Transforming Invoice Management in SAP with Insights from OpenText’s Matthias Niessen

⇨ Many invoicing processes rely on manual processes and outdated legacy systems.

⇨ OpenText's Vendor Invoice Management automates invoicing actions to reduce the change of errors and speed up invoice processes.

⇨ VIM utilizes the OCR tool Intelligent Capture to automatically extract and validate data from invoices, triggering workflows and approvals for invoice posting.

Automating the invoice management process is crucial for businesses looking to alleviate payment discrepancies, processing issues, delayed payments, and limited visibility. These challenges often arise when managing invoices manually across multiple systems external to SAP ERP. These manual processes slow down operations and introduce compliance risks that can hinder growth. 

In a recent conversation, Matthias Niessen, Alliances Marketing Manager at OpenText-inc/">OpenText and author of the SAP Press publication “Vendor Invoice Management with SAP,” shared valuable insights regarding the challenges many companies face in automating the flow of invoices. This sentiment was echoed by SAPinsider’s upcoming Cash Management and Visibility benchmark report, further emphasizing the inefficiencies in traditional finance operations across the cash-to-cash cycle. 

Understanding SAP System Challenges: Manual Processes and Legacy Systems 

One of the key challenges Niessen highlighted is the reliance on manual processes and outdated legacy systems. He noted, “in the realm of SAP and invoice management, the biggest pitfalls often revolve around the manual processes and the legacy systems that haven’t been upgraded.” This poses several problems, including: 

• Data integrity and loss: Manually entering invoices increases the likelihood of errors, missing entries, and data inconsistency. Legacy systems lacking modern data validation tools can exacerbate these issues. 
• Operational delays: Delays entering invoices into the system after receipt can negatively impact vendor relationships and financial reporting. 
• Compliance and regional regulations: Outdated legacy systems may struggle with receiving timely updates that comply with the latest regulations across multiple jurisdictions, potentially leading to legal complications. 

Niessen summarizes these hurdles, stating, “Multiplicity and lack of transparency in invoice management are the bane of financial departments.” 

To illustrate further, Niessen provides an example of how manual processes involving paper documents and PDFs in emails create inefficiencies in recognizing liabilities. These inefficiencies hinder businesses from fully utilizing negotiated payment terms. Niessen explains, “Despite many customers investing time to push suppliers into 60-day terms, businesses may not see the liability for 10 to 15 days, preventing them from taking full advantage of favorable terms.”

These inefficiencies disrupt cash flow and working capital management. Accurate liability management is crucial for precise cash forecasting, allowing businesses to avoid potential cash flow issues and manage finances more effectively. 

While digitization offers promise, many organizations struggle with document processing, particularly automating invoice flows. This can result in lost documents, delayed approvals, and discrepancies, hindering an efficient cash conversion cycle. “The delay in adapting to changes, such as automated document flows, leaves untapped potential,” warns Niessen. 

Value of Vendor Invoice Management (VIM) by OpenText for SAP 

OpenText’s Vendor Invoice Management (VIM) is designed to address these challenges embedded in SAP’s ERP to deliver automated invoice management capabilities. VIM simplifies the reception, validation, routing, and monitoring of vendor invoices, promoting collaboration within the invoice-to-pay process. Niessen explains, “Think of VIM as more than just a tool – it’s the bridge between old and new, between inefficiency and streamlined processes in SAP… the harmonization between VIM and SAP is all about real-time processing and accurate data.” 

VIM utilizes Intelligent Capture, an OCR tool, to transition invoices from paper to digital format, automatically extracting and validating data from invoices received via email or post. It maps electronic invoices based on their format and then triggers workflows and approvals for invoice posting. VIM ensures consistent performance and better integration throughout the invoicing process by eliminating the need for third-party tools. 

Evolution of Invoice Management in SAP 

Introducing solutions like OpenText’s VIM can transform invoice management in SAP. The shift from manual to automated processes significantly reduces errors, increases operational speed, and improves compliance. Niessen stated, “Businesses can automate the whole process from receiving an invoice until it is posted and paid.” 

As technology evolves, we can anticipate even more innovations in this area. These could include more intelligent automation, additional machine learning capabilities, and predictive analytics, all of which will play a more prominent role in SAP’s invoice management. These technologies will enable businesses to predict potential issues, make informed decisions, and ensure more efficient operations. Niessen concludes, “VIM isn’t just about automation; it’s about intelligently evolving how enterprises interact with financial data in the SAP ecosystem.” With tools like VIM, businesses can manage invoices more efficiently, leading to improved cash flow and capital management.

What does this mean for SAPinsiders? 

Prioritize a structured approach to VIM implementation by clearly delineating roles for tasks such as scanning invoices and validating OCR. Ensure your SAP support team is prepared to manage VIM’s standard workflows, and remember that while customization can be beneficial, moderation is critical to avoid unintended costs and complications.

Assess the volume of invoices and anticipate any performance implications this could have on your system. Decide on an archiving approach that best suits your organization’s needs, keeping in mind that some companies prefer using the SAP database directly, skipping a separate archive system.

Embrace centralization of the invoice process by directing all invoices to one central team. This avoids process dispersion across departments. Simultaneously, communicate clearly with suppliers about integrating VIM, ensuring they know invoice submission standards and procedures.