Generate Cost Savings from Supplier Invoices

Generate Cost Savings from
Supplier Invoices:
A Comprehensive
Technique to Improve
Your Purchase-to-Pay
Platform
Stéphane Haelterman
eBaia
© 2011 Wellesley Information Services. All rights reserved.

In This Session …
• 

• 

• 

The SAP Invoice Management application is more than simply
processing invoices and paying bills
s  It is the foundation into gaining real-time visibility into costs and
supplier performance
The SAP Invoice Management application by Open Text helps control
the invoice processing and helps A/P personnel simplify the
creation, management, monitoring, and routing of invoices
You will learn setup a business case and SAP Invoice Management
implementation best practice

1

What We’ll Cover …
• 
• 
• 
• 
• 
• 
• 
• 

Exploring invoice management – business case setup
Identifying SAP Invoice Management features
Examining OCR selection – What need to be considered
Understanding swimlanes shopping
Customizing tips for SAP Invoice Management
Leveraging project organization
Generating business intelligence from your invoices
Wrap-up

2

Today’s Situation
• 
• 
• 

• 

• 

70% of all invoices are received on paper and entered manually
15% to 30% of all invoices are incorrect and require manual follow-up
Many companies do not redesign their procurement processes and
are still receiving too many non-PO invoices
Little support for new business models: outsourcing and shared
service center
Invoice processing cost average: 12 EUR

3

Purchase To Pay Cycle

8
Invoice

Purch.

Payment processing
Payment processing

1

Purch. ord.

req.

Determination of requirements

? 20
10

7

6

30
Invoice verification

2

Procurement

Goods receipt
Purchase
order

3

Source determination

Vendor selection

10
20
30

5

PO monitoring

4

PO processing

4

Challenges of Manual Invoice Processing
Issue

Reason

Impact on Corporation

Compliance

Manual, paper-based processes and
inadequate accounts payable (AP)
process control

Limited reporting capability and negative
internal and external audit reviews

Excessive cost per invoice

Manual data entry, missed discounts,
late fees, excessive labor, duplicates
and errors, multiple follow-ups from
suppliers

Decreased earnings

Limited visibility of liabilities

Decentralized invoice receipts and
processing

Inaccurate balance sheet and working
capital

Difficulty in preparing accruals

Too much time required to capture and
record all purchases

Longer closing cycles

Inability to leverage early-payment
discounts

Random follow-up from AP personnel
and approvers, and no transparency of
workload

Suboptimal use of working capital

Poor vendor relations

Limited invoice status information, late
payments, and slow response to
inquiries

Higher prices, lower discounts, limited
negotiation, and lower credit rating

5

High Level Traditional Process Map … And Associated
Hurdles
Vendor

0101
0001

EDI
FAX

MAIL

MAIL

SCANNING

invoice

Mail Room

Accounting
Department

Purchasing
Approvers

reject

0101
1001
0011

FAX MAIL

contact via
phone, mail, fax

remittance
advice,
check
...

pay

Receive &
distribute
document
invoice
indexing

post and
release
invoice

park
invoice

reject

verify
invoice

approve

approve
invoice

•  Must distribute documents to all involved persons (when no scanning)
•  Many people in different departments are involved in processing a single invoice
•  No systematic process for handling exceptions
•  Documents are copied and stored several times in most organizations (when no scanning)

6

Common Goals for Accounts Payable
• 

• 

• 

• 

Decrease cost-per-invoice (save money)
s  Reduce cost per invoice and grow volumes without adding people
s  Consolidate into one central A/P processing center per country/BU
s  Capture more early-pay discounts and eliminate duplicate payments
Become more efficient and effective
s  Implement paperless processing (imaging) … when not already done.
s  Standardize and automate follow-up and invoice issue escalation
s  Move from doing busy work to analytical work and reduce errors
Increase visibility of liabilities
s  Invoices not yet posted must be visible for accruals
s  Provide metrics to review the entire A/P process
s  Utilize metrics for root-cause analysis
s  Provide information to support company and government control compliance
Improve the reputation of A/P (internal/external)
s  Pay problem invoices on-time
s  Streamline and automate communication with the organization
s  Push invoice resolution responsibility to appropriate individuals

7

Soft and Hard Benefits
AP Strategic Issue

Optimized / Automated


Excessive Cost-Per-Invoice

• Improve A/P

and buyers staff
productivity by eliminating low value
process steps (copying, e-mailing, fixing
exceptions, work associated with
duplicates, ..)
• Reduce drastically exception resolution
cycle time
• Optimized process solution ensures all
discounts are taken, payment
duplicates are eliminated.

