wh ite pape r

automated invoice processing into Sap

this whitepaper describes benefits and best practices when automating input from invoices into Sap author: thomas Carlsson, readSoft aB Copyright 2009 readSoft - www.readsoft.com Sap is a registered trademark of Sap aG in Germany and several other countries

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table of contents
1 Introduction 3

2
2.1 2.2 2.3

The problems
the company is losing money the company is wasting time the companys ap department is inefficient

4
4 4 4

3
3.1 3.2 3.3 3.4 3.5

The solution
iNVOiCeS prOCeSS DireCtOr accounts payable wOrK CYCLe adding on more functionality ensuring a smooth it-project

5
5 6 7 8 9

4
4.1 4.2

Return on investment
what do i need to invest? what benefits can you expect?

10
10 10

5
5.1 5.2 5.3 5.4 5.5

User testimonials
porsche thyssenKrupp Sidel BaSF Siemens

12
12 12 12 12 12

About ReadSoft

13

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introduction

how much does an invoice cost you?

There is a reason why SAP is one of the most widely used business systems in the world. When it comes to handling logistics, financial flows and other business critical information, there are simply very few systems that measure up to SAP. But however efficient your SAP system may be, one bottleneck still remains - getting your invoices into the system. This procedure is often painstakingly manual, involving an excessive number of staff who key in information by hand. But this tedious and time-consuming way of working can be rationalized using a technology called Document Automation. This means that information from invoices is automatically extracted, no matter if the invoices are on paper or in electronic format. The extracted information is then verified against an SAP system, creating a highly automated document flow. Document Automation speeds up accounts payable processes, allowing for faster financial statements and fewer late payment fees. And this is no small matter. According to a survey by the Institute of Management Administration (IOMA), 25 percent of all invoices are paid late, often incurring penalty fees or at the very least eliminating a companys chance of receiving early-payment discounts. In other words, Document Automation can add to a companys bottom line from day one. But although savings in time and money are important, user testimonials usually reveal that the most appreciated effects are better business processes and increased control. This whitepaper explains how to automate the AP process within SAP, and what type of investments and benefits can be expected.

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the problems

Processing invoices manually is expensive and time consuming, even when invoices are correct. But when invoices have discrepancies, thats when the real bottlenecks occur. According to the previously mentioned survey by IOMA, 44 to 55 percent of all AP invoices have discrepancies. Considering that two-thirds of all companies receive more than 10,000 invoices per year, that is a lot of discrepancies. And it is these invoices that take up most of the AP departments time. Researching duplicate invoices, validating FI-invoices, etc., are usually manual-intensive processes. When using manual processes, many organizations report the following problems:

2.1

the company is losing money

The cost of processing each invoice is too high. It commonly costs between $15 to $50 to process an invoice manually. Recurring late payment penalties. Early payment discounts are missed.

2.2

the company is wasting time

Staff spend a lot of time chasing information. Bottlenecks occur whenever people are out of the office.

2.3

the companys ap department is inefficient

Problem invoices take too much time Spending time on problem invoices means less time to address the root of the problem Paper-pushing is frustrating and time-consuming Problems arise when invoices arrive in different formats (paper, email, XML, fax, etc.)

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the solution

ReadSoft has worked with invoice automation since the mid 1990ies and can be said to be the pioneer in the field. ReadSofts business solution for invoices follows the invoice through its entire lifecycle, from capture to post. The solution includes both software and services such as customization and support. The solution consists of three main components: The INVOICES software which automatically captures information from invoices. PROCESS DIRECTOR Accounts Payable which receives the captured information and acts as a control center for the incoming invoices. WORK CYCLE which is a workflow tool for invoice approval and coding.

3.1

iNVOiCeS

ReadSofts INVOICES extracts information from incoming invoices, regardless of their source. Paper invoices are placed in a scanner and are converted to electronic images from which informaton can be extracted. Electronic invoices (PDF, XML, web, fax, etc.) are even easier to interpret. The captured information is sent to PROCESS DIRECTOR Accounts Payable, located inside the SAP system.

INVOICES has extracted information and line items from an invoice. This information is now ready to be matched and validated against a purchase order in SAP.

