Are E Invoices Always Correct?

Over the past year, I have noticed a rebirth of the concept that if the information came from a computer it must be correct. One example is an e invoice. The electronic exchange of meta data between trading partners has been around for a long time but most of these routines such as edi also include varying levels of error detection and collaboration. What I have observed is that some embrace e invoicing as a way to eliminate invoice errors. The reality is that merely changing the output format does nothing to change the source of the invoice meta data. There are several business solutions that include routines to "clean up" the meta data before transferring it to an ERP such as SAP but many of the decisions as to how to resolve the incorrect meta data still must come from the receiver of the invoice. Just detecting the problem and sending the invoice back to the vendor often does not eliminate the problem. For SAP clients, SAP Invoice Management by Open Text, allows the corporation to still receive the e invoice seamlessly but then analyzes the meta data for problems and if detected, a notification is immediately routed to the person with both the knowledge and responsibility to correct the meta data. It also provides a critical component where incorrect electronic meta data is analyzed for trends thereby allowing the corporation to address the root cause. Of no surprise...the root cause is often an issue with the origin of the meta data.

One of the first computer terms I learned was GIGO...garbage in garbage out. Changing only the method of invoice delivery often cause more problems than it solves...but...if done in concert with a solution such as SAP Invoice Management...the rewards can be significant!

See SAP EcoHub for more on SAP Invoice Management

Heard at SAP Sapphire

I recently attended and presented at the annual SAP Sapphire conference in Orlando. I expected to see strong interest in optimization of back office functions but after years of attending this event, I was amazed to see the high level of interest specifically around invoice process optimization. One personal example…I conducted a micro forum related to SAP Invoice Management where we expected 10 -15 people…the final attendance was 60 people.
In discussions with many of the attendees, I found a significant growth interest related to vendor networks such as provided by Crossgate and dynamic discounting (DD). The adoption of DD will drive corporations to invest in solutions such as SAP Invoice Management to ensure they achieve a high rate of straight through processing. DD will also require invoice exception processing to occur in very few days as opposed to weeks.
I also see the increased adoption of vendor networks driving standardization of invoice meta data content and format; not unlike what edi has driven in the past. This will be slow to evolve but I think will eventually happen.
One topic that caught my attention…Shared Service. While not a new topic, I feel a combination of searching for efficiency gains and control combined with merger and acquisitions has created renewed interest in shared services. The major difference this time around is focus is on utilizing technology and out of the box solutions such as SAP Shared Services Framework & SAP Invoice Management as opposed to prior efforts that focused on moving to less expensive labor pools.

Accounts Payable and Social Networks

I recently attended a presentation related to how Accounts Payable Departments might utilize social networks. This really got my attention since we at OpenText have long considered social networks as a means to enhance sharing of information ranging from individual contributions through departmental actions to corporate messaging. Open Text provides a tool “Pulse” as part of our ECM solution to assist with information sharing.
By using Pulse, organizations can take advantage of a Facebook-like social media environment within their existing Open Text ECM Suite deployments and move informal communications out of email, thus dramatically reducing dependence on inefficient and slow email chains. Additionally, it offers a way for people to collaborate rapidly in real time, while creating a secure knowledge base for new employees and team members. Pulse is a major step toward enabling customers to capture their organizational memory through the archival of formal and informal user conversations.
So…how can those in the business process around Invoice Processing utilize social networks? While I believe the use is unlimited, I will focus on a few examples.
Individual Information Sharing or what would an Accounts Payable Professional want others to know. By using tools like Facebook, Twitter, Pulse, etc an individual can inform others when they will be out of the office or they may want to share recently achieved Professional certifications. They may want to inform a group such as selected suppliers of upcoming requirement changes. Information might be shared with internal clients on payment activities.
Departmental Information Sharing – The department may want to share internal statistics such as on time payments and discounts earned. They can recognize those process participants that helped to achieve new success with invoice processing. The department may want to announce staffing changes such as retirement, promotions or transfers. They may want to create groups for selected participants such as procurement so they can immediately address resolutions being handled with SAP Invoice Management. For me, I am now able to know if one of my colleagues is traveling to the same event that I may be attending. I can also see when colleagues are on vacation…live vicariously through their adventures…makes my work day a little more pleasant.
Corporate Information Sharing – Your shared service center may want to utilize social networks to introduce policy changes to both internal and external clients. As with the Department, they may want to announce staffing changes. They may desire to communicate real time with internal Accounting Departments related to closing activities such as accruals. The use of the OpenText Pulse would be a great tool to increase the visibility of current policies and regulations. I for one monitor real time changes to travel budgets as well as new presentations that others may have saved to the content server. I don’t have to wait and hope I receive an email telling me about new presentations.
Let me know…how are you using social networks to improve your corporate contribution?
For more information on SAP Invoice Management http://ecohub.sdn.sap.com/irj/ecohub/solutions/SAPVIM
For more information on OpenText Pulsehttp://www.opentext.com/2/global/products/products-collaboration/products-opentext-extended-collaboration.htm

Problem Invoice: Post or Return to Supplier

I was recent ask by a client when they should send a problem invoice back to the supplier or should they continue to process the invoice.

Variables to Consider

There are several variables that should be considered when making the decision. For this discussion the first variable assumption will be that the corporation has implement SAP as their core system of record. You must also consider if the invoice input channel is paper or electronic. If you are digitizing the paper invoice, you should consider if you want to scan and create an image before returning or return before imaging.

Manual Process

If you process invoices manually, returning the invoice may seem like the simple approach but keep in mind you must keep some record (typically a spreadsheet) that the invoice was received and returned. If you have already received the goods and / or services, you must still ensure proper accounting for the liability regardless of the invoice.

Automated Process

If you have optimized your Accounts Payable processing utilizing a solution such as SAP Invoice Management, the decision shifts to a best practice of processing the invoice to the point of problem detection and review of problem. This optimization allows for fast analysis. Often the invoice is correct and the resolution requires changing the transactional data such as goods receipt. In other situations, it is more relevant to possibly short pay the invoice and if required to issue a debit memorandum.

Audit Consideration

Even if the resolution is to return the invoice to the sender, processing to the failure point and then sending the invoice back creates a strong audit trail related to the original source document. This audit is often needed for disputed payments.

Returning the Invoice

One major consideration with most vendor master files is the correspondence information includes only the contact information required to purchase from the vendor. If you are returning the invoice, it is the vendor Accounts Receivable department that requires notification. The usually prompts the question …“do I have to update thousands of vendor masters”? The answer is typically no. You would only update the vendors that you do the majority of business with and / or those you know have historically sent problem invoices. After that, you utilize reporting metrics to observe when a trend evolves and update the vendor master at that time.

One last decision is whether to include the original paper invoice or an imaging of the original invoice when communication with the supplier that you will not be processing the invoice. If electronic or if OCR is used for paper invoices, sufficient invoice meta data can be included in the notification email. If the meta data has not been captured, then it typically would improve the process by attaching a copy of the invoice. Being able to return an image not only reduces cost but also provides effective control for the Accounts Payable processing.

So…to return or not to return…that is the question…and as with most complicated business processes the answer is “it depends on the circumstance”.

See SAP EcoHub for more information on SAP Invoice Management