Abstract
Electronic document management (EDM) systems can assist in managing credit
and building good relationships with customers.
With today’s fast moving businesses putting increasing pressure on credit
controllers to get payments in, ignoring EDM is no longer an
option.
Richard King is
International Sales Manager for document management and imaging company, Version
One.
Not the paperless office again!
Despite the now pervasive use of computers, credit control processes have
changed little over the past 50 years.
Credit controllers still spend much of their time dealing with paperwork.
Whether it is posting out statements, making copies of invoices or digging out
customers’ original orders and proofs of delivery, the often promised ‘paperless
office’ might seem as far away as ever.
Electronic document management (EDM) and imaging solutions have been around
since the late 1980s, but until recently their use in finance and accountancy
tended to be restricted to stand-alone systems for scanning supplier invoices or
proofs of delivery.
At long last, this is now changing. More and more organisations of are
recognising the benefits of the electronic management, delivery and storage of
business documents, and the demand for these solutions is growing strongly.
Document management is now something that anyone charged with getting cash in
quickly and cost-effectively needs to take very seriously.
Document lifecycles
For credit controllers to get the full benefit from document management, it is
important to look at the whole document lifecycle.
There is a lot more to document management than just electronic filing, as
modern document management systems also assist with the creation, presentation
and delivery of documents.
Since many documents these days arrive electronically, filing is not just about
scanning either.
As well as storage and retrieval, document management systems support the use of
electronic ‘workflow’ so that documents can be processed or authorised
electronically.
Why credit controllers should take a closer look at EDM
Over the years, a number of things have changed to bring the paperless office
nearer to reality.
For instance, hardware costs have fallen significantly, with hard disks
continuing to get bigger and cost less.
The technology also continues to improve. The technology built into modern
scanners has got a lot better at capturing clear, readable images, even from
scruffy pieces of coloured paper.
Offices are now fully networked with workstation computers that handle graphics,
and not just the text only ‘green’ screens that characterised accounting systems
for so long.
There is also the reality of tight integration with existing accounting systems.
Credit controllers do not want more software to learn and use and so companies
such as Version One specialise in integrating document management tightly into
accounting systems so there is no new interface to learn.
Documents can be viewed, checked, approved and forwarded directly from the sales
ledger screens whether the system uses a legacy mainframe system or the latest
Windows technology from Oracle, Sage, SAP, Microsoft and others.
In addition, the Internet is now widely accepted and used at all stages of
buying and selling.
Orders are taken through email and websites, credit checks
are done online, payments are made by BACS or online banking, reminders are sent
via email and bad debts transferred to collection agencies electronically.
Few businesses, are now without access to email or the web, and many companies
now prefer to instantly receive documents by email rather than in three days’
time on paper.
How can document management benefit credit controllers?
There are many ways that document management technologies can assist in managing
credit and building good relationships with customers.
Generating documents
The first rule of getting cash in quickly is to get the invoice out quickly –
preferably a clear, understandable invoice.
Even today it is surprising how many
people have cumbersome manual or semi-manual processes for generating sales
invoices.
It is true that the default output from many sales order-processing
systems can look bland and lack either clarity or key details that help invoices
get approved promptly.
Typing up or retyping invoices in a word processor is
also a very inefficient way to work.
Output management software integrated into the accounting system will produce
clear, high-quality invoices, statements and reminders etc., even from old
character-based systems.
When customer payments are overdue, serious and professional-looking letters
with signatures can be generated without any manual effort.
These systems are much more sophisticated than ‘laser form’ systems of old and
the format of invoices and statements can be automatically varied according to
the customer, the sales division or the country the goods are being shipped to.
Automated delivery
Electronic delivery solutions such as automated fax and email, allow copy
invoices, statements and other documents to be sent out to customers
instantaneously, either as an image of the paper document or as a PDF file.
For instance, whilst a customer is on the telephone claiming to have not
received an invoice, the credit controller can send the invoice by email so that
it is in the customer’s inbox within seconds.
It is perfectly acceptable to email or fax original invoices as clarified by the
European VAT directive of January 2004.
Faxing and emailing means invoices get
to the customer much more quickly than if they were posted (especially if the
customer is based overseas) and emailing invoices also means that they are more
likely to be received by the correct person straight-away.
Equally, any issues
with the invoices will come to light and get resolved sooner.
Electronic delivery rather than the posting of documents also saves costs.
With emailed statements and reminders costing nothing, it is
possible to email out as many as is needed with minimum effort, enabling credit
controllers to spend less time on tedious jobs and more time on building
relationships with customers.
Nowadays, it is even possible for reminders or simple statements to be
automatically sent as text messages straight to a customer’s mobile phone.
For instance, text messages can be sent when a customer’s account becomes
overdue or when they are close to their credit limit.
This can be very effective in sectors such as professional services and
construction when key contacts are rarely in the office or are difficult to get
hold of.
Eliminating filing
An output management system does not just send documents to the customer, it can
also file a copy of each outgoing document automatically in the document
archive.
Businesses in the UK have an obligation to retain accounting records
for seven years (longer in some European countries).
Traditionally, this means
printing two copies and filing one. In the past, larger companies may have used microfiching or Computer Output to Laser Disk (COLD).
Modern document management
systems offer a much more cost-effective approach.
Of course, most modern accounting systems offer the ability to reprint invoices,
but this will not meet the stringent requirements of auditors.
If there is no
intention to retain paper records, documents need to be reproduced exactly as
they looked originally.
