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Invoice Choice

February 1, 2007
by Melissa Gentile
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Children's Memorial Hospital finds the right antidote to speed up account payables.

Melissa gentile

Like healthcare organizations across the country, Children's Memorial Hospital of Chicago has worked hard to reduce costs and streamline operations, while maintaining quality standards in an increasingly competitive industry. Ranked one of the nation's top children's hospitals by U.S. News & World Report, it is known for its organizational excellence and delivering cutting edge healthcare services. Technology has been key.

While much of the technology attention centers around equipment, software and systems that directly impact patient care; the automation of back-end functions such as accounts payable (AP), can play a major role in helping hospitals improve their bottom-line through costs savings and greater efficiencies that ultimately enable them to better focus on what they do best — treat patients.

In 2004, the situation in our Accounts Payable department was far from excellent. Although we had implemented a state-of-the-art AP software system, we still relied on manual invoice processing, which continued to cause a bottleneck in workflow and was negatively impacting vendor relationships.

For two years, my team of AP clerks and I struggled to gain control of a perpetual six-month backlog of invoices, and despite having a new software system in place, manual data entry of invoices was a complex and time-consuming process. To make matters worse, invoices would often get lost in the routing process through intra-office mail. Once invoices were approved, it could take an average of six months for them to be filed, making short-term invoice retrieval very time-consuming, and dispute resolution next to impossible.

We knew that to save time and improve the process it was essential to eliminate the manual processing of invoices as well as the excessive handling of paper invoices. Perhaps most importantly, it was critical that we reduce disputes, corrections and payment adjustments, and streamline the overall workflow of the office.

We turned to a best-of-breed invoice processing software solution from Finland-based BasWare to meet these requirements and integrate with our existing AP system. The company's Invoice Processing (IP) software enabled us to receive ROI within three months. In our UNIX operating system environment, the new software was able to interface to our Redwood Shore, Calif.-based Oracle back-end and our St. Paul, Minn.-based Lawson enterprise resource planning (ERP) system, enabling us to maximize our existing technology investment and obtain and send data directly to our ERP.

Through our selection process, we were looking for a system that offered optical character recognition scanning, invoice-purchase order and recurring invoice matching and business rule-based electronic workflow. Additionally, we needed basic data and cost-posting functionality to enable us to accurately allocate costs to correct accounts and cost centers using our ERP AP system's listings. We also knew we needed back office integration, analysis and reporting capabilities, and electronic archiving.

Since costs for IP systems with this functionality can start at $100,000 and vary depending on different needs, we realized that ROI was a critical selection criterion.

We selected BasWare IP because, in addition to its ROI, it offered fast implementation. (We were up and running in a two-to-three-month timeframe) as well as the maturity of the packaged solution. The fact that it integrated with our back-end system clinched our decision.

We saw immediate results from our new automated invoice processing solution. We were able to automatically scan in all new invoices as well as allocate our now freed-up time to focus on dispute resolutions and address the backlog of unfiled invoices.

Since implementation, we have recognized cost savings through reduced error-handling, quicker turnaround on payments and decreased invoice disputes. Using the invoice processing technology, we are able to elevate the AP department to a more strategic level.

Since achieving our immediate goal of eliminating the manual entry of invoices, we have begun to leverage the reporting and archiving functions that BasWare offers. We are able to better track our invoice history through document archiving, automatically capture and manage time and expense reports and address online check requests.

Eliminating the possibilities of error with manual entry as well as decreasing the time involved in handling those tasks has enabled us to reduce costs while eliminating the bottleneck associated with invoice capture, approval and processing. Children's Memorial Hospital of Chicago recognizes that the effective operation of accounts payables plays a role in helping our organization grow so we can continue to offer the highest standards in patient care.

Author Information:

Melissa Gentile is director of finance at Children's Memorial Hospital, Chicago.