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3.2

prOCeSS DireCtOr accounts payable

PROCESS DIRECTOR Accounts Payable connects INVOICES with SAP. The software can be said to be the control center for incoming invoices within SAP. Everything is handled inside SAP and has the familiar SAP look and feel. How it works As mentioned previously, paper invoices are scanned, electronic invoices are received, and INVOICES automatically captures the correct information from them all. From PROCESS DIRECTOR Accounts Payable, the AP clerk can access all data relevant to invoice processing and execute or initiate all processing steps. Invoices which are in accordance with a purchase order are posted or parked automatically. As a certified SAP add-on, PROCESS DIRECTOR Accounts Payable does not require any modifications to fit the SAP standard. While designing PROCESS DIRECTOR Accounts Payable, the focus has been on allowing the user to process documents within the familiar SAP environment. Another aim pursued while developing the solution was to provide users with a single point of entry from which they can access all required data and information. In addition to displaying the scanned data, the system also allows the user to jump to the vendor master data and purchase order data. It is possible to view the original invoice data and a history of all actions.

By eliminating physical handling of paper (typing of ap data, copying, in-house mail etc), most users see a productivity increase of 25% to 50%.

PROCESS DIRECTOR Accounts Payable is the control center for all your incoming invoices. Here you can see all your invoices and their statuses.

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3.3

wOrK CYCLe

WORK CYCLE is a workflow solution for automation and optimization of the entire invoices process. Invoice data and invoice images are sent in electronic format for query resolution and approval. All relevant departments can be incorporated into the workflow, including the purchasing department and the goods receipt department. How it works SAP users access the workflow via the SAP interface. Each work item provides all document-related information as presented in PROCESS DIRECTOR Accounts Payable, including PO and vendor data. Users without access to the SAP interface access the workflow via a secure web application. Naturally, this application also displays document images and data, as well as any comments entered by users during the workflow. An email alert with a link to the workflow document is available for all users. Workflow participants can add to, comment on, and approve the invoices sent to them. The idea of a Single Point of Entry has been consistently thought through and implemented. A complete record of all workflow steps and user actions is guaranteed. It is also possible to track who is currently working on the invoice at any time.

WORK CYCLE can be accessed both inside SAP (above) and through a web interface (right) allowing you to approve invoices wherever you are.

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3.4

adding on more functionality

INVOICES, PROCESS DIRECTOR Accounts Payable, and WORK CYCLE comprise the core of ReadSofts invoice processing solution for SAP. If you wish, you can add the following functionality to your invoice automation solution: Immediate statistics on your invoice process REPORTER generates statistical reports which enables you to evaluate and improve your process. You can get reports on: Data quality (for example, how often particular types of errors occur). The amount of processing (for example, the number of changes that need to be made to documents during processing). How long operations take using various runtimes The level of automation How many cash discounts are obtained Volume of documents per supplier ABC analyses of business partners. Let your suppliers check the status of their invoices online WEB BOARD enables suppliers to see the status of their invoices in a web application. This frees up a lot of time for the AP staff since they receive fewer questions from suppliers about where invoices are in the process. Suppliers can also be integrated into the workflow. This means that AP staff can can send an inquiry to the supplier, who can then process it directly within the system. As a result, timeconsuming internal inquiries directed to various departments can be minimized. No more red IDOCs EDI COCKPIT provides comfortable adjustment of incorrect EDI-documents. This means simplified processing of IDocs by visual support. Expand your solution to process purchase orders and other documents With PROCESS DIRECTOR, you can automates the entire purchase-to-pay process and process other documents such as for example purchase orders.

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3.5

ensuring a smooth it-project

As with any IT-project, it is crucial to pick the right supplier when implementing invoice automation into SAP a company with extensive experience in both invoice processing and SAP processes. At the end of the day, it is always the people that make the difference. SAP certifications ReadSoft has been a SAP Certified Partner since 2001, and was the first invoice processing company to receive this certification. PROCESS DIRECTOR Accounts Payable and WORK CYCLE are SAP certified integrations, the highest level of SAP certification, and they are also Powered by SAP Netweaver.