• Increased

Limited Visibility of Liabilities

Status of digitized paper invoices and
electronic invoices are immediately
available from process metrics.

Provide early visibility to vendor issues

Number of Urgent payments

Invoices are processed accurately and
timely so that they are always paid when
appropriate (cash management
optimization)

Understand cash exposure for inprocess & problem invoices

earnings
• Enable significant staff redeployment
toward more added value tasks
(analysis for decision support,
answering customer inquiries, collecting
receivables , …)

8

Process Optimization
AP Strategic Issue

Optimized / Automated


Difficulty in Preparing Accruals

Centralized controlled invoice
processing assures that invoices not yet
posted are visible for accruals

• Accruals

Poor Vendor Relations

• Late

payments are eliminated. The
“where is my money” calls are handled
promptly.
• With the utilization of the Vendor Self
Service, they are eliminated.
• Better visibility on vendor performance.

• Improved

Compliance - Inadequate Accounts
Payable Process Control

Implement system-driven process based
on pre-configured business rules
(sytematic and standardized process)

Complete audit trail available

No visibility on P2P performance

Established KPI’s & extensive reporting
available on the process

Drives accountability & enables
continuous improvement .

are determined effortless
through liability reporting
• Enabling shorter closing cycles
vendor relations.
• Procurement can negotiate improved
pricing and payment terms.
• Credit ratings improved through on time
payment.

Bottom line: Standardize and improve the business
process on basis of best practices
9

Build a High-Level Business Case
• 
• 

• 

High level valuation of Soft and Hard Benefits
Identify Major project Costs
Provide
Template for
s  SAP licenses
data collection
s  OCR licenses
s  External Services
Analyze data
„  Project and Change Management
§  SAP IM by OpenText implementation
§  Alert & Cockpit Reporting
Prepare
s  Infrastructure :
Business Case
„  Server for OCR
„  Content Server for scanned invoices
„  Scanners
Present
Business Case
„  Second screen for A/P processor
s  Internal Man-power
„  Business (Key users)
Propose Next
„  IT (Corporate + BU)
Steps
Calculate ROI and Pay-back period

Collect Data

Approve ?
Yes

No
End

10

Value Stream Map Summary (Example)

ROI_Invoices.xls is available at the following location:
http://www.ebaia.com/ROI_Invoices.xls
11

Payback (Example)
• 

What’s the value of Hard and Soft Benefits?
s 
No more vendor discounts lost or duplicate payment (if any!)
s 
Better relations with vendors (…leading to better negotiations, prices, credit ratings, ???)
s 
If no headcount reduction, redeployment of staff toward more added valued task (better payable follow-up, better
analysis for supporting decision making process such as Capex process or High Level Business Case
preparation)
Valuation of Productivity gains, with and without restructuring costs for activities from Booking Invoices (F33) to Filling Paper (F38)

ROI_Invoices.xls is available at the following location:
12

Key Success Factors
• 
• 

• 

Management support: Not just words but actual commitment and actions
Proactive Change Management for addressing impact on organizational and individual
behavior
s  Redeployment of staff toward more added value activities
s  Staff reduction
s  Inventory Procure-to-pay process change review…as systematic structure is applied
to processes which have been unstructured and less controlled previously
s  Standardization of the approval and exception processes prior to implementing SAP
IM
s  Project/blueprint sign off/approval required of each stakeholder
Active participation requested from all stakeholders
s  Plant Materials Management
s  Plant Controllers
s  Key Non-Inventory Requisitioners
s  Shared Services Purchasing
s  Shared Services Accounts Payable
s  Regional IT

13

Key Success Factors (cont.)
• 

• 

• 

Define specific expectations and target productivity for A/P staff
s  Number of days to process an invoice from receipt
s  Average days an invoice is parked for resolution
s  Invoices/FTE
s  Monthly Reporting and insight at plant/location level about processing and vendor
issues
s  % of overdue invoices
Vendor communication
s  Effective and repeated communication
s  Define specific guidelines and procedures the vendors must follow
Wise Project tactics
s  Force the use of Purchase Orders!
s  Select a world class OCR technology
s  Dual Monitors provided to A/P Processors improve indexing speed & accuracy…and
user acceptance
s  Prior clean-up the vendor data. Remove non-active and duplicate vendors.
s  Conduct extensive user testing
14

Key Success Factors (cont.)
• 

Pilot : BU/plant location
s  Plant to provide high volume activity
s  Small plant included to provide feedback on more exception oriented processing
s  Centralized and decentralized plant purchasing organizations
s  Seasoned SAP users
s  Ease of training and communication
s  Local project champion identified for implementation

• 

Stagger projects by BU/Plants
s  Improve probability of success
s  Train low cost configuration/support resources as soon as possible
s  Support after go-live

• 

After go-live
s  Conduct metrics review meetings,
s  Conduct refresher training,
s  And periodically restate expectations to keep the process health

15

Implementation Approach
• 

• 

• 

• 

• 
• 
• 

Project Preparation
s  Planning
s  Communication
s  Kick-Off
Blueprint
s  AS-IS workshops
s  TO-BE workshops (swimlanes)
s  Sign-Off
Realization
s  Customizing
s  Developments
s  Unit Testing
s  Vendor communication
Delivery
s  Acceptance
s  Physical Organisation
s  Vendor communication
Final Preparation & Go-live
Validation of Pilot
Roll-outs

16

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

17

SAP Invoice Management – Features
• 

• 
• 

7 workflows
s  Document Process Workflow (from receiving the scanned invoice info until the
invoice is parked/posted or the document is marked as obsolete or duplicates)
s  Parked PO invoice workflow (from the time a PO invoice is parked until the invoice is
posted or deleted)
s  Non-PO parked invoice workflow (from the time a non-PO invoice is parked until the
invoice is posted or deleted)
s  Web approval of parked invoice (from the time an invoice is sent for web approval
action until approval is completed or invoice is fully rejected)
s  Blocked PO invoice workflow (from the time a PO invoice is blocked for payment until
it is released or cancelled)
s  Blocked PO invoice header level action workflow (from the time that a blocked
invoice is authorized for header level action until the action is completed or when AP
sends back)
s  Vendor Self Service
29 variants templates
Country Specific
18

SAP Invoice Management – Features (cont.)
• 
• 

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Installation Check
Document Processing
s  Document Types
s  Process Types / Determination Sequence
s  Business Tules
Duplicate Check
OCR Mapping to Index
Index Mapping to Invoice
Pre and post dashboard processing
PO Based Invoice
PO Parking process
Parking Reason
Pre-processing
Non PO processing
Multi-level Invoice Approval
Rejection Reasons
Role Template maintenance
Role / User management – template based
Chart of Authority maintenance

19

SAP Invoice Management – Features (cont.)
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

• 
• 
• 
• 

Index Screen configuration
Invoice Processing Plugins using BADI’s and function modules
Enhancements
User process options configuration
User Substitutes Management utility
Workflow status, DP Document & Dashboard accessible from MIR4 and FB03
Reassignment of approval invoice items
Release of invoice DB lock for approval
Mail notifications
Authorizations
Web-based Approvals (webflow) configuration
Rollout criteria
s  Allowed Plants
s  Allowed Document Types
Detailed invoices analytics
Test Utility
Universal Worklist Integration
End of month and year closing tools
20

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

21

OCR Selection – What Needs to be Considered
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Full-Text recognition
Handwriting recognition
Learning capabilities
Line item recognition
Customizing of business rules
Legal details recognition
Vendor multiple VAT recognition
Use of a 1-time vendor
Duplicates check
Structured communication recognition
Vendor bank accounts recognition
Integration via IDoc, RFC, PI or EMBEDDED
Allows multiple clients
Good support and maintenance
Pricing per invoice instead of per page

OCR can be outsourced!!!
SAP Crossgate
Unified Post
Certipost …

22

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

(MS Visio) Swimlanes is available at the following location:
http://www.ebaia.com/swimlanes_vsd.zip
23

Invalid Data Format/Invalid Invoice Format

25

Suspected Duplicate Invoice

26

Currency Mismatch/UOM Mismatch/Freight on Invoice

28

PO Is Not Released or Incomplete/Unable to Match PO Lines

29

Vendor Maintenance Required/Vendor mismatch

30

Unable to Auto-Post the Invoice

32

Blocked for Payment Due to Price Difference

33

Blocked for Payment Due to Price Difference (cont.)

34

Blocked for Payment Due to Price Difference (cont.)

