Page 48 - Accounting Best Practices

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3–12 Shift Incoming Billings to an EDI Data-Entry Supplier
site must be constructed and maintained, while other software must be created
that converts the incoming transactions into EDI format and then ports the result-
ing data to the accounting system for further processing. Consequently, this can
be a relatively expensive option to implement, and so may only be useful for
those organizations experiencing a large volume of transactions.
Cost: Installation time:

3–12 SHIFT INCOMING BILLINGS TO AN EDI
DATA-ENTRY SUPPLIER

A company may have the best intentions for improving its accounts payable
process, but cannot shift to a fully automated system because its suppliers
refuse to send invoices in EDI format. Consequently, the company has no
opportunity to automatically shift incoming EDI messages into the accounts
payable system, automatically process them, and automatically send out an
automated clearinghouse payment. In short, the company is stuck with a man-
ual data entry front end to the accounts payable process. This is a particular
problem when a company is so small that its suppliers see no reason to shift
over to EDI transactions just for its benefit. This issue can be surmounted by
sending the incoming invoices to an EDI supplier that is willing to keypunch
the invoices into an EDI format.
To do so, a company can either have suppliers mail all invoices to a lockbox
that is accessed by the EDI supplier, or it can remail the invoices to the EDI sup-
plier. This supplier (really just a “body shop” that keypunches data) will reenter
the invoice information into an EDI format and transmit it to the company, which
can then process the invoices in a highly automated manner. Though this may
seem like an expensive way to handle invoice processing, it will allow an
accounts payable department to eliminate virtually all of its data-entry positions.
The disadvantages to this approach are a slight increase in costs over what it
would take to process the invoices in-house, as well as a time delay while the
invoices are remailed to the supplier (which may have an impact on the timing of
payments back to suppliers).
A variation on this approach is to arrange with an Internet-based bill present-
ment service to handle this function. For example, one can tell suppliers to send
their invoices to companies such as CyberBills or Paytrust, which scan the bills
into their computer systems and then send an e-mail to the company, notifying
the accounting department when a payment is due. The accounting staff can then
access the on-line databases of these bill presentment services and pay for all
bills electronically from one central location.
Cost: Installation time: