Optimizing Invoice

Processing with OpenText

VIM

Market Offering:Cross Industry

Package(s):SAP, OpenText
Authors:Kalie Porterfield, Anirudh Damani
Date: April 15, 2014

Contents
Executive Summary

Business Challenges in AP Processes

OpenText Vendor Invoice Management Overview

Meeting AP Process Challenges with VIM

Business Benefits of Implementing VIM

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AP Process Optimization Solution Summary

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National SAP Eminence whitepaper

Executive Summary

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.

Business Challenges in AP Processes

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:
Long invoice turnaround time
Late payments, missed cash discounts
Large amounts of manual activity
Process Based Process Scalability

High cost per invoice

Supplier dissatisfaction
Organizational 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

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.

Business Challenges in AP Processes

Role

Management

Buyers

Accounts
Payable Team

Suppliers

Typical Pain Point

Managing invoice processing cost

Need for reports to identify invoice issues and bottlenecks

Invoice processing targets not met

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

Manual invoice indexing is time consuming and cumbersome

Resolving exception invoices is manually intensive and reduces throughput

Invoice approval processes

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

Late payments affect cash flow

Customers 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:
invoice data input
problem invoice resolution routing between parties
invoice approval re-routing due to transition/termination/paid time off
intra-company requests for additional information or input for invoice resolution
vendor communication for updates and additional information
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.

OpenText Vendor Invoice Management Overview

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.

OpenText Vendor Invoice Management Overview

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 if action has
been taken or must seek out the
individual responsible for resolving
the invoice. The business may
also decide to have a custom
report created.

The individual accesses their VIM

Analytics report to see the status of the
invoice, the current workflow agent, and
aging statistics for the invoice.

Meeting AP Process Challenges with VIM

Meeting AP Process Challenges with

VIM
OpenText VIM streamlines AP processes with automated data capture, invoice exception handling,
and approval workflows and providing visibility and traceability through reporting and analytics. The
sections below detail the solutions in each of these core areas.
Invoice Data Capture
Optical character recognition can be used in AP processes to extract invoice header and line item
data from a digitized invoice image such as an emailed .pdf or a scan of a paper invoice. VIM itself
does not have an OCR component; instead it relies on either OpenText Invoice Capture Center (ICC)
or third party OCR component software. The data capture process using an OCR component
includes data recognition, validation, manual intervention if needed, data transfer to an invoice
processing document, and data archiving.

The OpenText-specific OCR component user interface, ICC, allows the business to extract and
validate data from paper or electronic invoice images on the front end of the process. This reduces
manual effort associated with invoice indexing, and provides data validation to prevent issues later in
the process. If there are any issues capturing data (the system is unable to read certain fields, the
invoice data capture is not complete, etc.) the user is prompted to intervene; this ensures data
indexing completeness.
ICC uses OpenText Capture Document Reader and an Invoice Knowledge Base to capture and
interpret the information on the invoice image. The Knowledge Base comes trained on samples of
invoices from thousands of global vendors allowing the Document Reader to recognize 70% of
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Meeting AP Process Challenges with VIM

invoice header fields on average. ICC also has the capability to learn new fields using Adaptive Read
Technology (ART) which is a training mode that can be executed by a VIM administrator.
Once the data is captured the fields are validated against ECC master data. For example, ICC may
check that the vendor number captured exists in the system, or that the PO number captured has the
correct number of characters. Invoices that have missing or invalid information are flagged as
exceptions and routed to an appropriate user for resolution. The user enters/corrects the data and resubmits the invoice for validation.

Once the data is captured and validated, it is archived in a content repository along with the invoice
image itself. A standard interface between VIM and the OCR engine brings the captured data into the
VIM invoice processing document. Alternatively, the user can key in the invoice information manually.
The invoice processing document in VIM is called a Document Processing (DP) Document, and it
provides the user with an interface similar to standard SAP. The view below is referred to as the index
screen, and contains the invoice data.

Meeting AP Process Challenges with VIM

.
Note that the DP document is NOT the same as an invoice document in SAP; rather the SAP invoice
is created from the DP document.
Exceptions Handling
After data is captured, VIM performs a duplicate check for the invoice that is far more robust than
standard SAP ECC. A duplicate is flagged when a set of invoice field values match those of an
existing invoice document; this set of fields can be configured to meet the businesses needs and may
be adjusted over time if, for example, too many false duplicates are identified. If a suspected
duplicate is identified, a work item notification is sent to the SAP inbox of a duplicate analyst for
review and actioning as needed.

Once the duplicate check is performed, the DP document is processed according to a set of business
rules. Business rules in this context refer to either specific invoice handling procedures (such as
parking of invoices with a certain characteristic) or invoice data exception handling procedures (such
as incomplete invoice data). VIM leverages SAP workflow to define 47 standard business rules,
although additional rules may be added as needed. Business rules can be executed from the users
VIM Dashboard for a particular DP document as seen below.

Meeting AP Process Challenges with VIM

If invoice data exceptions are flagged, the DP document is automatically routed to the appropriate
actor based on the exception reason and the transactional data in the invoice. The appropriate actor
receives a notification of this open work item to their SAP inbox. They can click on the item to open
up the DP document directly.

This invoice may be worked and rerouted based on configurable role resolution in VIM until the
exception is resolved. Returning to the dashboard image above, the tax expert may want to refer the
DP document to vendor maintenance for resolution in which case he/she would click Refer in the
appropriate line.
The exception routing and resolution process is summarized in the process flow diagram below.

Meeting AP Process Challenges with VIM

Business rules such as vendor data or tax data maintenance can also be configured to trigger parking
workflow. This workflow is configured separately from PO or Non-PO workflow, but follows the same
logic for exception resolution.
When the DP document is fully resolved an attempt can be made to post it in SAP ECC. If the invoice
is blocked for payment, ECC invoice management rules are triggered along with VIM blocked
workflow. In this case, ECC and VIM work in tandem to provide automatic routing using VIM, visibility
to the invoice in both systems, and payment in ECC.
Invoice Approval Workflow
Invoice approval workflows for both PO and Non-PO invoices are can be configured within OpenText
VIMs highly customizable invoice approval (IAP) workflow process. Invoice approval identification
and routing is housed in separate subworkflow process from invoice exceptions discussed above and
can be triggered based on the type of DP document (PO or Non-PO) or for specific parking reasons.
In addition, approvals can be configured to take place at either at the line item and/or header level.
Using standard VIM configuration invoice approval workflow for PO invoices, if required, is singlelevel and the approver is the requestor from the PO. This is true whether the workflow is triggered by
the DP document type or a parking reason that requires approval. If the business requires multi-level
PO invoice approvals it can be achieved using custom developments.
Non-PO approval workflow, on the other hand, is multi-level using standard VIM configuration. VIMs
Non-PO approval workflow is level based; individuals are assigned to a particular level in the approval
hierarchy and each level has an assigned approval limit. When an invoice is approved by a first level
approver, the system will check their approval limit and determine if additional approvals are needed.
This first level approver is the requestor, and the appropriate individual is determined by either the
Chart of Authority (COA) data or the email address on the invoice based on configuration. The
second level approver, if needed, is determined by company code, approval level, and cost object
assignment based on COA settings. Once the approver has been identified, a notification of open
work item is sent to their SAP inbox this is true for both PO and Non-PO invoice approvers.

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Meeting AP Process Challenges with VIM

Clicking on the open item brings the approver directly to the invoice approval screen. From this
screen they choose whether they will enter the accounting information (if it is a Non PO invoice) and
whether to 1. Approve 2. Reject or 3. Refer the invoice approval to another individual for additional
information. If the invoice is referred, the referee will add comments/additional information and refer
the invoice back to the approver.

If the invoice is approved by all required parties, the system will either auto-post or route the invoice
back to the AP team based on configuration. If the invoice is rejected it is either routed back to the
previous approver or the approval workflow is cancelled; this is also controlled by configuration. The
invoice approval workflow is summarized in the diagram below for the former case where the
document is routed backwards rather than being cancelled.
Two other notable functions of VIM invoice approval workflow are the abilities to approve invoices via
a web portal and to delegate approval responsibilities for termination/transition/paid time off.
For web approval the user logs into the SAP portal with their user ID and password and views the
required approval and coding screens much like they would in VIM. A user may also delegate their
approval responsibilities to another individual via the portal which his can be used for time off or role
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Meeting AP Process Challenges with VIM

transition. The user must select a delegate with the same authorizations and create effective start and
end dates. During the effective dates invoice approval notifications are sent directly to the delegates
inbox and an audit log shows that the delegate approved the invoice on behalf of the original
approver. The same functionality can be implemented using a t-code in the VIM system itself.
Reporting and Analytics
Execution of AP processes within the VIM system provides a data log that allows for robust, standard
reports. The VIM Analytics report helps the user manage and track their open AP work items, the
remainder are for management-level visibility and process-level analysis. The metadata used in these
reports is also structured for easy export to SAP BI if the business requires reporting capabilities
outsides standard VIM.
A brief explanation and an example output for each standard report is given below.
VIM Analytics
VIM analytics dashboard has two different views: document view and workflow view. Like many SAP
ECC reports, both of these views can be manipulated in the system, have ALV view capabilities, and
can be exported to various file formats.
The VIM document view gives users indexed data information such as company code, vendor
number, requisitioner ID, and purchasing group for all VIM documents (PO, Non PO, Credit Memo) in
the search criteria. There are 52 available fields in the VIM analytics document view and the report
can be grouped by characteristics such as company, document status, document type, date, month,
exception reason, vendor, or workflow status.

