AP Automation Series: Optimize Indexing in Your Enterprise Document Management System

In Chapter One of this series, we outlined the Benefits and Capabilities of Document Management Technology and reviewed the elements of a basic content management system, including invoice capturing, indexing, workflow and storage, and how to implement DMS as a simple first step in the automated AP process.

In Chapter Two, we discussed Utilizing Different Levels of Data Capture For Ease and Efficiency, including an overview of how various technologies can read data and how this information is shared from basic capture with structured templates to more advanced technology like barcode readers, Optical Character Recognition (OCR) and Intelligent Data Capture (IDC).

In Chapter Three we will explore how to ensure you can retrieve the right data from your system via proper indexing. When you are automating your AP, systems with advanced search capabilities can significantly reduce processing time and get you to the data you need faster.  But this level of sophistication requires the right indexing strategy so you can access the right information without overdoing it.

Indexing 101: Know What To Look For

As discussed in previous chapters, the key to successfully automating your AP is finding the right solution for your business, industry and workload. From single invoice scanning to a fully-automated enterprise solution, there are a number of ways to get the job done and get you on the road to improving invoice management.

With a fully automated AP solution, all documents are stored securely, can be automatically routed for workflow, then searched for retrieval, reporting and sharing via an internal network or in the cloud. All document formats – scanned documents, spreadsheets, emails, etc. are stored and easily located by searching document descriptions (like PO or Invoice), keywords (like ‘Acme Industries’), or individual data elements (like Vendor ID).

Data capture, storage and retrieval are integral to maintaining the right balance between too much information and not enough. And this is where indexing comes in. In the simplest terms, indexing is the process of creating the tables or indexes that point to the location of folders, files and records. With data indexing, database tables are used to store structured data in order to significantly speed up data retrieval.

Indexing allows people to search large amounts of complex data in a very short time. Remember the days of the good old card catalog? It could take us hours to find the right source for a school report when it now takes students a few seconds to type some key words into a search engine.

Document management systems can offer a similar benefit and efficiency for business.

For example, when you store an invoice in a paper folder in a file cabinet, you might search for it in a specific drawer, in a specific folder. Document management systems can help you not only find that invoice on a computer in a matter of seconds but also unlock the data that is in that one invoice by taking each data field – like invoice number, PO, company name, dollar amounts, etc. and store each of those in a database that is fully searchable.

And, do this with every invoice in your organization – saving you time, paper processing costs and delivering actionable information at your fingertips. Greater visibility into AP means executives can identify issues before they become bigger issues, take advantage of early pay discounts, improve vendor relations, and gain insight into workflows to enhance efficiency.

From data entry to full automation, you need to determine the best way to begin your incremental strategy move from paper to paperless. Ultimately, what you put into any system is what you will get out – so it is important to identify 1) which data elements you need 2) how you will retrieve that information and 3) how sophisticated your technology is – or needs to be.

Indexing should be carefully considered for efficiency, importance and scale. Say for example, you begin with data entry, and a year later move to barcoding or even intelligent data capture. Identifying the data elements in each phase should consider the next phase – how can we take what we have and add on without disrupting current workflow? Careful consideration should be discussed with your vendor about the best way to name fields and structure templates for optimal performance.

You should begin by asking the following questions:

How do we want to search? Invoice number? PO? Dollar Amounts? Vendor?
Make a list of the key elements on your documents and make sure to get buy-in from multiple stakeholders, from the administrative assistant to the CFO. Not everyone utilizes the same document in the same way. 

What reports do we need to access and which data elements are critical?
The best way to think about how to store your data is to consider what data elements are the most important to your business – which reports would you love to see on your desktop? Which data elements in combination can give you the right insight into your invoice process? If you are starting small, make those phase 1. You can always add more later. 

Where will the documents live and how can they be shared?
If you are sticking with paper for the time being, consider the best way to file documents and how that system can translate to an electronic data storage system when you are ready. But the better you understand your filing system, the easier it will be to transform the process when moving to a hybrid or electronic system.

  • How are they classified?
  • What types of documents are associated with an invoice and where are they stored?
  • What is the workflow associated with each document?
  • How will you retrieve supporting documentation from files?
  • Review the status or assignment of open invoices?

These questions will impact how you will capture an invoice and associated data, and are very difficult if you are still using paper to manage AP. Searching through a file cabinet, copying paper, mailing it or faxing it and waiting for a response is a great deal more labor intensive and costly than having a system automatically upload, index, store and secure a document.

Define how you plan to utilize the information once it is entered. Whether you are keying text into data fields or you are utilizing intelligent data capture, the way you extract your invoice data will affect how you index. The guiding principal should be formulating your indexing the right way so you can retrieve the information in the easiest, most efficient way for invoice tracking and reporting.