35

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

Source code available at the following location:
http://www.ebaia.com/source_code.zip
38

Roles
• 

• 

• 

The first step in creating a role is to define a role
s  Roles in SAP IM are based on product codes that are defined in
SAP IM
s  The following product codes are available in SAP IM:
„  005: Document processing (DP) base product code
„  LIX: LIV based product codes (both for PO-parking and POblocking workflows)
„  PIR: Product codes for NON-PO parking workflows
Every assignment is based on the product code/role combination
s  For example, to create a role called buyer in a PO parking process,
create role buyer with product code LIX
To maintain a role execute transaction /OPT/CP_9CX5
39

Roles (cont.)
• 

• 

• 

You should limit the number of roles based on the swimlanes best
practice to avoid too many steps delaying the payment
As the approval occurred at the purchase and if invoice match the
purchase order, no more than the accountant should be involved
The major roles are:
s  Indexer
s  Accountant
s  Purchaser
s  Receiver
s  Vendor Maintenance
s  Tax Expert

40

Roles (cont.)
• 

To maintain a role execute transaction /OPT/CP_9CX5

41

Roles (cont.)
• 

• 

Every VIM role is based on a role template. Templates determine the
options that control how a role is resolved finally by the workflow
runtime system
The following types of templates are available:
s  Key determination (Static)
s  Function module role
s  SAP HR org structure (Semi Dynamic)

42

Roles (cont.)
• 

To maintain a role template, execute transaction /opt/cp_9cx2

Use custom roles
only using a
function module as
template type (copy
from existing
examples)

43

DP Document Types
• 

• 

Should be limited to 2 document types by country/BU
s  MM Invoices
s  FI Invoices
s  Down payments
Execute transaction /OPT/VIM_1CX1

Use custom DP
document types
only (copy from
existing examples)

44

DP Document Types (cont.)
• 

DP document type process steps sequence

Custom step
types always
start with 9##

45

PO Line Determination
• 
• 

• 

Execute transaction /n/OPT/SPRO
Follow:
s  LiveLink VIM Configuration Document Processing  External
System Data (OCR/IDOC)  Maintain PO Line Determination
Procedures
Check Function: Optionally, use a custom function module here to
determine the PO line number

46

Duplicate Check
• 


Grp

step

Fieldname

Description field

1

1

BLDAT

Document Date in Document

1

1

LIFNR

Vendor number

1

1

GROSS_AMOUNT

Gross amount

1

1

XBLNR

Reference Document Number

2

1

BLDAT

Document Date in Document

2

1

LIFNR

Vendor number

2

1

GROSS_AMOUNT

Gross amount

2

1

XBLNR

Reference Document Number

47

Process Options
• 

Execute transaction
/OPT/VIM_8CX2

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

BDC Action
•  A BDC ID is executed if the user chooses this option.
Referral
•  User can refer the work item to a target role for further processing.
Class Method
•  At this point, this is not supported.
Call Transaction
•  The system calls the transaction that is defined in the Transaction Code
field.
Workflow Task
•  The system calls a (sub) workflow or task before continuing the process.
Select Workflow Task to define any custom post processing steps for a
given option.
Auto Action Required
•  Select this check box to let the system try to post the document (create
SAP document) in background. The transaction that is called for posting
depends on the process type configuration.
Recheck Proc Type
•  Select this check box to let the system try to run the business rules as
defined.
Confirm Check Rules
•  Select this check box to let the system try to get a confirmation from the
user to rerun the business rules.
Confirm Execute
•  Select this check box to let the system get a confirmation from the user to
execute the option.
Confirm Completion
•  Select this check box to let the system get a confirmation from the user
that
Document Status
s  Select the status set for the document if the option is executed
successfully

48

Process Types
• 
• 

Execute the /OPT/VIM_8CX1 transaction
Apply the selected swimlanes

49

Mapping External Data to SAP IM
• 


50

PO Blocking Process Configuration
• 

• 

• 

SAP Invoice Management provides functionality for managing
blocked PO-invoices (based on MIRO transaction) and exceptions
therein. Invoices are blocked if they show discrepancies, for example
a price discrepancy, that prevent the invoice from posting.
The main processing concept involved in managing blocked PO
invoices is the concept of “blocking reasons”. Blocking reasons
define the overall processing of the invoice as required by the
process swimlane. Unlike parking reasons, blocking reasons are
fixed by SAP. The most important reasons are price block and
quantity.
However, the use of MRBR “Release Blocked Invoices” is more
efficient as it involves the Buyer only.

