How to Quit Paper in Order-to-Cash and Procure-to-Pay Bringing New ROI
white paper How to Quit Paper in Order-to-Cash and Procure-to-Pay Bringing New ROI to SAP® Solutions www.esker.com Esker white paper Table of Contents Executive Summary.......................................................................................................................................................................... 3 Document Process Automation. .................................................................................................................................................. 4 Leveraging the Esker Platform. ................................................................................................................................................... 6 Order-to-Cash..................................................................................................................................................................................... 8 Sales Order Processing......................................................................................................................................................... 8 Accounts Receivable Invoicing...................................................................................................................................... 10 Procure-to-Pay................................................................................................................................................................................ 12 Purchasing. ............................................................................................................................................................................ 12 Accounts Payable............................................................................................................................................................... 14 Conclusion........................................................................................................................................................................................ 16 About Esker. ..................................................................................................................................................................................... 17 Esker white paper Executive Summary Many of today’s most profitable businesses run SAP solutions. Considering the significant investment in SAP systems, along with the increasingly competitive business environment, organizations need to achieve return on the investment. SAP solutions take businesses a long way toward standardizing — bringing together interrelated business processes under a standard architecture that helps the enterprise become more efficient, productive and agile in response to changing business conditions. Within the enterprise, SAP solutions do an excellent job of automating and integrating many aspects of business processes. What complicates matters is the simple fact that business processes require information to be entered into and documents to be delivered out of enterprise applications. Enterprise software typically does not include capabilities for universal communication between an organization and its customers and suppliers. Business processes extend beyond the enterprise, but the automation and integration often does not. Manual processing of business documents, with all its obvious disadvantages, is a part of the enterprise unchanged by implementation of SAP solutions. Friction is still present within key business processes, and it costs time and money. Return on SAP investments will not be fully achieved by a business until it can quit paper and automate the flow of sales orders, customer billing documents, procurement documents and vendor invoices into and out of the SAP system. Because they are such a vital part of business processes, these documents will ultimately determine the investment return on SAP solutions. Why quitting paper matters Although paper is an source of unsustainability, cost, errors and inefficiency in business processes, it remains pervasive. Worldwide paper consumption has tripled in 30 years and continues to grow, and 8 million tons of office paper (3.2 billion reams) are used every year in the U.S. Each ton of paper equals 17 trees, 3 cubic yards of landfill, 2 barrels of oil, 7,000 gallons of water and 4,100 Kwh of electricity. The average office worker uses 10,000 pages of paper a year. Even some of the largest companies running SAP solutions continue to process documents manually, for a variety of reasons. “Built-in” document processing capabilities are limited in their business systems, and the cost and complexity of reprogramming at the application level — with support for a full range of file formats and transports — makes it impractical. Yet, the increasing demand for information to satisfy the needs of customers and suppliers makes it a business necessity. In addition, it is not always possible to dictate how customers and suppliers send and receive information. Varying sizes, cultures, requirements, expectations and established processes of trading partners all figure into the mix. Attempts to accommodate all customers and suppliers often create IT complexity and require customization, which generally means added expense. The goal is to meet these varying needs while controlling costs. The solution comes in the form of a comprehensive “quit paper” platform that automates and centralizes capture, formatting, conversion, routing and storage of information flowing into, through and out of the enterprise. This type of platform enables businesses to: §C apture the necessary information from documents § Integrate the information into the SAP system §D istribute documents to the right places in the right ways §P rovide ready access to documents, document content and process information In addition to cost savings from elimination of manual processes, communicating with all customers and suppliers through the most appropriate channels translates into higher service levels and stronger business relationships. Increasing speed and accuracy through document process automation helps businesses fulfill customer orders faster, get paid for those orders sooner, optimize financial management and maximize supply chain efficiency. This white paper outlines the value of such a solution to businesses running SAP as a tool to achieve immediate additional ROI through automation of document processes within the order-to-cash and procure-to-pay cycles. 3 Esker white paper Document Process Automation Business processes run on input to and output from SAP solutions. Each step in a process involving a manual touch point causes friction that costs time and money. Esker solutions reduce this friction, helping companies maximize profits by automating and streamlining document-intensive business processes from beginning to end. IT industry analyst research consistently finds that companies with the fastest-growing profits in their industry sectors are addressing document process and achieving real benefits. Businesses with effective document processes are more likely to be leaders in profitability, and more responsive to changing market conditions. As a result, the recommendation is for organizations to examine key business processes for opportunities to achieve ROI. BUSINESS PROCESSES: Sales Order Processing, Accounts Receivable, Purchasing, Accounts Payable Before SAP Solutions After SAP Solutions Today, with Document Process Automation Process 1 Process 1 Process 1 Manual Processing Manual Processing Process 2 Process 2 Process 2 Manual Processing Process 3 Manual Processing Process 3 Process 3 Manual Processing Manual Processing Time and profit gains with SAP solution Time and profit gains with automated document processing TIME As illustrated above, SAP solutions condense business processes so those processes become more efficient and the company becomes more profitable. With e-commerce strategies leveraging technologies like EDI, IDoc, XML and Web technologies, many companies even think of their businesses processes as fully automated. But the reality for most businesses is that those technologies do not cover all customers and suppliers, so manual touch points remain after SAP solution implementation. The percentage of customers and suppliers who are not e-enabled may be a minority, but even a small number can represent significant cost and loss of productivity. And as long as paper remains, the company will be limited in its ability to optimize efficiency in the order-to-cash and procure-to-pay cycles. Addressing this situation further condenses business processes, yielding considerable additional value that is directly attributable to putting document process automation into the system. Businesses that remain saddled with sub-optimal document processes are limited in their ability to achieve objectives such as reducing Days Sales Outstanding, shortening transaction cycles, improving operational efficiency, cutting overall business communication costs and increasing profitability. The more customers, suppliers and vendors a company has, the more paper that must be printed, retrieved, faxed, mailed, photocopied and then filed, making the process longer and more error-prone. 4 Esker white paper Connecting people, documents and processes As a tool to improve business performance and simplify the IT infrastructure, fully capable document process automation connects functional aspects of business processes that revolve around documents and the different phases of document lifecycles. � Purchase Orders, RFQ, RFP, Specs Purchasing � � Sales Orders, Order Acknowledgments Sales Order Processing � � Shipping Reports, Shipping Confirmations, Bills of Lading, Proof of Delivery, T&C Shipping � � Reports, SEC Filings, Investor Relations, Executive Development Corporate � � Invoices, Statements, Account Summaries Collections, Credit References, Rsminder Letters Accounts Receivable � Accounts Payable � � Remittance Advice, Electronic Fund Transfer Sheet, Payment Request Approval Document process automation encompasses: § Document content entering the enterprise — including capture and validation § Document flow through the enterprise — including document approval workflow and archiving § Document distribution to customers and suppliers — including notification returned to the SAP system As the need to exchange business information with customers and suppliers through multiple media increases, organizations recognize that the most practical way to automate all document processes for all business partners is through a centrally managed information exchange platform that requires no custom programming to implement. Intelligent technology to recognize document content makes this possible — and feasible — by automating document processing based on business rules and user preferences through logic residing outside the SAP system. So, SAP applications require no modifications. This solution extends the ERP standardization model to the exchange of information that supports business processes, eliminating the cost and inefficiency of manual document processing. The platform supports SAP communication and connection architectures, enabling automated processing of documents into and out of SAP applications. When input or output reaches the platform, business rules determine disposition based on content and corresponding preferences for transformation and delivery of the document. Users can manage document processing through standard SAP desktop interfaces. Comprehensive document process automation document delivery has three essential characteristics, including: 1. Unlimited flexibility in both what information can be processed and how it can be processed 2. Non-intrusive integration into SAP solution environments with a seamless interface and external residence 3. Fast implementation without the need for custom programming The goal of deploying such a solution is to improve business process efficiency through information exchange with SAP solutions, which have the ability to interact with technologies such as XML (Extensible Markup Language). Document process automation achieves this communication by enabling SAP systems to use data contained in documents — both electronic and paper. Information becomes transparently available, whether it is in data or document form. 5 Esker white paper Leveraging the Esker Platform In the big picture of business processes there are two basic cycles: the order-to-cash cycle of fulfilling customer orders and collecting payment, and the procure-to-pay cycle of buying the goods and services needed to do business. The core principle behind Esker document process automation is a focus on helping businesses quit paper to drive operational efficiencies, cost savings and visibility for process control. Esker offers solutions specifically designed to eliminate, as much as possible, the huge amounts of paper flowing through order-to-cash and procure-to-pay cycles. ORDER-TO-CASH SALES ORDER PROCESSING PROCURE-TO-PAY Customer Order Purchase Order Payment Your Customers E-PURCHASING Payment Your Vendors Your Company Customer Invoice Vendor Invoice ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE Esker solutions satisfy the three key criteria for automated document processing with SAP applications. Leveraging SAP certified integration and patented rules-based automation technology, and available both as an on-premise server or as on-demand services (SaaS), Esker solutions integrate seamlessly to provide full document delivery capability — including status notification returned to the SAP system. Esker solutions automate every phase and every type of document delivery, from data capture to document formatting and transport. Results with Esker solutions include reduced IT complexity, shorter cash collection cycles, more timely ordering and receipt of goods, improved quality assurance due to less manual data entry, and lower overall business communication costs. SAP customers worldwide have achieved rapid efficiency gains for improved ROI and immediate additional value from their SAP solution implementations with Esker document process automation. With Esker solutions, SAP customers can overcome constraints on document content and format, email and attachment handling, and document merges and revisions — particularly when dealing with IDocs or raw data formats. Esker solutions recognize and process SAP document formats, including RDI and XSF, which reduces form development (SAPscript) time. And Esker solutions allow the use of any common document transport to meet the varying expectations and requirements of trading partners. 6 Esker white paper Document process automation functionality of the Esker platform encompasses: § Data capture capabilities, including image recognition §O utput management for a full range of document transports §N otification functionality to track document status from within SAP applications §O n-demand fax and postal mail delivery services leveraging vendor-hosted infrastructure §R outing capabilities for prioritizing, approval workflow and validation inbound documents §A rchiving for native document storage and retrieval § F orm processing features, including powerful formatting tools §X ML transports for efficient communication between applications §D igital signature and encryption mechanisms to safeguard enterprise content §A uto-bundling capabilities to create complete packages of purchasing and billing documents §R eporting capabilities to monitor key performance indicators Phased implementation with options Esker solutions allow incremental automation of business processes as time and needs dictate. In fact, many organizations initially implement Esker solutions to address one specific process; then begin tapping into its full potential as a solutions development platform that can be applied to any number of existing and future process automation initiatives. Esker solutions offer organizations significant financial advantages with the ability to: §E liminate the high cost and wasted time associated with manual processing of documents into and out of SAP applications §A chieve additional return on investment in SAP solutions §S horten transaction cycles, reduce Days Sales Outstanding and improve cash flow §B oost productivity by freeing staff for more valuable activities § Improve response time, enhance communication and strengthen loyalty among customers and business partners § L ower operating costs to improve profitability and competitiveness §G enerate high-usability, presentation-quality documents to support corporate identity §E liminate expensive SAPscript customization and programming efforts By automating the processing of documents previously tied to manual methods, businesses reduce the cost of communicating with customers and suppliers. The savings translate directly to increased efficiency for improved profitability and return on the investment in ERP solutions from SAP. In addition, the capability to make document capture and transport specific to the sender or receiver translates into better service and stronger business relationships. Esker solutions transform business information into new electronic formats — HTML, XML, PDF, TIFF, and text — and deliver documents via fax, physical mail, email, print, wireless message, Web, IDoc, EDI, and more. 7 Esker white paper Order-to-Cash From the arrival of a sales order from a customer to collection of payment for the order, manual processing hinders businesses in their ability to improve customer service, cut order processing and billing costs, and reduce Days Sales Outstanding (DSO). Companies processing customer orders manually often have backlogs of several days and are challenged in their efforts to support growth with limited resources, handle exceptions efficiently, lower rates of errors and returns, and monitor the order pipeline. And while businesses are eager to save the cost of manually delivering invoices to customers, many companies sacrifice electronic accounts receivable invoicing benefits to satisfy customers who prefer to receive their invoices by fax or postal mail. Sales Order Processing Sales order processing time can be dramatically shortened with Esker solutions. By reducing or even eliminating up-front data entry, customer service and cash collection improve as a result of real-time response to inquiries, fewer processing errors and incorrect shipments, and faster delivery of orders. Businesses gain the benefits of full order confirmation and processing notification capability, easy extraction of rich order data directly into the SAP system, and immediate access to inbound sales orders — without custom programming or workstation software deployment. Typical paper-based sales order processing can be a tedious process with a long series of steps. A customer places a sales order, which is manually verified and entered into the SAP system (creating the potential for errors). A hard copy of the sales order is filed by hand, both chronologically and in the sales order archive, and another copy is manually printed and sent to the sales department. Then an order confirmation is printed and manually faxed to the customer, and multiple copies of a delivery bill are printed for the accounting and production departments, and for manual archiving in the sales order archive and the chronological archive. A packing slip is manually printed for inclusion with the goods that are sent to the customer, and an invoice is also manually printed, folded, stuffed into an envelope, metered and mailed to the customer. Copies of the invoice are sent to the sales department and manually stored in the document archive. Automated sales order processing is faster and significantly more accurate than the manual, paper-based alternative. Sales orders are captured by the Esker solution, using intelligent technology, validated through a Web interface, and automatically entered into the SAP system. The Esker solution can automatically send a fax confirmation to the customer. A sales order is automatically archived, and a delivery bill is automatically sent to both the shipping and accounting departments. A packing slip is automatically printed for inclusion with the goods, and an invoice is automatically generated and sent electronically or mailed through an Esker-hosted production facility. Copies of the sales order and the invoice are automatically sent by email to the sales department, and are automatically stored. Automated sales order processing benefits §C ut order-to-cash processing costs by up to 70% §R educe order processing time by up to 90% § Increase the percentage of orders and order line items captured electronically § Prevent lost or misplaced orders by keeping them electronic § Lower stored data costs as a result of electronic archiving § Free-up staff time by as much as 65% so they can focus more on customer service § Increase data entry accuracy by more than 99% § Reduce returns, which directly affects the bottom line § Lower labor costs of order entry: from $5–$15 per order before to $1–$3 per order after 8 Esker white paper Automated sales order processing overview VALIDATED DATA 1 Incoming sales order received by email, fax, paper or via web 2 Data captured, read and made available for verification 4 ABC Sales Order created in SD (using VA01 or through data feed) 12,6 253.99 GL Act 19.6% 102,20 John 45,00 Email Fax Sales Order SAP® Solution SAP® Content Server Esker Archiving Database or Paper & Scan Web 3 5 Web form validation Capture accuracy Customer exists in SAP customer Master Duplicate PO check Exception management Document accessible via SAP interface Case study Following the acquisition of another large manufacturer, the company had 120 customer services reps receiving and entering orders arriving in different formats with different expectations. Reps entered these orders using a paper-based process that took more than 43 minutes per order on average, causing a backlog of 3 days. Each order was tagged with multiple delivery dates based on inventory, and millions of dollars in orders were not being invoiced because reps were unable to match proof of delivery with the orders. An independent study found that implementing the Esker solution resulted in annual labor costs savings of $5 million over 3 years in addition to cost savings as a result of using less paper and reducing off-site document storage. The backlog was decreased to same-day order entry, and average order processing time was reduced to less than 5 minutes. The company is now able to report on every step that occurs during sales order processing, and employees can devote more time to serving customers instead of entering orders. A company executive reports that instant access to order information has helped to reduce the customer service group’s first-call resolution by 25%. 9 Esker white paper Accounts Receivable Invoicing While invoicing keeps cash flowing into businesses, it also costs money when invoices are manually processed for mailing or faxing. According to SAP, the cost of mailing an invoice can be as much as $15 USD. Even with state-of-the-art ERP software, the best efforts of accounting departments are limited by inefficient delivery of invoices. Before invoices can be delivered and customers can pay, data from the SAP system must be extracted and composed. Documents are printed and sorted, then manually faxed or folded and stuffed into envelopes for mailing. Invoices often wait to be delivered at the end the month, which results in payment delays that inflate DSO rates. Invoicing also typically involves photocopying and filing invoice documents for various internal and external recipients involved in the billing process. The higher the volume of invoices to be delivered, the slower the entire process becomes and the greater the potential for human errors. IT analyst research has found that the average U.S. company can save millions of dollars annually by sending invoices electronically. The percentage of electronically delivered business-to-business invoices is rapidly increasing because businesses want to reduce costs, improve customer service, and enhance ROI; customers want to move money faster and reduce accounts-payable overhead; and the investment needed to achieve savings is relatively low. Automated electronic AR invoicing with Esker solutions simplifies billing operations at minimal cost, helping businesses eliminate manual handling and reduce DSO. Companies can send 100% of their invoices electronically, as they are generated, while enabling customers to receive those invoices in whatever way they prefer — whether by postal mail, email, fax or via online portal. Users can simply “print” to a business rule to send invoices. Customers can choose how they want to receive invoices, and sent invoices are instantly accessible for viewing. Businesses maintain visibility over the entire invoicing process with integrated monitoring and tracking tools. To support compliance with international invoicing requirements. Esker offers bestin-class digital signature and certification for more than 35 countries around the world. For cash collection, Esker solutions automatically compose and send documents in the best formats at the correct stages. By eliminating the manual printing, sending and filing of documents, the process is shortened and all correspondence is delivered at the appropriate time. Businesses can give customers the same amount of time to pay, but reduce average time to collect cash by shortening the overall information exchange cycle. Esker AR invoicing solutions effectively removes direct paper invoice and manual handling costs, helping businesses improve financial metrics and gain control of invoicing processes by automating workflow. Companies can resolve contact management issues and satisfy varying customer preferences for receiving invoices while gaining the advantages of 100% electronic AR invoicing. Automated AR invoicing benefits § Cut invoice delivery costs by 40–90% § Reduce billing document handling time by up to 96% §B illing errors and returns reduced by as much as 90% § Reduce Days Sales Outstanding by 2–5 days at minimum § Increase process control and visibility with tracking of individual invoices § L ower overhead and paper handling for printing, folding, stuffing, stamping and mailing §R eallocate resources from mail operations to more productive activities § Improve service to customers with real-time delivery and more choices for receiving invoices §R etrieve billing documents quickly and easily with electronic archiving and web portal access 10 Esker white paper Automated AR invoicing process overview YOUR COMPANY SAP ESKER If customer accepts e-invoice Applications If not, the invoice is sent by regular mail EMAIL with attachment or link to portal CUSTOMERS ESKER PRODUCTION FACILITY ARCHIVING M A IL FAC TO R Y Post Office Delivery CUSTOMERS Case study A leading maker of digital circuits sends 100,000 invoices annually to customers around the world. These invoices are generated by the SAP system, printed, and sent each day. Prior to the Esker solution, the company used old green bar forms and sent the invoices via FedEx worldwide. Invoices to Asia were manually batched, and invoices for Europe had to be manually archived for Valued Added Tax (VAT) audits. Total annual cost of the process was estimated to be $98,000 per year; the company quickly recognized the need to route European, Asian and U.S. invoices in daily batches according to the distributor, and either send a single email with multiple secure PDF attachments, or send all the invoices as one secure PDF attachment. Working with Esker, the company shortened its invoicing cycle while gaining automated archiving for storage and retrieval — complete with an audit trail. Invoices go directly from the SAP system via print spool to the Esker solution, which applies formatting specific to U.S., European or Asian invoices. Asia invoices are batched, converted to a PDF and submitted to a secure Web site. Then a notification email is sent to the receiving customer with a link to the batched invoices. Europe invoices are converted to PDFs that are emailed (as attachments or with a secure Web link) and electronically archived for searching and retrieval. This ability to merge 100 PDFs into a single PDF and route the document was a key factor in the company’s decision to implement the Esker solution. Initial annual savings totaled $68,000 with ROI in three months. 11 Esker white paper Procure-to-Pay When companies add up all the time and resources spent on sourcing and buying the goods and services needed to need to run their business, the cost of generating and processing a single purchase order can be as high as $250. And difficulties arise in trying to manage audit trails, keep track of documents, share supplier information across business units and optimize inventory control. In a typical manual process it can take nearly 4 minutes to key in a vendor invoice and as long as 2 days to complete approval. Average processing cost is over $20 per invoice and the error rate can be as high as 4%. Companies miss out on vendor discounts and struggle to prevent duplicate payments, support regulatory compliance, and maintain strong relationships with suppliers. Purchasing The purchasing department generates added value and profitability for the entire organization by communicating with suppliers to procure high-quality goods and services at the lowest cost and at the right time. This value is restricted by archaic and inefficient working methods involving paper documents and time-consuming tasks. Businesses improve purchasing by outlining each step in the process, identifying document-dependent manual touch points, prioritizing based on cost/return, and automating the top priorities first. A typical manual purchasing process requires handling of multiple documents, such as requisition orders, purchase orders and confirmations, all of which are copied, distributed and filed by various internal and external groups involved in the process. A purchasing department is typically in contact with the accounting/finance department, production planning department or other groups that require goods or services, external suppliers and warehousing. Each purchasing document must be printed, retrieved from the printer, faxed, sometimes sent via postal mail, photocopied (perhaps several times) and filed. The process is duplicated with each supplier’s purchase order. Departments requiring goods or services use the SAP system to create and print a purchase requisition. A purchase validation request is created and manually printed and distributed. The purchase details are confirmed by hand with a stamp or other manual means. The purchasing department uses the SAP system to create a purchase order, which is printed and manually faxed to the supplier. A copy of the purchase order is printed and sent to the warehouse to ensure that it is ready to receive the goods and confirm correct delivery. Additional copies are manually printed for the accounting department and the paper-based archive. Suppliers fax order confirmations to the purchasing department, which manually collects and files the documents and manually sends confirmation emails to the departments requiring the goods or services. The automated purchasing process includes the same basic steps. This is important to note because Esker solutions do not disrupt established procedures; they simply automate them. The department requiring goods or services creates a purchase requisition in the SAP system. A purchase validation request is automatically created and emailed by the Esker solution to confirm purchase details and approval. The purchasing department creates a purchase order in the SAP system, which sends an automated fax to the supplier. A copy of the purchase order is automatically emailed to the warehouse to ensure that it is ready to receive the goods and confirm correct delivery. An automated email is also sent to the accounting department. The supplier faxes an order confirmation to the purchasing department, which is automatically received and archived, and an automated confirmation email is sent to the department requiring the goods or services. Each step is handled electronically, with no manual touch points. Automated e-purchasing benefits § Cut the cost of processing procurement documents by up to 60% § Increase PO processing speed by up to 95% for faster procurement § Centralize storage of purchasing documents for high availability of supply chain information §G ain internal controls for regulatory compliance support and consistency in procurement across the enterprise § Strengthen supplier relationships and keep the supply chain running smoothly 12 Esker white paper Automated purchasing process overview Automated Archiving PURCHASING DEPARTMENT Purchase order SUPPLIERS Fax Purchase order copy SAP WAREHOUSE Applications Email Purchase order copy PRODUCTION PLAN Validation process email form ACCOUNTING DEPARTMENT Email PURCHASING MANAGER Case study A leading healthcare products manufacturer implemented an Esker solution to deliver documents throughout its worldwide supply chain. The company saw payback in less than six months, achieved significant productivity gains and improved communication with suppliers and customers. To supply its facilities in the United States and Europe, the company buys materials from suppliers on both continents and sells its products through a network of distributors and retailers in more than 90 countries. Before implementing the Esker solution, the company delivered its SAP-generated transaction documents via manual fax — paper-intensive, labor-intensive and costly. According to the company’s estimates, the total cost of manually faxing a purchase order was $1.25. Delivering these same documents via automated fax, the company has reduced this cost to $.25 — saving $1.00 on each purchase order. With an annual volume of 250,000 procurement/fulfillment documents, they are saving $250,000 per year. In addition, the company has been able to reassign more than one full-time employee and avoid any increase in administrator or programmer workloads. Equally valuable, the manufacturer is now able to communicate with its supply chain more rapidly and responsively. 13 Esker white paper Accounts Payable In a basic AP process, a purchase request is sent to a manger for approval in paper form. The manager or the requester takes it to an entry clerk and a PO is created, either within or outside the SAP application. Then the PO goes out, in most cases through the postal network, to the supplier where it is received and processed. The goods or services are delivered, an invoice is eventually created and sent back, and the accounts payable process begins. The invoice comes in, again in most cases through the postal network. Employees physically open the mail and determine where the payable needs to go, which may be through an approval process. Then an individual keys the invoice information into the SAP application so it can be paid. To make sure the goods were received, someone must to go back to the person who placed the order to make sure they received the goods or services and were satisfied with them. Manager approval may be required if the invoice has not been approved for payment, or of it exceeds a certain dollar amount. Then, in many cases, the invoice is archived in a file cabinet. Many companies have entire rooms filled with file cabinets storing paper invoices and related documents, which takes up valuable space and can make retrieval difficult. Esker solutions capture data such as vendor number, purchase order number and due date for routing and indexing when a fax, email, paper or electronic invoice arrives. No predefined templates are needed. The Esker solution checks the extracted data to determine whether or not the invoice is associated with an existing purchase order. In the case of a PO invoice, the Esker solution pulls information directly from the SAP application, either through BAPI or replication, and compares the invoice content with the PO information. If there is a perfect match, the Esker solution can automatically send the transaction straight through to the SAP application in a touchless process. For invoices that do not match up with a PO, the Esker solution can perform the necessary exception handling, such as checking to determine if the invoice is a duplicate, if there are any discounts that can be applied for fast payment or if the invoice needs to go through an approval process. Coding may be done, either inside or outside of the accounting department, at this stage. If any additional approval is required, the invoice can be transferred through the office electronically. Users know exactly where the invoice is in the approval process, and it gets to the right people for the necessary approvals to generate the information in the SAP system and book payment as quickly as possible. Throughout the entire process, whether the invoice is with or without a PO, the Esker solution attaches information inside the SAP system. Invoice data and the document image are electronically transferred into an archive (either SAP Content Server, the Esker archive or a separate archiving solution) with a link back into the SAP application for quick and easy retrieval of the information as needed. A complete audit trail of every step provides the ability to produce a complete record of all actions that took place throughout processing, using the reporting capabilities of the Esker solution. Automated AP processing benefits § L ower purchase-to-pay process costs by as much as 40–60% § Receive and enter vendor invoices up to 75% faster § Take full advantage of fast-payment discounts § Reduce errors resulting from manual keystroke entry and hand-matching § Prevent late and duplicate payments § Strengthen credit status § Improve response to vendor inquiries concerning invoice status § Gain visibility to see who is buying what and how often §B enchmark metrics such as vendor cost and employee performance 14 Esker white paper Automated AP process overview 1 Incoming invoice received by email, fax, paper or via web 2 Data captured, read and made available for verification 4 Invoice created — available via SAP workflow Email Fax Vendor Invoice SAP® Solution SAP® Content Server Esker Archiving Database or Paper & Scan Web 3 5 Web form validation Capture accuracy Vendor exists in SAP vendor Master Order number exists (for PO invoices) Duplicate invoice check Document accessible via SAP ArchiveLink® Case study At a $3 billion international cable manufacturer with a 9,000 employees, AP transactions were all carried out manually with over 24,000 vendor invoices per year having to be input on the main business system. With paper-based processes, control and visibility were difficult to maintain. Manual invoice data entry created the risk of keystroke and selection errors. Searching for matching order lines and delivery note details on larger orders added time for each line item to be found. All vendor invoices were archived in physical folders. When price and quantity issues arose in attempting to post an invoice, the physical document was passed to the purchasing department and the AP department lost visibility. For authorization of non-PO invoices, groups of invoices were taken to a scanner connected to a PC and each invoice was scanned to a directory as a PDF file, where it was renamed and then copied to a file server. The file would be emailed to the authorizer, and then placed back on file. A key part of the business case for the project was to understand and execute the most efficient processes to drive down costs for the business. With the company’s Esker solution, vendor invoices are received as scanned images. The image is processed by a business and split into individual invoices, which are then passed to invoice processing rules using optical character recognition to capture predefined fields. Captured fields are used to create a user form for data validation. The user form containing the data extracted from the image, along with the image file itself, is sent to an AP specialist for validation of the extracted data against the invoice image. The specialist validates each extracted data field on the user form against the corresponding field on the invoice image. Upon completion of the validation process, an invoice is automatically created in the SAP application. Each invoice is processed through to SAP Content Server, with a URL link posting into the SAP application. As a result, the company has been able to reduce its paper processing by more than 98%, leading to full process control and visibility. Requirements for staff resources within the AP department have also been reduced by approximately 60%. And response times for processing vendor invoices have been dramatically reduced by cutting the elapsed time required for authorization and query management. 15 Esker white paper Conclusion Organizations running SAP solutions have made a major investment in standardizing business processes. Because documents play such a vital role in achieving return on the investment, businesses will only achieve full ROI when document processes are automated. Despite the revolutionary impact of SAP solutions on business processes, many essential documents — sales orders, customer invoices, purchase orders, vendor invoices and others — remain bound to manual delivery. Significant cost and time savings, as well as increased customer satisfaction, can be directly attributed to automated processing (which encompasses both input and output) of these documents. Intelligent automation technology has made it possible to remove paper from document processes with no applicationlevel modification of SAP solutions. Using patented technology, Esker solutions enable paper-based processes to be modeled and automated based on content analysis and multiple electronic media options. This automation generates significant financial gains while shortening business cycles and enhancing customer service. IT analysts recommend that organizations take a close look at their document processes because valuable opportunities exist for cost reduction, efficiency improvement and competitive advantages. Research has shown that organizations with effective document processes are more likely to be profit growth leaders able to respond effectively to a changing business environment. With on-premise or on-demand solutions from Esker, businesses running SAP applications are able to: § Automate document processing with minimal implementation time, risk and cost § Transform manual task into fast and efficient information exchange § Reduce average time for order processing, customer invoicing, procurement and vendor invoice processing § Reduce (or eliminate) manual data entry and associated errors §R educe overhead and paper handling for printing and faxing or folding, stuffing, stamping and physically mailing documents § Gain process visibility and control § Eliminate the pain of paper document routing and archiving § Make data and documents readily available for customer/supplier service and auditing § Improve customer and vendor satisfaction § Increase competitiveness § Achieve immediate additional ROI for SAP solution investments Beyond improving communication with customers and suppliers, making business information more accessible and employees more productive, and reducing demand on administrative resources, document process automation with Esker solutions is a useful initiative in terms of dollars saved alone. Learn more about Esker document process automation Details of automated sales order processing, accounts receivable invoicing, e-purchasing and accounts payable processing solutions are available in process-specific white papers available from Esker. 16 Esker white paper About Esker Esker is a recognized leader in helping organizations eliminate manual processes, gain visibility and control, and reduce the use of paper by automating the flow of documents into, within and out of the organization. With its comprehensive platform and patented technology, Esker delivers the advantages of automated document processing either as a powerful onpremise solution or as an on-demand services (SaaS) leveraging Esker-hosted infrastructure. Customers achieve significant and immediate operational efficiencies, cost savings and measurable ROI in as little as three to six months. As an established SAP software solution partner with certified integration, and an SAP customer itself. Esker has made serving the needs of SAP customers a top priority. The results of the SAP and Esker partnership are demonstrated around the world by SAP customers who have automated document processes with Esker solutions. Esker has a dedicated R&D team focusing on SAP applications, and a primary objective to offer SAP customers the best solution for document process automation. Founded in 1985, Esker operates globally with more than 80,000 customers and millions of licensed users. Esker has global headquarters in Lyon, France and U.S. headquarters in Madison, Wisconsin. For more information, visit www.esker.com. 17 Madison, Wisconsin § U.S. Headquarters Worldwide Esker locations Asia § www.esker.com.sg Esker, Inc. 1212 Deming Way Suite 350 Madison, WI 53717 Australia § www.esker.com.au France § www.esker.fr Germany § www.esker.de Tel : 608.828.6000 Fax : 608.828.6001 Italy § www.esker.it Email : [email protected] Spain § www.esker.es United Kingdom § www.esker.co.uk © 2009 Esker S.A. 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