Going paperless isn't a new concept for the mortgage industry. The promise of the e-mortgage has many lenders jumping on the imaging bandwagon. However, many lenders may not have considered the benefits of taking the entire organization paperless.
According to recent estimates by TowerGroup, lenders can save almost $200 per loan through the use of integrated document management technology. If that's the case on the front end, imagine what kinds of savings could be had by leveraging this same technology in the back office.
For years, financial institutions have employed tools that addressed its front-line and back-office issues independently. As operational concerns increase and lenders are forced to do more with less, technologies like enterprise content management (ECM) and integrated document management can be implemented enterprise-wide to increase employee and operational efficiency, while reducing internal costs, simplifying compliance efforts and enhancing the bottom line. Not bad for a single solution, wouldn't you agree?
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Accounting concerns
Accounting, like other departments within an organization, must tightly adhere to many government regulations. The automation of accounting processes through ECM allows companies to ensure procedures and approvals are followed according to government regulations by using automatic rules-based routing and processing. In addition, companies can create an audit trail to provide evidence to regulators that all procedures and processes were followed to the letter of the law.
Through automation, organizations can significantly streamline and simplify their accounts-payable processes. By converting paper documents into digital content at the point of arrival, the entire life cycle of the document is managed in the document management system.
As a result, organizations have the ability to set up automated processing for purchase orders, invoices and exceptions. This significantly decreases turnaround time and allows institutions to take advantage of early payment discounts and eliminate late-payment penalties.
Human error in accounting can be a significant challenge to an organization. An errant keystroke can cost an organization severely, both in profits and time. An ECM system can prevent many of these errors by creating an efficient data-entry process for accounts payable fueled by automating data capture and document indexing. This ensures information is entered into the payables system accurately and the corresponding documentation is stored using standardized indexing methodologies so documents can be searched for and retrieved with relative ease.
Not only will accounts payable benefit from the ECM system, but many tasks within accounts receivable will be directly impacted by the technology as well. Collections represents the cornerstone of accounts-receivable activities, and the ability to quickly and efficiently recoup debt is vital to an organization.
Through integrated document management, organizations can automatically route documents and send e-mail notifications and reminders to speed up the process. The ability to electronically monitor a document's travel through an organization provides valuable insight into process timing and helps to identify possible bottlenecks that can impede the speedy reconciliation of external debts.
Another benefit to accounts receivable is the ability to enhance revenue recognition by sending bills with supporting documents in a variety of formats, such as physical mail, CD, e-mail, fax or the Web, more quickly. The ability to easily incorporate supporting documentation into outgoing bills means the accuracy of those bills is less likely to be subject to controversy, resulting in fewer customer disputes and faster resolution.
However, should a dispute arise, customer service representatives are able to resolve the dispute quickly and easily because they have access to all relevant documentation through the ECM system.Â
In addition, employees can access that documentation directly through their core system. With documents at hand, they can resolve disputes while on the phone, reducing callbacks. If the dispute should escalate, the ECM system allows for collaboration with individuals inside and outside the organization to ensure efficient and exemplary customer service.
The benefits of ECM are not solely relegated to accounts payable and receivable activities. The accounting department as a whole can experience innumerable benefits of imaging and automation.
According to Paystream Advisors, the emphasis on corporate cost containment and productivity enhancement in recent years has prompted accounting departments to seek new and innovative solutions to automate traditionally paper-based, labor-intensive processes. The inadequacies of previous processes have been exposed by the requirements set by Sarbanes-Oxley (SOX), which highlighted the many compliance risks inherent to manual, paper-based processes.
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The HR function
As ECM is used to streamline operations in accounting, human resource (HR) departments can also benefit greatly from the same technology system. HR serves as the lifeline of an organization, and it is, by nature, one of the most document-heavy departments of any organization. By utilizing ECM, HR can reduce costs by decreasing or eliminating paper documents and storage requirements in the department. With this system, HR has convenient access to a centralized repository of employment that ensures consistent management and retention policies are adhered to.
Employee productivity is one of the most common benefits of using an ECM system, and HR is not exempt from this. Much of this department's time is spent manually performing administrative tasks such as performance evaluations, compensation plan changes and time-off requests, or more routine functions, like changing name and address data, entering vacation dates and filing and retrieving employee records. By streamlining and automating these processes, HR employees are able to be more efficient and spend time on more critical tasks, like recruitment.
Recruitment and employee retention is one of the more essential jobs of the HR department. These efforts could make or break an organization. To remain competitive, HR departments must incorporate automation into their recruitment and retention activities.
In recent years, the main sources of job applications have been through corporate sites, online career sites like Monster.com and CareerBuilder.com or simply via e-mail. An ECM system gives HR workers the ability to ingest online job applications and create an electronic database of applications and resumes that can be indexed based on skill sets or experience in a certain area.
This provides HR departments with a powerful advantage in quickly finding the right person for the right job. In addition, this ability minimizes the costly transition time between employee turnover by allowing executives to make the best hiring choice as timely as possible.
The most basic function of a HR department is to maintain files on employees throughout their relationship with an organization. ECM systems can be used to capture and store employee records, as well as documents associated with credentialing, recruitment, testing, relocation, continuing education, benefits administration and compliance.
All of the documents for an employee can also be placed in a single electronic folder with limited access. Upon separation, the folder can become unalterable and initiate the retention period required by law.
Leveraging ECM in HR also empowers employees to look up documents such as benefits plans, personal work hour records or the status of requests without involving human resources employees each time, freeing HR to focus on tasks at hand. HR can also issue policy changes or other essential communications through an automated tracking and acknowledgement process that ensure all employees have reviewed and acknowledged the document, thereby enhancing HR's compliance efforts. The system also provides security features to protect employee information and comply with government regulations regarding privacy.
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Governance, risk and compliance
Compliance isn't an option for most institutions, and the cost to remain complaint can often be staggering. ECM allows institutions to enjoy significant cost savings through the reduction in paper usage alone. However, the ability of an ECM system to be integrated throughout an organization provides cost savings of its own.
Most specifically, the use of one system to monitor and manage compliance eliminates the expense and complexity of maintaining multiple point solutions. Being an enterprise-wide solution also ensures consistent compliance throughout the organization by extending policies, procedures and best practices across multiple business units.
An ECM system also allows compliance officers to monitor and manage all governance, risk and compliance-related content and records, including documents, physical assets and human interaction, through a centralized administrative interface. In addition, the flexibility and user-controlled nature of an ECM system allows institutions to respond quickly to evolving standards, laws and regulations, which not only saves money but time.
Automation of routine workflows for specific processes and the establishment of business rules based on specific processes not only ensures compliance, but also increases efficiency and accuracy in auditing, control and discovery, as well as day-to-day tasks.
The automation of retention schedules and document distribution, as well as the creation of audit trails, ensures that organizations can provide concrete evidence during internal and external audits that all processes were followed precisely and in a timely manner. For the mortgage industry, this means lenders can demonstrate with relative ease compliance with the Graham-Leach-Bliley Act and SOX guidelines, among others.
Jason King is director of financial services for Hyland Software Inc. He can be reached at (440) 788-5000.