51

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

52

Which Invoice Fields Need to Be Recognized?
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Country/BU VAT number
Document type validation based on keywords (invoice, credit note, …)
Vendor based on VAT number
Vendor invoice number
Blocking of documents with keywords like (pro forma, duplicata, …)
Invoice reference (and date) in case of credit note
Valid purchase order number
Currency validation
Gross amount exclusive VAT
VAT amount
Gross amount inclusive VAT
Negative sign for credit note detection
Co-contractor detection

53

Which Invoice Fields Need to Be Recognized? (cont.)
• 

Detail lines extraction
s  Item number
s  Associated PO item number and PO number
s  Vendor material number
s  Your material number
s  Item description
s  Quantity
s  Unit of measure
s  Unit price
s  Amount

• 

Electronic invoice (separate process)

54

Physical Organization and Furnishings
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Where to open mail
Where to receive invoices
Where to sort invoices
Where to scan invoices
Where to execute OCR validation
Where to store paper invoices (if legally required)
Barcode printer?
Quality barcode type needed
Scanner choice
PC with 2 screens or a large screen

55

Communication
• 

• 

Recurrent Letter to all vendors:
s  Where to send invoices
s  Your company VAT number
s  Vendor VAT number
s  Vendor invoice/credit memo number
s  Invoice reference number when credit memo
s  PO number if no invoice lines
s  PO number and item on every invoice line
s  Specific business rules
Internal procedures

56

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

57

Cockpit – Workload by Employee

59

Cockpit – Exceptions Overview

60

Cockpit – Handler/Document View

61

Dashboard – Processing Cost by Invoice

62

Dashboard – Evolution of Invoices Handled

63

Dashboard – Monthly Handling Efficiency

64

Executive Dashboard (future reporting options)

65

Key Process Analytics Dashboard (future reporting options)

66

Key Process Analytics Dashboard (future reporting options)

67

• 
• 
• 
• 
• 
• 
• 
• 

Wrap-up

68

5 Key Points to Take Home
• 

• 
• 

• 

• 

Make use of the business case included resuming 10 years of
successful invoice management implementations
Focus on the key success factors
Speed up the SAP Invoice Management implementation thanks to the
customizing tips
Limit the number of actors and actions by applying the SAP Invoice
Management swimlanes best practice in order to keep a good SLA
Build relevant and useful analytics to help you reduce the invoice
processing cost

69

Resources
• 

SAP Invoice Management by OpenText
s 
Whitepapers and brochures
„ 
„ 

s 

Swimlanes (MS Visio)
„ 

s 

http://www.ebaia.com/source_code.zip

Invoice Management – recommended readings
s 
The Invoice Reconciliation and Payment Benchmark Report
„ 

s 

s 

http://findarticles.com/p/articles/mi_pwwi/is_200701/ai_n17125651/

Accounts Payable: Strategies for Success – Outsoursing, Automating and Streamlining
„ 

s 

http://www.apexanalytix.com/Downloads/Goods_and_Services/BVR_APPAR_JP_041105.pdf

New Accounts Payable Research Shows How Outsourcing and Automation Are Key Enablers to Success
„ 

s 

http://www.anybill.com/system/files/Aberdeen%20IR%2526P%20Benchmark%20Report-jun06.pdf

The Strategic Response of Payables and Post Audit Recovery to Corporate Challenges
„ 

http://www.slideshare.net/nsprau/raapstrategiesforsuccessabvc3714

Accounts Payable Invoice Automation
„ 

• 

http://www.ebaia.com/swimlanes_vsd.zip

Additional developments
„ 

• 

http://www.sap.com/solutions/solutionextensions/invoice-management/index.epx
http://www.opentext.com/2/global/products/products-accounts-payable/products-opentext-vendor-invoice-management-forsap-ap.htm

http://www.businessstrategy.com/LinkClick.aspx?fileticket=Q_SHtKoA800%3D&tabid=68

Tool for setting up your Business Case
s 

70

Your Turn!

How to contact me:
Stéphane Haelterman
shae@ebaia.com
71

Disclaimer
SAP, R/3, mySAP, mySAP.com, SAP NetWeaver®, Duet®, PartnerEdge, and other SAP products and services mentioned herein as well as their
respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product
and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by
SAP.

72

Generate Cost Savings from Supplier Invoices

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Destacado

Destacado (20)

Similar a Generate Cost Savings from Supplier Invoices

Similar a Generate Cost Savings from Supplier Invoices (20)

Último

Último (20)

Generate Cost Savings from Supplier Invoices