Client Case Studies

Industry:  Utility

Applications: Accounts Payable Processing

Company:Northeast Utilities (NU) is the parent company of the Northeast Utilities system. It is among the 20 largest electric utility systems in the country and the largest in New England with over 7,000 employees serving customers in Connecticut, New Hampshire, and Western Massachusetts.NU's operating subsidiaries include the Connecticut Light and Power Company, Western Massachusetts Electric Company, Yankee Gas and Public Service Company of New Hampshire, furnishing electric and gas service to more than 1.7 million customers.

Challenge:
Northeast Utilities receives an average of 750 paper invoices per day and couldn’t process this volume in a timely fashion. They were seeking to eliminate the data entry component of their current invoice and authorization for payment (AFP) process through the use of Optical Character Recognition (OCR) software. NU's intent was to integrate the OCR capabilities with both their accounts payable system "INDUS Passport" and their document management system "Spescom EB".

Due to the work backlog, it was taking an average of 22 days from time of invoice arrival to scan. NU’s standard payment terms are 30 days, but since no one could view the status of the invoice for the first 3 weeks, the process was frustrating to both NU personnel and their vendors.  NU’s accounts payable department had 10 people handling this process, along with other duties, and was feeling additional pressure to make this team available to handle other tasks.

When invoices arrived, the invoice processor sorted the invoices into the following categories: (1) quantity invoices, (2) signature (services) invoices which usually have multiple line items, (3) high priority invoices which include old invoices, invoices with a high dollar volume or invoices with short payment period or time-sensitive discounts, and (4) AFP, which are invoices without purchase orders. After sorting, the invoices were prepared for scanning and put into batches of 25, the invoice data was keyed into Passport and then non-AFPs were matched against purchase orders.

For both invoices and AFPs, Passport would generate a code that uniquely identified each document and then a bar code with key information would print out. Invoices with their bar code sheets were scanned. The images were passed to the document management system and could be viewed in Passport, thus enabling NU’s helpdesk and their vendors to check the status of a payment.

To find a solution, NU visited the exhibitor hall at the International Accounts Payable Professionals Annual Forum. There they visited the AnyDoc Software booth and were subsequently introduced to a local AnyDoc integrator, Imaging Solutions, Inc. of Wallingford, CT. Their search was expanded, an RFP was issued and they ultimately met with 8-12 vendors. The top vendors were given 100 sample invoices and asked to provide a product demonstration. Ultimately, Imaging Solutions and AnyDoc Software were selected. The selection team at NU liked that Imaging Solutions was located close by, provided first line support and was extremely knowledgeable about the imaging process. The team also felt that the AnyDoc Software best met their needs.

Solution:
Imaging Solutions designed and implemented a system that utilizes two products from AnyDoc Software.

The quantity and signature invoices come from a multitude of vendors in a multitude of formats. Thus, the AnyDoc Invoice module, designed specifically to extract data from unstructured forms, was deployed to extract data from these invoices. After the invoices are scanned, AnyDoc Invoice uses Optical Character Recognition (OCR) technology to capture data such as order number, invoice number, invoice date, and total amount off of the document. The captured data on any signature invoices is verified against purchase orders and other entries in its accounts payable system and is then automatically approved, without the need to be manually reviewed. Manual data entry has been virtually eliminated. The utility company employees now only need to verify that the data captured is accurate. Since the backlog has been reduced, high priority invoices no longer need to be pre-sorted.

An OCR for AnyDoc template is used to extract and capture data from the AFPs. Imaging Solutions used the traditional template feature and helped design a form that is filled in by the internal NU buyer to give payment approval. The AFPs also go through a scan, data capture and verification process. Images of the invoices and AFPs along with the index data are passed to the document management system.

Imaging Solutions also worked with NU to identify the best scanner for this application and NU purchased a Kodak i840 production scanner.

Results:
After extensive testing of both the accuracy of the captured data and the integration with the back end systems, the system went live in September 2004. Imaging Solutions provided training on all aspects of the solution, including scanner usage and care and the capture and verification process.

By automating their invoice data capture process, NU has received these benefits:

• The backlog has been reduced from an average of 22 days, to an average of 1-2 days. Even at the busiest time of the year, the backlog is only 3-4 days. This has enabled their vendors to obtain invoice status information on a timelier basis.
• Five people from the Accounts Payable department have been reassigned to new duties, yet the department is functioning better than before.
• With the redesigned work process and a new high-speed production scanner, the time to do the scanning has drastically improved. Previously, it would take 1 ½ days to prepare, sort and scan 1 day’s worth of mail. Now, 3 days’ worth of invoices can be scanned by an experienced person in a few hours.

“The implementation of OCR has been a tremendous asset to NU. Our number of days to process an invoice dropped precipitously even after we reduced our processing staff by 40 percent,” said Clement Lewis, Manager Accounts Payable at NU.

Since the initial implementation, Imaging Solutions has worked with other NU departments to take advantage of the original investment in the system. Additional applications for the AnyDoc system are being investigated by Northeast Utilities.

For more information, contact Imaging Solutions at 203-294-6300 or visit us at www.imagingsolutions.com.