The need: to enhance an AP process to include an invoice management solution (IMS) and thereby enable the early capture into SAP of invoice information. The solution would allow for pre-emptive action and report generation and would provide more comprehensive liability information on invoices and would enable management to take advantage of lost discount opportunities.
The challenges: processing cycle times (delay in posting expenses, late payment penalties and account suspension, tax compliance), invoice and credit memo visibility (responses to vendor queries were difficult, internal and external queries difficult), working capital management (difficulty in predicting payments, inability to ascertain group liability), loss of discount (AP as cost centre vs profit centre), invoice and credit memo processing costs (invoice and credit memo dispute resolution, exception handling).
The solution: An AP IMS needs to be implemented.
NokusaEI implemented an AP IMS solution for a client in Botswana and the primary purpose of the project was the recording, tracking, managing, and reporting on all supplier invoices and credit memos. The IMS solution was developed in SAP, and the use and functionality of the SAP AP system was therefore expanded. The original intention was that the solution would be implemented as an invoice tracking system; however, the solution grew into an invoice management solution.
The solution as implemented caters for purchase order and non-purchase order transactions, consignment and sundry transactions as well as credit memos. Original invoice images (scanned) are attached to the SAP record for ease of re-use and more effective document management.
The AP IMS project took 14 weeks to complete and went live in April 2010 and has been successfully used since then.
The client has estimated a return of investment for the project of under a year, with most, if not all, anticipated project benefits realised, and the solution is regarded by the company stakeholders as very successful.
Benefits realised include:
* Increased discount accruals
* Decreased costs
* Improved working capital
* Improved compliance
* No lost documentation
* Improved stakeholder relationships
* Improved internal controls
The question facing most companies would be to automate or not to automate an AP process?
The use of increased integration with an ERP system, rather than increased automation should first be applied to enhance document (scanning) and data (indexing) capture, preferably early in the process. This integration can be used very effectively to streamline the process for lower volumes, which do not justify the use of automation technology such as OCR (optical character recognition), or even for higher volumes if data capture can be decentralised and thereby distributed across the organisation.
The use of automation technology should be viewed as a quantum leap in terms of data capture complexity, but achieves similar quantum improvements particularly in the volumes of invoices that can be indexed in a given time. OCR lends itself to be used in a shared services environment where scanning may be decentralised, and where OCR for improved indexing is centralised.
Automation technology should only be introduced when:
* The process is first understood well and manual solutions that are integrated to, and therefore assisted by, an ERP system, can no longer meet the requirements (such as volumes to be processed or capture consistency).
* Volumes justify the additional expense and complexity that automation introduces.
* The maturity of the organisation lends itself to its practical use.
Another issue would be to build or to buy?
This is the oldest question in the IT world and there are many excellent integrated “out of the box” AP solutions available with automation options such as ReadSoft, OpenText's Vendor Invoice Management (VIM), Basware's InvoiceReady and so on. So why re-invent the wheel?
The consensus conclusion is to buy when you need to automate commodity business processes (to standardise) and build when you're dealing with the core processes that differentiate your company (to compete). But the reality is a little more complicated with cost, time to market, politics, architecture, skill sets and strategic value as considerations.
When it comes to cost, it is important to bear in mind that many out of the box solutions offer volume pricing options (for the product itself and for maintenance).
Each organisation needs to critically evaluate all options and then the correct decisions can be made.
NokusaEI is an international company that is recognised as one of the foremost experts in implementing enterprise content management (ECM) functionality in association with SAP, which includes the SAP Document Management System, SAP ArchiveLink, SAP Netweaver Folder Management and Open Text Extended ECM for SAP.
Contact us to arrange an obligation and cost-free meeting to discuss how you can unlock the ECM value in your SAP system. (www.nokusaei.com)
Share