When Optical Character Recognition (OCR) technology was first popularized in the early 2000s, it presented a unique and exciting opportunity for Accounts Payable teams. With lengthy approval times and paper-based processes consistently slowing departments down, it promised to help the department move towards a faster, smarter, and less labor-intensive digital future.
Fast-forward to today, and OCR-based A/P tools and platforms are a mainstay in nearly every mature finance department - but for many organizations, they’re proving a difficult step to get right.
Far from accelerating the digitization and modernization of A/P departments, even the most popular of these legacy technologies may now be actively hindering it — creating bottlenecks, increasing invoicing errors, and even limiting automation.
Here are four big ways to tell whether your legacy A/P technology is holding your team back.
Over the past 20 years, the top OCR-based platforms have added a breadth of new capabilities, including SAP integration, basic automation of invoices, and even cloud-based A/P workflows.
However, while these capabilities (largely) do what they say they do, in most cases, they’re pretty basic. They tend to be built on a limited set of existing, restrictive rules — giving you basic functionality as part of a platform you already use, but limiting your ability to grow and evolve those capabilities as your needs change.
In turn, this can seriously impact the flexibility and agility of your A/P department. While each basic operational task is supported, these limited tools can’t understand context. So, when new needs emerge (like using a new type of invoice template) you’re forced to build new rules around every variation of your documents, just to get meaning from them. Add too few, and you won’t get the information you need from your invoices. Add too many and the rules can break.
With A/P teams facing greater pressure than ever before to be agile and reactive to changing business and working capital conditions, these restructured workflows and limited capabilities are a serious problem. If you’re having to work around your existing platforms instead of them supporting your changing demands, that’s a big sign that legacy tech is holding your A/P team back.
Nearly every provider of a legacy A/P platform boasts that their tools ‘reduce manual workloads’ and ‘automate exception handling’. However, these claims might not be as factual as they first seem.
While OCR-based solutions can automatically search for a standard set of exceptions, flag any issues, and route them towards the correct person for resolution, the resolution process is a manual one. Teams have to find the correct invoice — whether it’s digital or paper — find the issue, and solve it with no assistance from the technology. For one invoice, this doesn’t seem too hard a task. But when teams are having to manually correct issues across hundreds of invoices each day, it can quickly become completely unmanageable.
And to make matters worse, the technology that supports intuitive, proactive exception resolution is available. In fact, advances in AI are making the capabilities more accessible than ever. They just can’t be integrated into legacy tech platforms — so for A/P departments without the right systems in place, they’re tantalizingly close, but remain just out of reach.
Read: What is Accounts Payable? The process, business objectives and KPIs that matter
A/P processes can be highly complex, time-consuming, and labor-intensive, but there is a huge amount of potential for automation within them. Invoice processing, data capture and validation, coding and distribution; all of it can be automated, helping A/P teams work efficiently, reduce errors and bottlenecks, and realize cost savings.
So why not just grab a proven A/P automation solution and get going? Well, for many departments, it’s not that simple. For teams looking to streamline certain areas — invoice processing, for example — OCR-based tools provided an entry to automation. But now, the rigid workflows and restrictive systems that they create are capping what can effectively be automated, and how far that automation can extend.
Legacy platforms simply can’t support complex, fully-automated workflows, meaning truly intelligent automation is out of reach. To bring the best of automation to the modern A/P department, and free up teams to focus on value-adding tasks, you may first need to take a step back — away from the legacy tech that helped you apply basic automations to your workflows.
The kinds of OCR-based platforms we’re talking about here aren’t cheap. The digitalization of paper-based invoices still requires in-house scanning hardware and software, ongoing maintenance, and mail room and storage costs. And with your teams still solving exception handling issues manually, it can all add up to a huge drain on resources.
If you’re using these platforms today, it’s because you invested in them expecting to see a meaningful return on your investment. That isn’t just a short term consideration either. If you’ve been relying on the same core platform for two decades, it’s still important that it delivers meaningful value today.
Continuing to use the technology you already have is in itself a technology decision – and needs to be evaluated like one. The errors and bottlenecks being created by limited workflows? They’re costs. The knock-on impacts of incorrectly extracted data? They’re costs too. The non-stop manual error resolution your team handles every day? Surprise surprise, another big cost that you’re absorbing.
So, with all of that considered, the big question is; am I really getting value back on what this technology is costing me today?
Despite their shortfalls, legacy OCR platforms and tools still dominate the A/P industry, and for many departments, completely underpin day-to-day operations. And there’s a reason they’re so ubiquitous too — they were once an important step towards a modern, more efficient A/P department.
But while the basic functionality of these tools can’t be disputed, it’s now clear that in many ways, they’re holding A/P teams back. They represent a single step in a much grander A/P evolution journey. And those that stay rooted to that step will have to sit by while others move past them.
That doesn’t mean these systems need to be ripped and replaced – there are other, less extreme options. New capabilities can be layered on top, for example. But one question does need to be asked: ‘Can I achieve my digital goals, with the platform that I have?’
Try our interactive Accounts Payable demo to find out how Celonis can help you evolve your Accounts Payable processes.