FSN: Are accounting and document management systems converging?

Are accounting and document management systems converging?

3rd July 2006
When businessmen transitioned from a culture of ‘my word is my bond' to written contracts nobody could have foreseen the massive growth in paper volumes that would result. Nowadays, every aspect of a business transaction is evidenced by documents and the current climate of compliance and regulation only serves to encourage organisations to generate even more paper and to store it for longer. Whether it is buying goods and services or selling them, every transaction is accompanied by a bundle of accounting documents that may have to be printed and stored.

Yet in systems and process terms, the accounting transaction and its related documents seem to occupy parallel and unconnected universes. For example, a purchase order, once generated, may appear as ‘goods on order' in the inventory system and as an ‘outstanding commitment' on the purchase order processing system, but the physical document, with its authorisations, descriptions and commentary effectively disappears from view and becomes detached from the accounting records when it is committed to a lever arch file. Whilst audit trails and transaction references preserve a system generated link between accounting record and accounting document, the physical link is broken once the printed purchase order leaves the system for authorisation, or worse still, if it is manually generated. This means that any subsequent handling of the purchase order, such as matching with a GRN (goods received note) and a supplier's invoice requires significant manual intervention before the accounting records can be updated.

It is a situation only too familiar to Allan Doyle, IT Manager of Nichols plc, best known for their Vimto branded drinks. When the Nichols Group slimmed down its company structure and re-organised itself around a shared services centre, management sought to reduce the amount of inefficient paper flows around the business and provide deep integration between core financials, based on Sage Line 500 and a suite of document management and imaging software from Version One, a specialist software author.

Datel, a Sage Line 500 reseller that has been working closely alongside Nichols Group for almost ten years was responsible for introducing Version One to the company. Paul Compton, Datel's sales director told FSN, “Version One is our preferred document and image management system on the Sage Line 500 platform. It brings enormous benefits to our customers and can be deeply embedded in the Sage system.”

“The document management system was a very important enabling technology that allowed us to create the shared service centre,” Doyle told FSN. “We had six separate trading companies that were geographically dispersed, each with their own accounting function. Getting approval for purchase invoices involved putting paper copies in envelopes and physically distributing them around the country. Inevitably, invoices got lost, suppliers could be paid late and disputed transactions were very difficult to resolve,” he added.

However, this is fairly typical of most companies and once a purchase invoice is placed in an internal envelope or regular post, the accounts department is blind-sided and unable to control the process. Paul Crompton, Sales Director of Datel, a Sage reseller agrees. In common with many resellers, his role has changed from just selling software and services to helping companies use information technology to improve their processes and business performance. Crompton has seen enormous growth in the uptake of document management and imaging systems in his customer base because the business benefits are so compelling. “In the last 18 months, the level of customer interest in document management has grown more than 200 percent,” he told FSN. “Business systems such as Sage Line 500 generate a lot of paper, for example, sales invoices, remittance advices and statements. So customers see an immediate benefit if the output is stored electronically, rather than in paper files. But they also reap significant efficiency gains by being able to quickly retrieve electronic images of documents stored on the network.”

Linking the accounting system to the document imaging system is the key to realising the benefits. “It's absolutely essential,” says Crompton, whose organisation is now almost evangelical about the benefits and demonstrates document management software from Version One to Sage customers at almost every opportunity. “Once we had seen the remarkable benefits for ourselves in organisations such as the Nichols Group we started to promote it heavily.”

Integration between Sage and the document management system is also at the heart of the implementation at Nichols Group. “We took the strategic decision to make our Sage system the only copy of supplier and customer records in the organisation. This means that all of our systems, for example our in-house purchase requisitioning system and our distribution and warehousing systems have to integrate with Sage,” says Doyle “and the document management system is no different. The fact that Version One uses a Windows and SQL database platform made the integration task that much easier.”

Inbound purchase invoices are batched, bar-coded, scanned and registered on the accounting system. The tight integration with Sage means that scanned images of the invoices can be retrieved from within the accounting software using a number of search criteria, such as date ranges, unique supplier or transaction reference. From there on, the Version One system routes the invoices through an authorisation and approval process to individual budget holders. Each authoriser can see lists of invoices awaiting approval, together with an accompanying image and can be reminded via email of outstanding transactions as appropriate.

On the outbound side of the house, images of all accounting documents, such as, sales invoices, remittances, statements and even payslips are automatically archived. Outbound documents are despatched in the post, principally because many of Nichols Group's customers are in the pub and club trade and do not have the facility to handle electronic invoicing.

With several thousand invoices a month being received and generated the savings have been massive. Doyle estimates that at least £100,000 was saved across the group in the first year of operation, but in procedural terms the savings have been just as impressive. Doyle told FSN there were six purchase ledger clerks before the move to the shared service centre but this has now been reduced to three.

Whilst document management has touched almost all of the accounting processes within the Nichols Group it was surprisingly simple to implement. “It probably took no more than 5 days with minimal involvement from me. Version One had obviously integrated their systems to Sage before and knew exactly what they were doing,” added Doyle.

Despite the high level of interest in document management it's still early days. Presently, most of the interest in Crompton's customer base lies in electronic scanning of inbound documents and electronic storage of outbound documents, but Crompton is convinced that interest in workflow, document routing and approval will quickly follow. “It's one of the easiest sales to make because people see the benefits right away. Every business can benefit from this technology without necessarily spending hundreds of thousands of pounds. It looks like we've got a tiger by the tail,” he says.

For more information on VersionOne, visit http://www.versionone.co.uk

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