower your suppliers to provide invoices, • Check status of payments ‐ Reducing calls to AP staff • Consolidated invoices from suppliers or electronic invoices • Express Invoices – ability to users to enter invoice data into a web interface and then fax in invoice. • Expand the use of technology that we already have – eliminate more paper

Imaging, Workflow and OCR: The Road to AP Productivity