Esker DeliveryWare White Paper. Best-Practice Accounts Payable Automation for SAP Solutions.

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1 Best-Practice Accounts Payable Automation for SAP Solutions

2 Table of contents Introduction Conventional accounts payable with SAP systems Esker DeliveryWare and your SAP application Automating accounts payable Workflow and process tracking Benefits of accounts payable automation Creating a successful implementation Conclusion About Esker

3 Introduction While SAP solutions empower businesses with accounts payable functionality and transaction data, manual entry and tracking of vendor invoices remains a barrier to full business process efficiency and return on investment in SAP solutions. Many businesses running SAP applications still employ conventional paper-driven accounts payable processes. As a result, they are limited in their ability to minimize per-invoice costs, prevent duplicate invoices and take advantage of fast-payment discounts. Financial planning, vendor relationships, employee productivity, inter-enterprise communication and even regulatory compliance efforts may suffer from lack of automation in accounts payable. Just as automated entry of vendor invoices is essential for process efficiency and quality assurance, data on invoice document processing is crucial to daily operations. For example, vendor inquiries frequently create the need for information about the processing status of an accounts payable transaction. Quick access to information on whether an invoice has been received, processed, or paid (as well as data on the currently responsible agent) can significantly reduce turnaround time of vendor inquiries. Recently, accounts payable processes have gained the interest of SAP customers seeking measures to speed up their purchase-to-pay cycles, strengthen vendor relationships and gain negotiating leverage, and improve cash-on-hand planning. Beyond significant cost savings, organizations using an automated accounts payable system can realize efficiencies throughout the process. This white paper outlines these benefits and presents a unique solution, exploring automation of accounts payable processes within SAP applications. It analyzes the challenges faced by companies today who are still using manual paper-driven processes, as well as the benefits of automating processes including time, labor and cost savings as well as increased visibility into the process. In doing so, this paper highlights innovative technologies for comprehensively automated invoice management to optimize the purchase-to-pay cycle. Above all, this paper is designed to assist CEOs, CFOs, CIOs, Accounts Payable managers and SAP system administrators in learning, planning and evaluating automation of accounts payable processes to gain added efficiency in today s competitive business environment. 3

4 Conventional accounts payable with SAP systems Manually orchestrating your accounts payable operations is inherently inefficient and creates the potential for errors. Manual processes are labor-intensive and time-consuming, requiring valuable resources to manage each part of the process. In conventional accounts payable with SAP solutions, any document processing prior to invoice posting is a black box detailed information about what s happening in the process is either unavailable or not readily accessible in the SAP system. Receiving and entering the invoice, routing and resolving problems require manual intervention. Receive Process Post Time Automated invoice capture, workflow and tracking makes the process transparent. This visibility enables coordination and control to optimize the process. Conventional paper-based invoice processing 4

5 Esker DeliveryWare and your SAP application SAP customers struggling with high invoice error and dispute rates, long payment cycles, poor auditing and high administrative costs related to manual processes not to mention less-than-ideal relationships with vendors can choose from several solutions to automate accounts payable processes. Only one offers patented DeliveryWare Rules Engine technology and a full range of document capture and delivery format capabilities to maximize the value of SAP applications and effectively control the time between invoice receipt and payment. Esker DeliveryWare Esker DeliveryWare offers a comprehensive solution that streamlines current business processes by eliminating inefficient steps, making communication more personalized and cost-effective, regardless of the information source or delivery type. Esker DeliveryWare eliminates manual touch points and brings visibility to the accounts payable process while causing no disruption of current business operations. Designed to optimize internal and external information flow into and out of SAP applications, Esker DeliveryWare is an end-to-end document process automation platform with patented technology. Managing all inbound and outbound document processes through this central platform simplifies the IT infrastructure, reduces the time and costs associated with document communication and streamlines critical business processes such as accounts payable. 1 Document Capture DeliveryWare Rules 5 Engine Document Transport 4 5 Esker DeliveryWare automatically captures invoices and other documents in any format independent of layout and application or source, without the need for custom programming. At the heart of Esker DeliveryWare is patented technology that automatically recognizes and extracts data from electronic documents to determine formatting, conversion, and routing conditions and actions that need to take place, as defined by processing rules. The optional Accounts Payable Module provides comprehensive workflow and process tracking capabilities. Esker DeliveryWare distributes documents automatically, based on organizations specific requirements. They can be delivered to multiple recipients in the most complete range of formats (text, XML, PDF, IDoc, PCL, PS, TIFF, etc.) and media (postal mail, fax, print, , web, file transfer, archive, wireless message, etc.) 5