Start Simple: Smart Data Entry

At the simplest level of automation, key information from an invoice may be keyed in by hand to a data field on a spreadsheet or into an accounting system – vendor name, invoice number, date, amount and status.

Alternatively, that data may also be selected from a drop down menu. Data entry into a computer system – though labor intensive – is a stepping stone to full automation and may be the best option for smaller businesses looking to implement some level of automation. With simple template fields, users can then search, for example, on Vendor ID# to pull up information on those related invoices or documents. Simple report generators can be used to incorporate field types and generate reports on key elements.

Ideally, the template fields utilized for data entry should be easily identified by those using them – since manual entry is still a part of this process, you should only add the data critical to your invoice process, and not waste time entering data that won’t be needed for research and reporting.

Intermediate to Advanced: Capturing Barcode Data

The next step may be to scan invoices and track that data via barcoding to add efficiency in the process and collect important data elements. Barcode labels contain key data elements for each document or set of documents to make it easy to categorize and identify not only the document itself but to enable automatic indexing without data entry. Retrieval is critical when employing barcoding. Knowing what data elements to include so that you make it possible for users to find, access or share the document is key to efficiency.

For example, with barcoding, key data elements are stored on the invoice and when scanned into a system, use that data to classify the document, like Vendor ID #, Vendor Name, Address, GL Codes, etc. Since the information is automatically read by a computer system there is less room for error and less time spent on data entry. And barcodes can associate a document with account information that is already in a database, so the information is automatically indexed for fast search and retrieval.

Documents can also be named according to a specific category and stored on a company intranet or in the cloud. This alleviates the burden and costs of managing paper – mailing, faxing, copying, etc. and invoices can be routed more quickly via email or when accessed on a company network. Barcoding is a terrific way to start the hybrid process of taking invoices and importing relevant data into an automated system while still using paper. This allows for simple search and tracking of invoice data like when it was received and processed, as well as can classifying all records of a certain type or name into one group – significantly saving data entry processing and document retrieval times.

The Full Monty: Automatic Text Extraction with Intelligent Data Capture

With Intelligent Data Capture (IDC) and Optical Character Recognition (OCR) organizations are able to make the most of automation and realize greater ROI from a full automation solution. These capture types incorporate self-learning technology to enable the solution to locate any word or phrase that appears in any document. As documents are scanned, information is automatically translated for indexing which eliminates the need for any manual data.

As indexing information is extracted automatically when using advanced data capture, organizations can process greater volumes of data for maximum efficiency. With OCR, a scanned image file can be made fully searchable on individual text fields or with zonal OCR, data can be extracted from a specific zone for indexing (like the top third of an invoice).

Once data has been captured and indexed, retrieval is easier. Searching a document by text, field, annotation is simplified, and you can search the contents of an entire years’ worth or 5 years’ worth of data in seconds to pinpoint the information you need. Both logic and Boolean search capabilities can be utilized to account for misspellings and to help fine-tune searches.

At the highest level, these systems can integrate with an existing accounting or ERP system for 2, 3 or 4-way matching processes. Business rules can be applied to add automation to the process from start to finish. For example, you can enter vendor name and prompt a look up in the ERP system to locate YTD purchases. You can also automatically pull in the GL codes for a vendor for a smooth integration with your GL system.  And by integrating AP processing with other accounting and ERP systems, you not only eliminate the errors from manual data entry, you also gain access to information across your enterprise that can be used for improved analysis of financial trends and expenditures for more accurate forecasting.

Moving Towards Full Automation

By starting small and planning ahead, AP automation can be implemented on the right scale, at the right time for your business. As you start the process of automating document management, make sure to look for systems that allow you to create and/or configure templates that fit your business needs. Different data fields should accommodate numbers, alphanumerics, dates and other pertinent data, as well as track document creation, retention and access for accountability and security. Being able to search this indexed data can be of immense importance for audits and other compliance requirements.

You should also look for systems with intuitive features to help reduce the time it takes to implement and train staff. And if you are moving to a full AP automation solution, consider where your documents originate – email, paper scans, or full electronic invoicing – a DMS should be able to handle any and all file types and automate indexing for efficiency.

If your current AP process is costing you more time or money than it should, it is time for technology. You can increase your financial insight, management and ultimately profitability – but only if you take a close, hard look at your current processes, identify what is holding you back and how you can move forward.

The great thing about AP automation is you don’t have to do it all at once – but start in a way that will deliver the most impact and generate the best ROI for your business right now.

Want to learn more?  Finding Cash in Your AP Department with Automation. Learn More in This Webinar!

Be sure to keep an eye out for the next blog in our series: