Investigate The Digital Mailroom Investment

In the stock market, successful investments are made through informed, careful consideration. A smart investor wouldn't jump on a hot stock tip and invest hundreds of thousands of dollars in a company with an unknown performance. When investing large amounts of money, you obviously want to make sure there will be a proven return. The same philosophy applies when you consider IT purchases for your company: a hot topic, an innovative function, or advanced technologies can't alone justify spending significant amounts of money. You want to know more about the topic, see proven results, and hear other organizations' testimonials. IT purchases are investments - and you want to make sure those investments will be profitable.

The concept of a digital mailroom is much like a hot stock tip: it seems great in theory, results can be predicted, and efficiencies seem apparent, but the technology is still in its infancy. It requires such an investment of funds, both up front as well as for ongoing maintenance, that adoption of the solution has been limited. But advancements in forms recognition software and high volume scanning efficiencies are combining to move the digital mailroom down the line from a high-flyer to a blue chip.

Understand The Challenges Of Digitizing Your Mail
A digital mailroom is a combination of integrated hardware and software where incoming mail is scanned, the data is captured, and the resulting electronic documents are appropriately routed. The digital mailroom is not feasible for every company. Typically, Fortune 500, business-to-consumer (B2C), and mail order companies could consider the digital mailroom as a justifiable investment, as well could entities in the government, healthcare, financial, and insurance verticals. Organizations in these categories may process tens of thousands of pieces of mail a day, either in a central mailroom, divisional mail drops, regional offices across a country, or some combination of all three. Employees open, sort, and distribute mail that includes myriad pieces of correspondence: checks, invoices, forms, handwritten notes, photographs, large or small documents, to name a few.

Even if your mailroom has imaging capabilities, as in remittance processing or wholesale lockbox environments, the nonstandard mail pieces - known as exception mail - until recently required costly manual handling. In fact, in these imaging environments, the cost of processing nonstandard mail can account for more than 50% of the mailroom budget. "The manual process of handling exception mail involves separating the nonstandard piece, and copying or manually keying in the information," says Peter Kaps, president of Kleindienst Datentechnik (Houston). "In the end, a processing operator has to manually reassociate the check with the transaction and other supporting documentation."

Forms Recognition A Vital Step In The Digital Mailroom
These imaging challenges don't seem to make much of a case for a digital mailroom, do they? A year ago or several months ago, no. But technology is always evolving, and vendors are developing upgrades to hardware and software that can address these headaches. The most significant of these is capture software with forms recognition capabilities, which essentially eliminates exception mail. "Customers need devices and software specifically built for exception processing," says Craig Reeves, VP of worldwide product marketing for Imaging Business Machines, LLC (IBML) (Birmingham, AL).

"Forms recognition is really the last frontier in exception mail processing," says Reeves. "You can't effectively use OCR [optical character recognition] until you know what you're dealing with. A forms recognition software layer can do that."

Because the capture software can be programmed to recognize exception mail, manual sorting isn't necessary. Documents from one envelope (say, an invoice, a check, and a handwritten note) can be fed into the scanner at the same time, and each piece will be recognized and recombined at the back end. "A form and a check can be processed with the same scanner and put back together in the same image file," says Dick Goyette, VP of sales and marketing at Scan-Optics, Inc. (Manchester, CT). "The one-pass processing, rather than two- or three-pass, significantly reduces mail processing time for an organization."

The forms recognition can reduce the need for manual data entry labor, too. "When scanning, once you have the image, you still need people to perform the correction and verification part of the process," says Kaps. "Manual data entry is a nightmare to a lot of huge organizations. The improved recognition software can save some manual work. If you can eliminate 130 out of 160 manual entry positions, that is a lot of savings."

Improvements in high-volume scanners add efficiencies to exception mail processing, too. Better feeding mechanisms and double-feed detectors can process mail faster (holding up to 500 pages in the feeder, and processing approximately 300 pages per minute). Also, envelope opening and extraction capabilities can be added at the front end, eliminating the need for people to open envelopes and set up the documents to be scanned. Think about it. The scanner and capture software may be able to image 200 pages per minute, but someone has to remove those pages from their envelopes and stack them into the scanner. "With mail extraction capabilities, you can usually double or triple your throughput into the scanner, which is about a 60% labor savings in the overall process," says Scott Maurer, VP of marketing and international operations at OPEX Corporation (Moorestown, NJ).

A digital mailroom also gives you a means to rethink how mail is collected and distributed in your organization. Not only is the mail process automated in your corporate mailroom, but your entire organization's mail can be sent to one hub location and distributed electronically. This can include regional, temporary, and/or subsidiary offices, which will nearly eliminate paper floating throughout the organization, and will increase productivity and communication.

Check 21 - Another Reason To Invest In A Digital Mailroom
Check 21 (The Check Clearing for the 21st Century Act), which became effective in October of this year, allows an electronic version of a check to be considered the legal equivalent of the original check. An image replacement document (IRD) is created by scanning a check, and the IRD is processed just as a check would be.

What does this mean for large organizations that receive thousands of checks? It gives them a shorter float time to clear checks: down from the current three to four days to less than one day. "A lower float time could significantly affect cash flow for businesses like wholesale lockboxes," says Maurer. "You're talking about millions of dollars in checks."

Organizations can also see savings in the cost of shipping the checks to banks or payment processors. "The 'last mile' in the postal trip, the breaking of mail into smaller units, and then bringing the mail to its destination, is where the biggest cost comes in for check processing," says Reeves.

Check 21 will not, however, necessitate new technologies beyond those that are already included in a digital mailroom. "While Check 21 may mandate that everyone involved in a check's journey accept IRDs, image exchange with 'paper-to-follow' notations have been negotiated for years," says Maurer. "Check 21 is not necessarily a new practice, it just forces everyone to play along."