6 Automating accounts payable Automating accounts payable yields significant savings by reducing the number of touch points involved at each step of the process. The result is less manual data entry time and errors, shorter purchase-to-pay cycles, on-time payments, fewer duplicate invoices, faster identification and resolution of issues, and better service to vendors. Automation Savings Esker DeliveryWare Accounts Payable Module helps SAP customers realize these benefits and will continue to help identify further areas of improvement. 48 hours $40 to $70 30 days 7 days $4 to $6 4 minutes Manual Process Flow Estimated Cost Automated Process Flow Estimated Cost Invoice Payment Cycle Invoice processing time 6

7 Tight integration with SAP applications Esker is committed to simplifying document process tasks for SAP customers. SAP-certified Esker DeliveryWare integration is seamless and does not require any reprogramming or business processes modifications. Invoices arriving in various formats (paper, fax, , electronic file, etc.) are automatically captured, approved and transferred to the SAP content server or Esker DeliveryWare repository. On top of this, order data such as vendor name, purchase order number (for invoices with a purchase order), quantity and prices, are automatically made available in the SAP system, replacing manual data entry. The invoice object is linked to the stored document, allowing the user to retrieve the original document easily when necessary directly within the SAP user interface. The process flows through the following steps: Step 1: Capture When an invoice arrives, it is automatically handled by Esker DeliveryWare, The document is recognized and converted using document capture technology, and invoice data is extracted. Step 2: Notification If desired, the user can receive a notification that a new invoice has arrived and that it needs to be validated. By clicking on the link contained in the notification, the user opens the Esker Document Manager web interface to access the invoice validation web form. Step 3: Validation Using standard BAPIs, the software checks that the vendor data and order data (for invoices with a purchase order) already exist in the SAP system. For PO invoices, Esker DeliveryWare can perform two-way matching of the invoice with the PO, or three-way matching of the invoice with PO and goods receipt. In the event of a mismatch between the document and SAP master data entries, the user is able to browse SAP master databases to match data extracted directly in the web form. Step 4: Posting data to SAP system Data is then passed to the PTS (Process Tracking System)* invoice data capture module within the SAP system. This module creates a process tracking record and attempts to post the PO-based invoice if desired. In case of an exception, or for those cases where auto-posting is not possible or desired, an SAP workflow engine-based best-practice PTS workflow is started for that tracking record. The workflow work item goes to the AP user s workflow inbox, awaiting action. Upon execution, the SAP Workflow calls up the appropriate transaction code for the posting of an invoice, and the document image appears alongside the pre-populated data*. See FOOTNOTE. Documents can be saved and posted, at which point the work item disappears from the user s workflow inbox. If a business or technical condition exists that prohibits posting of the invoice, the user simply cancels instead of saving and posting. A set of decisions relating to exception handling are presented to the user. Selecting a particular option triggers the corresponding workflow behind the business process. The work item disappears from the user s inbox and is placed in the inbox of the appropriate person to perform necessary actions (for example, updating vendor master data or obtaining non-po invoice approval and coding through the SAP NetWeaver-based web link). Then the work item is sent back to the user, who can then post the invoice. * All references in this document that pertain to PTS, process tracking and SAP workflow refer to a solution developed by Dolphin IT-Project and Consulting Corporation. Process Tracking System (PTS) is a trademark of Dolphin IT-Project and Consulting Corporation. All rights reserved. 7

8 Workflow and process tracking Beyond automated receiving and entry of vendor invoices, optimizing accounts payable with SAP applications requires coordination and execution capabilities including invoice approval, exception handling and vendor inquiry management. If your organization has ever been unable to fulfill a vendor s request for the status of an invoice, paid the same invoice twice, missed out on fast-payment discounts or made an inaccurate forecast of cash on hand, then you know access to current information is key to effective business management in accounts payable. Incoming invoice documents launch the purchase-to-pay cycle. Fast response to invoices helps to strengthen vendor relationships and enables organizations to take full advantage of fast-payment discounts. Incoming vendor invoices need to be entered and confirmed quickly to allow for efficient payment scheduling. Reliable up-to-date information on the status of new vendor invoices is crucial for effective financial management and forecasting. Along with receiving and entering invoices, SAP customers seeking to optimize accounts payable face challenges with: Productivity Late payments Exception handling and invoice block resolution Duplicate invoices Vendor inquiry processing As a comprehensive solution for accounts payable automation, Esker DeliveryWare offers workflow and process tracking* capabilities for best-practice Accounts Payable management such as dynamic work item task descriptions, automated routing for exception handling, SAP NetWeaver-based web/ invoice coding and approval, and detailed reporting in addition to automated document capture and data entry. SAP customers using Esker DeliveryWare benefit from integration of data on transactions, documents, and process status for financial reporting and process analysis. These capabilities are tightly integrated with SAP Business Workflow technology, and use SAP ArchiveLink to facilitate capture of process information immediately after a vendor invoice document has been entered. The process information and the business document are instantly available for reporting and display. SAP Business Workflow automatically routes the business document to the AP clerk for subsequent processing. * (PTS) process tracking and SAP workflow refer to a solution developed by Dolphin IT-Project and Consulting Corporation. PTS Process tracking System is a trademark of Dolphin IT-Project and Consulting Corporation. All rights reserved. 8

9 Tracking record When an incoming invoice document launches the purchase-to-pay cycle, a tracking record is created. Index information, such as vendor name and reference number, are stored in the tracking record and updated continuously during the subsequent accounts payable process. The index information can also be used to automatically route documents and tasks to the responsible accounts payable clerks without manual intervention. Search and selection User accessing the transaction can choose from a variety of selection criteria to narrow down the search to a specific tracking record or group of tracking records. Records can be quickly accessed by using the tracking record number, receipt date, vendor name, or SAP document number. Choosing from an array of available search criteria, users can obtain other data valuable for financial accounting and cash management. For example, all invoices that have been received, but not paid, and are due on or before a certain date can be found. The number of payment blocks as well as the blocking reasons for certain vendors can also be obtained. Process history For each tracking record, the corresponding financial accounting transaction and the archived document can be accessed. Sorting by any column is possible and a real-time database refresh can be performed to receive up-to-date information. The process history of a tracking record displays all relevant steps a process has gone through before reaching its current state. The process history records the date and time of the step completion as well as the user who performed the corresponding tasks. In accounts payable, the process history creates a complete audit trail by tracking document receipt, transaction posting, possible exception handling for conditions such as master data issues and payment blocks. Benefits of accounts payable automation Beyond optimizing invoice receipt by taking manual paper routing and manual keystrokes out of the entry process, the Esker DeliveryWare solution results in significant benefits both for business management and system administration. Enhance financial and cash management Workflow and process tracking with Esker DeliveryWare provides a central point of access to all accounts payable data in the system. It contains continuously updated information about vendor accounts, amounts payable, due dates, and payment terms even before the corresponding transaction is posted in the SAP system giving a complete picture of the current accounts payable status in the system as well as cash flows that are to be expected. Improve quality and effectiveness of vendor service management Vendor inquiries regarding invoice receipt, processing and payment status can be comfortably serviced. Vendor service representatives can easily locate accounts payable documents, obtain their processing status and history, and determine the responsible accounts payable clerk, should further inquiry be necessary. Take full advantage of fast-payment discounts and better payment terms Esker DeliveryWare significantly improves processing time and quality by virtually eliminating manual task coordination as well as information routing and transport. At the same time, document processing can be prioritized according to due dates and payable amounts. Accounts payable processing can be focused and completed in a shorter and more definable timeframe. As a result, organizations see fewer late payments and more fast-payment discounts and gain a stronger position for negotiating favorable payment terms with vendors. 9

