Corporations of all sizes are on their own path to digitizing business processes. But, according to enterprise content capture firm Top Image Systems, mid-market firms — those with less than $1 billion in annual turnover — are in a league of their own when it comes to digitization.
These companies, explained Top Image Systems Chief Technology Officer Carsten Nelk and Chief Marketing Officer Andrew Pery, are ditching on-premise enterprise resource planning (ERP) systems in droves. But instead of going all in on the cloud, many of these firms are looking for a hybrid of sorts to handle operations, especially when it comes to the accounts payable department.
“From an overarching market perspective, we see that there is an underserved market for AP automation in the mid-market,” Pery said. “Based on the market research, there is an increase in adoption of cloud-based AP automation. Companies in the mid-market are looking to retool their investments and moving away from on-premise ERP platforms.”
Top Image Systems may be best known for its data capture technologies, but as the executives told PYMNTS, optical character recognition (OCR) technology is only a small piece of the puzzle for corporations that want AP automation.
For instance, AP solutions must address the omnichannel trends in how businesses pay. That means meeting that demand for a hybrid solution.
“We’re finding that many organizations, while they’re using data capture technology to ingest invoices, they aren’t so much for workflow automation,” Pery said, adding that Top Image Systems is looking to build solutions around this trend.
But an omnichannel accounts payable department can occur in other ways, too.
The rise of digital invoices contributes to this pattern, with organizations now seeing electronic invoices sent via email, as well as the continued prominence of paper bills.
“Still, the majority of organizations we see have invoices sent as email attachments, as PDF, as well as a significant amount of paper,” Pery explained. “What we’re seeing is multichannel invoice capture.”
The executive pointed to Billentis research that found a small portion of the hundreds of billions of invoices of the world being sent in true digital fashion, allowing for automated entry of the bill data into a company’s accounting portal.
Pery said he doesn’t expect this to change anytime soon.
“We expect a combination of email, PDF attachments, fax, paper and electronic,” he said. “Over time, I think there’s going to be increased adoption towards electronic, but in North America, for example, it’s still predominately email and paper.”
An omnichannel approach to AP needs a multipronged approach to automated solutions.
Top Image Systems’ technology chief was clear that OCR technology is only one prong to achieving an end-to-end accounts payable service.
Earlier this month, the company rolled out its AP service, eFLOW AP. Nelk emphasized that the product moves beyond simple data capture, highlighting the need for various checks and validations within an AP automation tool.
“OCR can deliver as much information as possible, but overall, the information comes not only from the bills that have been captured but also the business information that has been captured.”
“It is not enough to talk about data capture,” he stated.
According to Nelk, an AP solution that automates data capture from incoming invoices is only a fraction of achieving an end-to-end solution. Those checks and validation capabilities must also be included — not only to capture more data but to capture accurate data. Overall, OCR is not a flawless technology.
“There’s no such thing as 100 percent accuracy,” Pery said of OCR. “There is always going to be some level of manual intervention and of manual processing and validation. But if you can reduce the volume of manual validation, that helps.”
In covering all its bases, an AP solution can then provide as much automation as possible for executives, leaving them to focus on more critical tasks. According to Pery, it’s all about improving the bottom line.
“Clearly, reduced transaction costs,” Pery pointed to of the financial benefits of an AP tool that combines data capture, as well as validation capabilities. But there are other ways AP automation impacts the books.
Automation, Pery said, allows AP professionals to focus on more strategic business processes, like the buyer-supplier relationship. The ability to assess those partnerships allows executives to offer early payment discounts to the most strategic of partners — which, he added, is a better investment than simply sitting on cash.
Plus, a hybrid of cloud and in-house tools can be much more affordable to the mid-market crowd.
Finally, automation provides enhanced visibility into working capital as well, he added. In today’s market climate, improving cash management isn’t only about the money anymore.
“In these times of intense competition, it’s not just about reducing transaction costs,” Pery explained. “But it’s also about becoming more agile in managing business and suppliers.”