Two years ago, Alltel Wireless was saving about $1 million annually by paying certain invoices by the deadline and receiving a prompt-pay discount. This year, the savings have climbed to almost $17 million, thanks to an automated document processing solution the firm implemented, according to Lynn Smith, finance manager for accounts payable (A/P). Now things happen quickly, and Alltel is no longer flying blind. "Before we couldn't tell which invoices were for $5 and which were for $5 million until they had been manually entered," she says. "We were always guessing about the potential impact on cash flow and working capital."
Duplicate payments, once a problem, have been eliminated, she adds. Furthermore, Alltel cut its invoice data entry
staff from eight to just one-and-a- half and stopped paying overtime. Before, staff often worked 10-hour days and postponed vacations in the scramble to keep up. "Now we rarely have any backlog at the end of the day," Smith reports. "What used to take us days or even weeks now takes just hours," she testifies. An automated, orderly process means much less time spent fielding calls from unpaid suppliers, she adds. "Our help desk was flooded with calls before," she points out.
"Now the volume of calls is much less." All told, Alltel Wireless uses an A/P staff of 36 to process and pay the 165,000 invoices it receives annually from some 5,000 suppliers. Hand-written information or poor quality copies still require human eyes and hands, Smith notes.
Recommended For You
What happened at the Little Rock, Ark.-based telecommunications firm? It installed invoice processing automation using Brainware software called A/P Distiller. Alltel is cashing in on dramatic improvements in the ability of computers to simulate what humans do when they open an envelope, look over a complex document, recognize the document type (an invoice, for example) and then find and extract the critical information from that document.
"Computers are learning to look beyond characters and recognize the meaning of a document," reports technology analyst Melissa Webster, program vice president for content and digital media technologies at market-research consultancy IDC, Framingham, Mass.
Creating enough intelligence and business rules in a system to simulate the human learn-and-remember process is a real challenge but one that Brainware attacks with some success, she reports. It helps that optical character recognition (OCR) and intelligent character recognition (ICR) have improved steadily over the years and now can recognize characters in some handwriting.
Document image capture and management comprise one of the fastest growing segments of the content management market, Webster says. Companies have put a high priority on automating document processing, partly to cut costs but also to gain agility.
"It can be an important competitive advantage," she notes. Another big benefit is compliance with laws like Sarbanes-Oxley. "Electronic workflow is auditable, traceable and verifiable," she points out. "The ROI on these solutions is quite attractive."
Invoices are particularly challenging documents to process automatically because they come in a great variety of formats. Typically, a document that is processed repeatedly can be formatted into a template so that when that particular document comes through again–say an invoice from ABC Corp.–the system recognizes it and applies the appropriate template, which mines the relevant information, often based on where on the document it appears and what it is called. But each distinct document requires its own template, which means a large library of templates.
Ashburn, Va.-based Brainware stands out for its template-free technology and its ability to effectively search databases among its larger competitors in the document imaging and management space like EMC and Cofax, Webster notes.
Brainware sports some eye-catching metrics. Well over 90% of the characters on a paper or electronic invoice are correctly recognized by the OCR routine, claims CFO James Zubok.
When it doesn't work, handwritten notes and ink or carbon smudges are usually the culprits. It's harder to calculate the percentage of invoices that are processed and fed into an A/P system in a truly touchless process since different companies require different approval processes (like two-way or three-way matching) and have different rules for what triggers routing to a person for approval. For example, one Brainware client requires any invoice over $25,000 that can't be matched to a purchase order be routed to a person for approval, Zubok reports.
But at some companies, including Halliburton, also a Brainware client, the touchless process works 92% of the time. At Halliburton, a clerk in the mailroom opens the mail and scans the invoices. The scanner communicates with the Distiller software, which lifts, organizes and processes data and 92% of the time feeds the approved invoices directly into the company's A/P system where they are automatically scheduled for payment, Zubok reports.
Only 8% are ever seen or touched by anyone but the mail room clerk, he says.
For companies with large A/P staffs, the reduction in headcount typically ranges from 60% to 80%, according to Zubok. A staff of 40 that just read invoices and key in information could be replaced with a staff of one, he points out. If matching and investigation is involved, the staff cuts will be somewhat smaller, he concedes. The solution is usually sold to CFOs, controllers or treasurers, who appreciate all the potential savings, rather than A/P supervisors who might not welcome the prospect of losing most of their staffs, he notes.
A finance executive, Zubok hones the financial selling points. "I was talking recently with one very large cable company that has a 5% EBITDA margin. I told them that the headcount reduction alone would drop $2 million in savings to their bottom line, which would be the equivalent of $40 million of revenue. It would take 33,000 new cable contracts to create that much revenue. The savings are big enough to affect your stock price," he claims.
Cash-poor companies like the savings, of course, and the ability to bring all invoices into view quickly so they can make strategic decisions about which to pay when. Cash-rich companies like to take full advantage of prompt-pay discounts and then work with procurement to negotiate deeper discounts wherever there is an opportunity, Zubok reports.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