10 Obtain data for vendor and employee performance analysis Process history provides a complete audit trail for each instance of an accounts payable process. It contains data on payment blocks and blocking reasons which can be used to perform a detailed analysis of vendor performance with regards to invoicing accuracy. The process history further provides valuable data on process time. This data can be used to identify bottlenecks and critical paths in the internal process of an organization. Eliminate photocopies and paper archive management The Esker DeliveryWare Accounts Payable Module gives access to both the SAP transaction document and the archived original attached. All documents can be viewed simultaneously by several users. This eliminates the need for photocopies as well as manual document storage and retrieval procedures. Typical results with Esker DeliveryWare Accounts Payable Module include: Up to 70% lower accounts payable processing costs Lower stored data costs by electronic archiving Up to 65% faster receiving and entering of vendor invoices Up Increases your accuracy of data entry by up to 99% Staff time freed-up by as much as to 65% Creating a successful implementation To ensure the success of your conversion from conventional paper-driven accounts payable to an automated process: 1. Search for a solution that offers the highest value. To get the highest return on your investment, find a solution that will fully integrate your accounts payable process. It is highly likely that you have different requirements from different suppliers and vendors. Make sure that the solution you choose can meet all your own requirements as well as those of your vendors, such as diverse document formats, validation, approval, routing and archiving. 2. Search for a solution that can be integrated quickly. Measuring the cost of deployment, integration and scalability to meet your needs and your vendor needs is crucial in choosing the correct solution. Search for a solution that will integrate seamlessly with your existing SAP applications without custom programming. 3. Expertise and knowledge are key to success. Successful accounts payable automation must include both technology and expertise. How long has the company been implementing these solutions and how many successful installations have they completed? Make sure they have a strong understanding of the essential tasks involved in enterprise technology implementation and integration. 4. Find solutions that create added value. The solution must automate every piece of the accounts payable process. It should leverage your existing infrastructure to the value of your current SAP system as well as other enterprise applications. A complete solution will offer advantages that stand-alone imaging and workflow products cannot provide. 10

11 Conclusion For companies looking to optimize business processes, automating accounts payable processes can yield significant bottom-line return. The purchase-to-pay cycle requires orchestrating transactions that span multiple steps, processed at different times by different systems. Improvement in these performance variables enables SAP customers to benefit from: Automated and centralized accounts payable processing Early invoice prioritization and duplicate check Consistent, quick exception handling Real-time tracking of invoices Easy storage and retrieval of invoices Automated approval and reporting Comprehensive data for A/P reports and benchmarking To achieve these results, it is necessary to carefully assess the available market solutions and find one that meets all the needs in your specific process. Inefficient business processes cause companies to miss tremendous opportunities for profitability, and can keep them from improving competitiveness. Now is the time to automate, and the leading solution is Esker DeliveryWare for: Integrated data/document capture Flexible, automated task routing Consistent exception handling procedures for canceled transactions and blocked invoices Duplicate invoice checking Minimized number of key strokes to complete accounts payable process Continuous tracking of process data and status for vendor inquiry service Dynamic work item descriptions and titles Reports on process time and volume, queued invoices, exceptions and blocks, due dates, discounts, scheduled payments... even before the invoice is entered in the SAP system Comprehensive business solution with view of all accounts payable processes in the SAP system Quick, turnkey implementation without custom programming 11

12 About Esker Esker is a recognized leader in helping organizations streamline manual, paper-intensive processes and reduce the use of paper by automating the flow of documents into, within and outside the organization. With patented document delivery automation software (Esker DeliveryWare) and hosted document delivery services (FlyDoc), Esker offers a total solution to automate every phase and every type of business information exchange. Customers gain significant and immediate operational efficiencies, cost savings and measurable ROI in as little as three to six months. Founded in 1985, Esker operates globally and has over 80,000 customers and millions of licensed users worldwide. Esker has global headquarters in Lyon, France and U.S. headquarters in Madison, Wisconsin. For more information, visit or 12

13 Contact Information Madison, Wisconsin Ô U.S. Headquarters 1212 Deming Way Suite 350 Madison, WI Toll-free Phone Fax France Ô World Headquarters 10 rue des Emeraudes Lyon France Tel +33 (0) Fax +33 (0) Australia Sydney Asia Singapore Germany Munich Italy Milan Spain Madrid United Kingdom Derby, Derbyshire 2006 Esker S.A. All rights reserved. Esker and the Esker logo are registered trademarks of Esker S.A. in the U.S. and other countries. SAP is the registered trademark of SAP AG in Germany and in several other countries. Process Tracking System (PTS) is a trademark of Dolphin IT-Project and Consulting Corporation. All other trademarks are the property of their respective owners. WP-EDP-US-AP-A