What Makes A Good Invoice Processing Product?

Just a few years back, I  remember struggling to round-up a sufficient number of end users to fill out a story on invoice processing in Transform magazine (http://www.transformmag.com/showArticle.jhtml?articleID=18200850). Installations were so scarce that every time I would talk to vendors like AnyDoc, who was one of the North American pioneers in invoice processing, I’d ask how many installations they had.

Well, those days are gone. Even if you take vendor-supplied numbers with a grain of salt, I’d estimated there are now more than 500 invoice capture installations on U.S. soil. I’ll also estimate this is 10 times the amount there were just three years ago. That gives us a compound annual growth rate well over 100% for 2005-2007. Invoices are clearly the hottest growing segment of the document capture market.

It’s my observation that the majority of users in this space are capturing header data, such as the vendor name, P.O. number, date, remit to address, etc. It seems like most products on the market can perform this task fairly efficiently. It’s line-item capture is shaping up as a big market differentiator.

Line items are the invoice details that tell how many of each particular product are being purchased. When added together, the sum of these details equals the invoice total. Line items are used to do three-way matching against purchase orders (POs) and proof-of-delivery documents to ensure that orders have been fulfilled correctly.

Every vendor we talk to offers line item capture, but it seems some may be overly optimistic about the number of end users taking advantage of their line-item technology. On more than one occasion, we’ve found ourselves on the phone with an end-user whom a vendor has recommended as using its line-item technology, only to find that while the user may have experimented with it, line-item capture is far from in production.

That said, adoption of line-item capture is on the rise. Yes, it still takes some extra work to implement, but in certain situations, the payoff is worth it. Line-item capture, for example, creates the potential for more straight-through processing, which is the term used for an invoice that can be captured and posted into an accounting system without a human being having to see it.

Based on demos we’ve seen recently, we expect line-item capture to continue to evolve and become much more of a plug-and-play option in the next couple years. This should lead to more widespread adoption of detail capture, as the capture of invoice header data followed a similar path to success.

When is a template a template?

Prior to line-item capture’s rise to prominence, the most pressing question surrounding invoice capture had to do with templates. Everyone who plays in this space wants to brag about having template-less technology. Of course, the validity of this claim depends on your definition of templates.

The fact is, we really don’t see many truly template-less applications. What vendors have mostly done is set up a series of rules that enable users to more quickly define templates. Yeah, you can get away with going template-less if you really want, but, the bottom line is that to improve performance, users are typically employing templates (call them what you want) for their leading suppliers.

How important is back-end integration?

The third big topic when it comes to invoice processing is integration with back-end accounting and ERP systems. Initially, this was not a high priority for the data capture specialists who pioneered invoice capture. However, over the past couple years, as invoice processing adoption has moved from the “innovators” to the “early adopter/early majority” stage of the technology life cycle, integration with other systems has become paramount.

We don’t think it’s any coincidence that as vendors have placed a higher priority on back-end integration, invoice processing software installation rates have soared.

Those are the big three when it comes to invoice processing, line items, set-up, and back-end integration. If you’re vendors product excels in all three years, you will increase your chance for success in this burgeoning market.

Looking for information on invoice processing apps, check out these vendor sites:

http://www.readsoft.com/products/; http://www.kofax.com/products/ascent/invoices/details.asp; http://www.brainware.com/invoice.php; http://www.anydocsoftware.com/software/solutions/invoice/intro.html; http://www.captivasoftware.com/products/ia4Invoices.asp; http://www.datacap.com/products/invoices/; http://www.topimagesystems.com/Page.asp?Par=2&id=14; http://www.banctec.com/solutions/business-process-outsourcing/invoices/; http://www.peladonsoftware.com/docxp4invoices.htm;
http://www.odt-oce.com/usa/?ul=en