IPS Blog

In Accounts Payable, “Garbage In” Can Make Quite a Mess

Mar 29, 2013 9:55:00 AM

In the early days of computing, there was a popular saying about the power of information technology. “People make mistakes,” the saying went, “but to really screw things up, you need a computer.”


The fact is that IT services bring big benefits, from music and TV in the cloud to online shopping. They also create big risks, like the hacking of private information stored on a server.

So, to really screw things up, you still need a computer. Take accounts payable. It is a document-driven process, whether the invoice comes by mail, by email or as a Web download. And in two-thirds of companies, it is mostly a manual process. What’s the obvious solution? Digitize those documents: run them through a scanner, perform optical character recognition on them, drop the information into your accounts payable system and – voila! – problem solved.

If only. Remember, we are feeding information into a system that disburses the organization’s hard-earned cash at the end. Garbage in, cash flow out. Anyone who tells you that scanning is a perfect science doesn’t do very much of it. Anyone who tells you that OCR can solve all your problems is trying to sell you an OCR solution.

 

In practice, you need strong quality controls and validation software to keep garbage out. Scan the images? Sure. But run the digital documents through validation software that verifies that accuracy and has human intelligence to manage the exceptions. Pull a random sample of the “good” records just to be sure. The work is worth it, because every error at this stage earns compound interest as it flows straight through the AP process.

Capture information with OCR? Sure – but you will get better results using the master vendor file and PO file to look up and validate PO numbers and vendor names. Match that data with the information captured by OCR or keyed by data entry operators. And validate with Subject Matter Experts who know an error when they see one and can fix it on the fly.

There’s more – much more. But you get the idea. Some IT services mistakes we can live with. That embarrassing photo somebody tags on Facebook may make you squirm. But if you find yourself shoveling garbage into your accounts payable system, it’s no laughing matter.