Automated Accounts Receivable Processing Solution Proof of Concept

ABSTRACT

Open Scan Technologies, Inc., in conjunction with a Fortune 500 company, completed a proof-of-concept exercise of it’s Corporate Accounts Receivable (A/R) Automation Solution in a controlled test environment. The test, which utilized actual payment documents from the company’s customer base, yielded the following results:

• 385 templates created in 3 1/2 hours
• 67% reduction in time required to handle bank exceptions
• 100% elimination of bank lockbox remittance data entry (keystrokes)

This report details the results of the test.

BACKGROUND

A Fortune 500 wholesale distributor (company) was interested in the OPEN SCAN^® solution and wanted to determine if it would be effective for their operation. The test was designed to measure two features of the OPEN SCAN system:

1. Proprietary point-and-click template creation
2. Exception handling

It also measured the features’ ability to impact three (3) key areas: ease of use for operators, speed of processing and accuracy of data.

The company operates multiple divisions in locations across the U.S. Their clients submit payments to a number of bank lockboxes. The banks deposit checks and key remittance data such as invoice number and amount paid from client documents. The banks charge by the keystroke for this service. In addition to the bank keying remittance data, the company also has in-house staff to handle payments that the bank could not (i.e. exceptions). The in-house staff resides at a centralized shared services center. On average, they have one (1) FTE per division in the A/R department and 75 divisions total. The combination of bank keying and in-house exception handling can process, on average, 1,000 invoices per day, per division.

Although the company creates a standard remittance form for their clients, only 10% of their customer base use this document. The other 90% uses either their own remittance document (generated by the customer’s A/P system) or no document at all. Many customers pay multiple invoices with a single check. The average is 4.5 invoices per check.

TEST ENVIRONMENT

The test utilized an image archival CD-ROM from one of the bank lockboxes as a source of customer payment images. This ensured that the test used real customer documents and actual customer data. It also served as a baseline reference for the number of total invoices paid and posted. Operating the system during the test were two A/R staff members from the shared services center. There was only one station, so the operators alternately took turns working. Therefore, the test results represent the work of one FTE. Prior to the test, neither operator had ever seen the system before.

SAMPLE SIZE

The bank lockbox archival CD included images from 430 envelopes and deposit data from two consecutive days. In this case, an ‘envelope’ refers to all the contents (remittance page(s) + check) within an actual envelope that a customer had sent in to the bank. According to the bank record, the bank had identified 1,947 separate invoices within these 430 envelopes. The 1,947 invoices represent approximately double the average daily number handled by each division.

Included in the 430 envelopes were 45 envelopes that had only handwritten data, either in the memo field of the check or on a separate document. Within the 45 envelopes there were 158 invoice lines (8% of the total volume). This handwritten data can not be interpreted by the software and had to be keyed manually. The nature of the company’s clientele (many small, “mom & pop” businesses included in the mix) leads to a comparatively high number of handwritten documents.

TESTING STEP 1: Point-and-Click Template Building

OPEN SCAN’s solution is designed for businesses that receive payments on a wide range of document types from their varying customers. In order to accommodate this complex environment, the system utilizes a proprietary template technology. Unlike many document recognition systems where template-building is cumbersome and often requires IT or professional services, the OPEN SCAN solution is very user-friendly and templates can be built quickly and effectively on the fly even by novice operators.

The goal of this portion of the test was to measure how quickly operators could be trained to use the system and then how quickly they could build templates once they were trained. Two staff members, neither of whom had ever seen the system before, were brought in to run the test.

After less than 30 minutes of training, the first operator began building templates. Although a few of the more complicated documents required some trainer assistance, the first operator worked independently most of the time. Once the first operator was confident in her ability, the second operator took over template building. There was little difference in the pace at which the second operator learned the system. As noted before, 430 envelopes were presented to the operators for templating. Forty-Five of these contained handwritten or otherwise “un-templatable” documents. The remaining 385 envelopes (some of which contained multiple pages) were templated in 210 minutes. The resulting rate is:

385 envelopes / 210 minutes = 30.5 seconds per template

Because two operators used the system during this test, these results include two separate learning curves. Taking that into consideration, it can be reasonably expected that this rate would improve slightly in a full production environment.

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