(#4 in a series.)
In our last installment in this series we discussed the economics and methodologies behind eliminating as much as possible of the hard copy files stored by businesses. Today we'll explore digital workflows and how they reduce costs and increase revenues. We'll consider two examples: the printing and distribution of payroll checks, direct deposit advices and W-2s; and the vendor invoice approval process in the accounts payable department.
In the case of the high-volume printing of payroll documents, workflow consists of manual paper handling and distribution. Preprinted forms may have to be stored and loaded into the printer or digital overlays may be applied to blank paper stock to print the paper documents. When the documents are removed from the printer they may have to be sorted and prepared for distribution by hand and then stuffed into envelopes for mailing. Folder-stuffer devices can automate this process to some degree, but an operator is required for loading and unloading documents. Then the documents have to be mailed or delivered by hand or by courier in the case of delivery to a remote location.
No matter how you do it, the print production and delivery of paper documents is time and labor-intensive and expensive in terms of equipment, consumables, and mailing and courier costs. Most organizations are moving as fast as possible to direct deposit to avoid the high expense check printing, but direct deposit advices still have to be generated. By creating pay stubs, W-2s and other documents in digital formats, a great deal of the process cycle times can be cut. As an example, one medium sized organization reduced their payroll cycle time from 1.5 days to 2.5 hours as a result of creating digital pay stubs and sending them directly to archive for employee self-service. In addition to the labor savings, all of the other costs of production and distribution were eliminated, and the self-service function eliminated most of the calls for lost document reprints.
Let's turn now to the much more complex workflow example of accounts payable invoice processing. Invoices received from vendors have to be matched against purchase orders and receipt vouchers and verified as accurate and complete. The paper documents are routed through a series of individuals for capturing general ledger account numbers and other notations before being finally approved for payment. Then they must be entered into the accounts payable system for vendor payment. This process may take days or even weeks if in a distributed environment documents have to be physically moved from one location to another.
A digital workflow involves capturing a digital image of the invoices at the first touch point, automatically approving those invoices that match the original purchase order, then routing those invoices without purchases orders and those that have exceptions through a pre-established digital workflow. This process dramatically reduces the labor involved in this process and ensures that invoices can be processed quickly enough to avoid late payment penalties and to allow early payment discounts to be taken. It also eliminates other common problems associated with AP invoice processing such as paying the same invoice twice, misplacing invoices, and paying the wrong vendors.
The good news is that, because of the steady compounding of improvement in the price-performance ratio of computing technology (see Moore's Law), it is now economically feasible to capture capture documents digitally at the point of origination or at their point of entry and eliminate paper bottlenecks in business. Just a few years ago these solutions may not have been economically feasible in many cases. Now, power-to-cost ratio of computing power has increased to the point that these solutions are not only practical, but they also offer extremely high returns on investment with a break-even point of six months to one year.
So that's a quick summary of the power and extreme value of automating document-intensive business process workflow. Join us next time for the fifth item in the list of the top 10 things you need to know about going paperless at work.