By relying solely on the accounting system, it is easy
to be caught out should the system need changing or restructuring or if the
ledger is cleared, accounts closed, product codes changed, invoice layouts
redesigned or stationery changed.
Invoices and credit notes are not the only documents that should be retained in
the document archive. All correspondence with debtors, whether generated
automatically or on an ad hoc basis using a word processor should be kept, and
capturing statements, while not essential, can be very helpful in resolving
queries.
While outbound documents can be captured, filed and cross-referenced
automatically, a scanning system will be required for inbound correspondence,
order forms, certificates, proofs of delivery and receipts from couriers, etc.
Avoiding missing documents
Once documents are filed electronically, they can never go missing.
Document management systems allow people to view and – with the relevant
permissions – to print, fax, email, copy or add notes to a document.
Several people in different offices can look at the same document at the same
time.
Importantly, a good system should not allow anyone to remove, delete or
change a document.
Equally, a document management system can report on the documents that it
has, and perhaps more usefully, on the documents it does not have.
For example, if order acknowledgements and despatch notes are captured
automatically from the accounting system and proofs of delivery scanned when
returned by the delivery driver, a good document management system should be
able to report on despatches that do not have a corresponding proof of delivery.
In this way potential problems can be spotted sooner and action taken to
avoid a large ‘write-off’.
Dealing promptly with queries
All sorts of queries can delay the payment of invoices.
By having a document
management system tightly integrated with the sales ledger or credit control
software, most queries and requests for copy invoices, statements and proofs of
delivery can be dealt with while the customer is still on the phone.
By having a
single document archive for all documents, it is possible to move seamlessly
from an invoice to a proof of delivery and then to past correspondence.
Any copy
documents the customer needs can be forwarded instantly by email or by automated
fax.
Document management systems are also a good way to share information.
The same
document archive can be integrated with a contact management system or CRM
system as well as the accounting system, so that anyone in contact with
customers can have access to statements, invoices, orders and debt chasing
letters without needing to access the accounts system itself.
Similarly, credit
controllers can look at contracts and outstanding quotations and proposals when
considering what action to take with an overdue debt.
If customers routinely request documents before agreeing to pay invoices, such
as copy invoices, proofs of delivery, certificates of conformity and question
and answer results, the credit controller could even consider integrating the
document archive with the company website.
This will allow customers password access to various documents that the
credit controller is happy for them to see.
Processing cheques and remittances promptly
Modern scanners process documents of all shapes and sizes quickly and
efficiently.
As well as correspondence and proofs of delivery, this technology
can also be used to speed up the processing of payments.
Remittance advices
received from customers paying by BACS can be scanned and added to the work pool
for the appropriate controller or team.
Organisations that receive significant
volumes of cheques may get some benefits from scanning inbound cheques and
remittance slips.
A bar-coded remittance slip can be incorporated on each
invoice or statement to further speed up the allocation of cash.
This can be
easily achieved using output management software.
If customers return these
remittances with their payments, the remittances and cheques can be scanned
together in batches, captured as images and processed semi-automatically, saving
valuable time.
Another benefit of an electronic archive is that it enables the images of
documents to be moved around more quickly for faster processing.
In these days of shared service centres and offshore call centres and data
entry facilities, it is increasingly likely that post will be opened in one
location, but credit controllers and others that need to see documents are often
based elsewhere.
Electronic ‘workflow’
Once documents are stored electronically, they can be viewed and processed on
screen without the need for the original piece of paper.
Electronic workflow
software – or even simple email messages – can be used to notify people that
they have something to do, look at, review and/or approve.
Workflow is also
useful for ensuring that all relevant people are kept ‘in the loop’ and that
everything is properly recorded.
Workflow is ideal for setting up new accounts,
reviewing credit limits, authorising new credit limits and processing bad debts
and write-offs.
With workflow systems, details are forwarded to all relevant staff for approval
or simply for information before action is taken.
If a debtor needs to be taken to court, it is essential that all appropriate
steps have been taken beforehand and that all the supporting documentation is
available.
Electronic cash collection
It is somewhat ironic that while in many areas businesses have clung to
paper-based processes, electronic funds transfer has now become commonplace.
Most larger organisations pay suppliers electronically.
Equally, most households
now pay many of their bills by direct debit or online banking.
Paperless payments and document management go well together.
Direct debit
mandates can be generated directly from any accounting system as part of the
invoice or statement by using an output management product such as Version One’s DbForm.
These forms are personalised and usually include a barcode so that
returned mandates can be scanned, processed and archived automatically.
The same
output management software can modify invoices for customers that have completed
a direct debit mandate to show them the amounts and dates of collections.
Following the BACSTEL-IP upgrade of the past couple of years (see CREDIT CONTROL
JOURNAL, Volume 27 Number 1 2006), all reports and feedback from BACS are now
paperless.
These documents can be processed by the document management system, generating
batch jobs to update the ledger when direct debits have been a success and
automatically sending letters back to the customer if they fail.
Conclusion
Today’s businesses are faster moving than ever, putting increasing pressure on
credit controllers to be as efficient as possible when getting payments in and
dealing with reluctant payers.
EDM can help in many ways from automated document generation and automated
delivery through to electronic cash collection.
And although a completely paperless office is still more of a myth than a
reality, there are now numerous solutions in the marketplace that can help to
eliminate the slow and inefficient paper-based processes that still exist in
many Credit Control Departments, whilst saving significant amounts of time,
money and storage space.
Source:
Credit Control Journal (Volume 27, No 6,
2006) |
