Magazine Article | August 21, 2008

Use Intelligent OCR To Streamline Invoice Processing

Source: Field Technologies Magazine

After implementing an intelligent OCR (optical character recognition) solution, this company cut by 60% end-of-year overtime due to the processing of invoices.

Integrated Solutions, September 2008

PPL Corp. controls more than 11,000 megawatts of generating capacity in the United States, sells energy in various U.S. markets, and provides electricity to more than 4 million customers in Pennsylvania and the United Kingdom. PPL Services is a division of PPL Corp. that is responsible for processing more than 1 million customer bill payments each month, as well as more than 150,000 vendor invoices each year for various materials and services.

To accommodate its high-volume processing, PPL has used an OPEX digital mailroom solution for the past 10 years. PPL implemented a customer payment solution that used the OPEX technology to streamline business processes. This in-house lockbox solution processes more than 50,000 customer payments per day. In the '90s, PPL also implemented another OCR solution to support the accounts payable portion of its processing. Unlike accounts receivable where PPL generates a standardized payment stub that each customer uses, vendor invoices come in various shapes and sizes, with key information located in different places. PPL had been using an older OCR software solution (circa 1999) to obtain information such as invoice number, date, vendor name, purchase order number, and dollar amount owed from each invoice. This information was then manually entered into PPL's PeopleSoft accounting software.

The OCR software required a template be manually created for each vendor so the software could find the necessary information. For instance, on some of the invoices the amount owed would be in the top right corner, and on others this same information would be in the top left corner. Templates had to be created each time a purchase was made from a new vendor, or when a vendor made any changes to the layout of its invoice. "The creation of templates was cumbersome and labor-intensive, to the extent that many of the users were bypassing the software altogether and just manually entering all of the information into PeopleSoft," says Denise Baker, project manager at PPL Services. 

In 2006, PPL began the search for a solution to automate the invoice data entry into PeopleSoft and minimize the need to manually key in information. After considering five vendors, PPL chose the Kofax Intelligent Capture & Exchange solution. Kofax Intelligent Capture & Exchange consists of Ascent Capture software for preliminary data capture and Xtrata Pro software for form identification and intelligent data extraction.

"The installation of the solution was going to be composed of multiple steps, and we hired integrator BizTech Solutions to assist us," recalls Baker. Physical installation involved installing the Kofax software onto a group of Windows servers. The application was then configured to collect the invoice data required, such as invoice date, vendor, amount, and line item information. BizTech also created an OIU (OPEX Import Utility) interface to import the images scanned on the OPEX equipment directly into the Kofax Ascent application. Once the images are written to the Kofax software, they go through the OCR module that reads the images and collects the invoice data specified during configuration. Unlike the older OCR software that required templates, the Kofax Xtrata Pro can recognize key data anywhere on an invoice.

After OCR, the images go through Kofax Validation where the user can see the image scanned using the OPEX equipment on one side of the screen and the data that the Kofax software has collected on the other. Once the user checks the information and makes any necessary corrections, the data is released from the Kofax software to an Oracle database, and the images are sent to an image repository. "We added another validation measure by creating our own verification software to apply business rules to the invoice data the Kofax software captures," says Baker. For example, PPL's verification software flags any invoices that are more than a certain dollar amount and sends them to a queue to be reviewed by management. Upon successful completion of the verification's business rules, the invoice is automatically loaded to PeopleSoft.

To train employees on the Kofax software, PPL used a PowerPoint presentation guiding users through the steps of how to process an invoice. Then, PPL set up a testing station with generic data so the employees could become familiar with using the solution and also understand how it would improve the invoice processing. When employees began using the Kofax solution, PPL provided training support to answer employee questions. The physical installation, interfacing, and testing of the solution took approximately one year and was completed in October 2007.

The manual tasks the older OCR solution required were causing the employees who process invoices to work a lot of overtime at the end of the year when PPL receives a large quantity of invoices. By eliminating the creation of templates and much of the manual entry of data, the Kofax Intelligent Capture & Exchange solution has cut employee overtime 60% for PPL employees who process invoices. The Kofax solution also provides for timelier recording of payment obligations, improving PPL's cash forecasting ability.