For a detailed view of a specific document, the user can select the line and click the Dashboard
button or view the SAP invoice document by clicking on the document number. In addition the user
can view a particular invoice image or print a copy of the document from the VIM analytics screen.
The VIM Analytics workflow view provides detailed information on the selected documents exception
or approval workflow status such as current agent, work item ID, and processing status. This view
looks and functions very similarly to the VIM analytics document view save that the field selection for
the report is geared toward workflow monitoring.

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Meeting AP Process Challenges with VIM

Exception Analysis
The exception analysis report details all exception work items grouped by exception type, company
code, or vendor. It allows the user to monitor exception frequency, pinpoint vendors or companies
with the most exceptions, total the amount of invoice liability affected by exceptions, and view the
average processing and wait times for each type of exception. A list of work items with exceptions is
also accessible from this screen with a double click.

Productivity Report
The productivity report shows the productivity of users or roles and the activities executed by these
users or roles. The report gives an overview of processing time (total and average) and wait times
(average), allows for a comparison of productivity between two time periods, gives a snapshot in of
in process items by user or role, and enables analysis of the number of touches per invoice for a user
or role. The report also allows the user to drill down to documents processed by or being processed
by a user or role.
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Meeting AP Process Challenges with VIM

Aging Report
The aging report show aging data for documents in process in VIM. This report shows a summary of
in process document age and allows for drill down capabilities from the report screen.

Key Process Analytics

The key process analytics report functions as an executive dashboard that highlights key managerial
KPIs. This report summarizes total liabilities, processed / in process documents, VIM invoices per
channel, first pass invoice rate (invoices that are processed with no exceptions), most frequent
exceptions, and top vendors by purchase amount. These process statistics are contained in
configurable blocks that can be customized to the business needs.

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Meeting AP Process Challenges with VIM

Summary Report
The summary report provides summary statistics for all invoices in the selection criteria that can
displayed in various hierarchies (much like a pivot table).

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Business Benefits of Implementing VIM

Business Benefits of Implementing VIM

The benefits of implementing OpenText VIM include optimization of AP processing activities, the
financial impact of this process optimization, and integration with SAP ECC.
Process Optimization and Reporting Capability
Integration of VIM core processes, OpenText data archiving, and OCR data capture with SAP ECC
works to optimize Accounts Payable processes that are often manually intensive, time consuming,
and costly. Process improvement benefits of VIM implementation can be seen throughout invoice
data entry, invoice processing and approval workflow, exceptions handling, and compliance and
reporting.

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Business Benefits of Implementing VIM

Financial Impact
Although the financial benefits of AP Process optimization with VIM will vary from business to
business, the financial benefits can be significant. The table below shows the estimated financial
impact of VIM and OCR implementation provided by OpenText for a processing rate of 500,000
invoices per year.

SAP Integration
VIM is designed to work with SAP from both a technical and user experience perspective, facilitating
a smooth technical implementation and user acceptance process. Key integration points include:
The VIM core processes exist entirely within the SAP landscape
VIM works with ECC workflows, and is developed using ABAP and SAP technologies
such as the development workbench, function groups, dialogue programs, business
objects, workflow definitions, roles, customizing tables, etc.
VIM uses SAP master and transactional data for data validation, approvals, and
document creation
From an end-user perspective, the VIM user interface looks and feels very similar to SAP ECC. From
the use of t-codes to access screens to the report manipulation capabilities VIM operates in an
identical manner to ECC. The same similarity exists for customizing and administrative activities for
system setup and maintenance.

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AP Process Optimization Solution Summary

AP Process Optimization Solution

Summary
This whitepaper defines AP Process optimization as a business need and justifies why OpenText VIM
is an excellent solution for clients using SAP ECC.
OpenText VIM is a scalable, SAP-centric solution to optimize AP processes. VIM is built to be a
preconfigured solution, and the highly customizable core processes and built in interfaces on the front
end of VIM for OCR and the back end for ECC facilitate a smoother, quicker implementation.
Using VIM to optimize invoice processing activities benefits not only the AP department, but all
parties involved in the PTP 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. In addition to increasing invoice processing efficiency, VIM also provides detailed visibility
and tractability to AP processes for enhanced monitoring, internal reporting, and compliance
capabilities.
VIMs integration with SAP ECC, process automation capabilities, and potential financial impact make
it a holistic AP processes solution.

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