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    Market Offering:Cross Industry

    Package(s):SAP, OpenText

    Authors:Kalie Porterfield, Anirudh Damani

    Date: April 15, 2014

    Optimizing Invoice

    Processing with OpenText VIM

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    National SAP Eminence whitepaper  

    Contents

    Executive Summary 1 

    Business Challenges in AP Processes 2 

    OpenText Vendor Invoice Management Overview 4 

    Meeting AP Process Challenges with VIM 6 

    Business Benefits of Implementing VIM 16 

     AP Process Optimization Solution Summary 18 

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    Executive Summary

    1

    Executive Summary

    Invoice processing is a time, labor, and cost-intensive process for many companies due to inefficient, manual processes. These inefficiencies can have negative implications such as late payments, missed discounts, duplicate payment, excessive costs, and poor vendor relationships. OpenText Vendor Invoice Management (VIM) was designed through a partnership between OpenText and SAP, and its seamless integration with products from both companies makes it a holistic solution for AP process optimization. VIM streamlines AP invoice processing activities by automating data capture, invoice approval and invoice exception routing. In addition, it provides holistic visibility to invoice processing through a variety of standard reports and dashboards.

    Using VIM to optimize invoice processing activities benefits not only the AP department, but all parties involved in the Procure-to-Pay cycle. Reducing time, manual effort, and cost of

    invoice processing can mitigate end-user pain points, facilitate better supplier relationships, and decrease the cost of doing business.

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    Business Challenges in AP Processes

    2

    Business Challenges in AP Processes

    The AP processes addressed in this whitepaper include invoice receipt and indexing, document processing, approval workflow, exception handling, and posting payment to vendors. These processes fall at the end of the Procure to Pay Cycle, but their execution affects components from requisition – e.g. a buyers ability to procure products with low prices and advantageous terms – through receipt – e.g. matching of goods receipt or service entry sheet to the invoice . Well designed, automated processes can help keep the procurement cycle running smoothly, while inefficient AP processes yield challenges and pain points felt throughout the organization.

    High-level challenges associated with the AP process can be segmented to 3 areas:

    Process, Organizational, and Technology challenges in Accounts Payable filter down to pain points for the individuals that execute invoice processing tasks on a daily basis. The key roles/departments involved in AP Processes include management, the accounts payable team, buyers, and suppliers.

    Process Based

    •Long invoice turnaround time

    •Late payments, missed cash discounts

    •Large amounts of manual activity

    •Process Scalability

    Organizational

    •High cost per invoice

    •Supplier dissatisfaction

    •Resistance from suppliers to negotiate better terms and pricing

    Technology System

    •Duplicate invoice entries and/or payments

    •Risk of non-compliance (SOX)

    •Poor communication between AP and other parts of the organization

    •Low visibility to volumes, throughput, and bottlenecks

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    Business Challenges in AP Processes

    3

    Role Typical Pain Point

    Management

    ·  Managing invoice processing cost

    ·  Need for reports to identify invoice issues and bottlenecks

    ·  Invoice processing targets not met

    Buyers

    ·  Resolving invoice exceptions is not a core responsibility

    ·  Problem invoice resolution is a manually intensive process

    ·  Negotiating with suppliers is more difficult with late payments

    Accounts Payable Team

    ·  Manual invoice indexing is time consuming and cumbersome

    ·  Resolving exception invoices is manually intensive and reduces throughpu

    ·  Invoice approval processes

    ·

      Processes that are paper-based are frustrating and can cause rework

    Suppliers

    ·  Late payments affect cash flow

    ·  Customer’s often cannot provide visibility to invoice status or expected payment date

    ·  Reluctance to provide better terms/pricing when payments are not timely

    For many companies, the challenges and pain points associated with Accounts Payable processes can be traced to the manually intensive nature of many key activities, as well as their execution outside of the system. These manual activities include:

    Ø  invoice data input 

    Ø  problem invoice resolution routing between parties 

    Ø  invoice approval re-routing due to transition/termination/paid time off  

    Ø  intra-company requests for additional information or input for invoice resolution 

    Ø  vendor communication for updates and additional information 

    Ø  invoice status monitoring and update reports, etc. 

     As such there is a business need for companies to streamline their Accounts Payable processes using a technology-enabled solution that reduces the number of manual invoice touches, efficiently and automatically routes the invoice through approval/resolution processes, and provides convenient visibility to the entire process.

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    OpenText Vendor Invoice Management Overview

    4

    OpenText Vendor Invoice Management

    Overview

    OpenText is an industry leader in Enterprise Content Management products with an SAP partnership that spans over 20 years. OpenText Vendor Invoice Management (VIM) is business solution that leverages the capabilities of both companies to streamline and optimize a business’ AP processes. The end goal of a VIM implementation is to move the business from outdated AP processes to industry best practices with a “plug and play” solution.

    Core VIM Workflow

    The core VIM workflow and document processing capabilities sit between document archiving and Optical Character Recognition (OCR) solutions on the front end and the payment processes in SAP

    on the back end. There are 3 main components: Exceptions handling, approval workflows, and reporting and analytics.

    OCR data capture and core VIM document processing capabilities work together to reduce manual effort required to execute invoice processing by conducting the process in the system. This includes OCR data capture, automated or facilitated routing of exception invoices for resolution, and automated, hierarchical routing of invoices that require approval. Bringing these processes into the system provides the data needed for complete visibility and traceability of the AP process for analysis and/or reporting.

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    OpenText Vendor Invoice Management Overview

    5

    To illustrate these concepts in practice, consider the following scenarios:

    Scenario Pre-VIM Implementation Post-VIM Implementation

     AP Clerk receives an

    invoice

    Paper or electronic invoice is received and distributed to the AP

    clerk. The AP Clerk manually keys in all invoice data.

    Paper invoices are received and scanned, electronic invoices are passed

    through to the OCR component. The OCR component captures, and validates the data before archiving it and using it to populate the fields in the invoice processing document

     An invoice has missing information

    The individual processing the invoice must park or hold the invoice to seek out the correct person to provide missing information. There is no visibility to communication as it is outside

    of the system. When a resolution is reached the processor will return to the invoice to populate the information.

    If the individual processing the invoice tries to move forward with missing information VIM will intervene and route the invoice to the appropriate business role for resolution. The individual processing the invoice also has the

    option to refer the invoice to a business role at any time. The resolution process is highly visible and traceable because it is conducted in the system.

     A Non-PO Invoice Requires

     Approval

    Customized workflow needs to be developed within SAP for proper routing of invoices based on the organizational policies. The

    workflow can be complex and requires maintenance.

    VIM triggers the approval workflow for Non-PO invoices and automatically routes the invoice to the appropriate requestor. After the requestor approves

    the invoice the system determines if a second approver is needed. If so the

    invoice is automatically routed to the appropriate individual. All approvers receive notifications when they are assigned open approval work items.

     An individual wants to see

    the status of an exception invoice

    The individual can go into the invoice itself to see

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