With hundreds of SAP installations around the world, ReadSoft has more expertise and experience than the rest of the market combined. Indeed, many of ReadSofts technicians and project managers have a background in core development of SAP. With a well-proven project process, including pre-study, project planning and project implementation, you will be guided all the way through the project.

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4
4.1

return on investment
what are the investments?

Different companies have different needs and pricing varies greatly depending on how many invoices you process and how your SAP system is set up. This also affects how long the implementation project takes. Generally, SAP projects take somewhere between one and six months to implement. After working closely with large and medium-sized companies in several countries, we can safely say that the return on investment is usually around one year.

4.2

what benefits can you expect?

There are numerous benefits associated with automated invoice processing. Below are some that our clients often refer to: Decreased costs for invoice handling There have been several studies on how much it costs to process an invoice manually vs. automatically. Although the results differ, the potential gain is always surprisingly large. The Aberdeen Group has reached the following conclusion in their report The E-Payables Benchmark Series: Imaging and Workflow.

Improved control of cash flow and invoices Companies gain time and money when implementing solutions for invoice automation, but improved control over the whole AP process is often cited as the greatest benefit.. Increased control of delivered and invoiced goods This means more accurate information to base decisions on. It also reduces the risk of paying fraudulent invoices.

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Compliance with legislation Compliance with legislation such as the Sarbanes Oxley Act (SOX) is becoming increasingly important. Document Automation helps achieve this compliance. Decreased manual work Since processes are automated, staff can focus on more rewarding tasks such as process evaluations and follow-ups. Shorter total processing time This allows companies to take advantage of early-payment discounts, and more importantly, reduce late payment fees. Early notification of errors Invoice automtion gives the AP department more time for research and problem solving.

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User testimonials

With hundreds of installations all over the world, ReadSofts invoice processing solution is by far the most widely used software for invoice processing into SAP. Here is what some of the users say:

5.1

porsche

Lutz Meschke, Financial Manager: We decided on ReadSoft due to their experience in automating a costly manual business process. Their technology will offer us substantial benefits and speed up financial processes related to the handling of Porsches many supplier invoices. Furthermore, ReadSoft has offered us professional and extensive services during the implementation period. This technology is truly a part of the future.

5.2

thyssenKrupp

Michael Ackermann, Central Department Manager of Group Accounting: We were impressed by how easily ReadSoft customized their solution to our specific demands. In the end, our associates in the controlling department registered a significant increase in efficiency. Prior to implementation, the process (invoice receipt, distribution, verification and approval) took at least three days. Today, its down to 15 minutes. The project was completed as per our specifications, without surprises and to our fullest satisfaction.

5.3

Sidel

Stphane Durand, responsible for Accounts Payables: ReadSoft and Sidel quickly established a good commercial relationship, and we were impressed by the competence of the ReadSoft staff. For instance, their plan for the implementation phase was a mere 30 days. As it turned out, it even took less time than that.

5.4

BaSF

Ludger Sdmersen, Director Bids and Invoices: One of the things that impressed us was the flexibility with which the solution was adapted to our needs. This was important for our multinational usage as well as in presenting a clear, transparent and efficient workflow for our approval processes. Our expectations were exceeded by far.

5.5

Siemens

Uwe Fischer, Supplier Accounting Manager: We were impressed by the know-how and drive shown by ReadSoft associates. This was shown throughout the project, from the development phase all the way to end support.
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about readSoft

ReadSoft was founded in 1991, and has been the technical innovator of the market ever since. With offices in 16 countries and partners in an additional 70, ReadSoft has the most extensive support network in the business. Today, more than 5500 customers use ReadSofts software to automate their document processing. ReadSofts customers come from all over the world and all lines of business telecommunications, finance, mail order, insurance, market research, aviation, banking and many more. Some organizations have been able to cut down on their document processing costs by as much as 50%. ReadSoft has been an SAP Software Partner since 2001 and is the worlds number one choice for automated invoice input into SAP. ReadSoft has a SAP division solely devoted to SAP integration. Some 50 highly skilled SAP experts work with developing and installing our SAP-solutions all over the world. Many of them have backgrounds as core developers at the SAP headquarters.

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