Optimizing the supplier invoice management process at a Hungarian electronics trading company
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Discover how our company’s digitization solution can significantly speed up and make the processing of documents more efficient, as well as drastically reduce the resource requirements of the process!
Initial situation: Introducing our client
Our company was contacted by a trading company that handles approximately 1,500-2,000 incoming financial documents per month. The vast majority of these are invoices, more than two-thirds of which are issued under a Hungarian tax number.
According to the client, incoming documents are filed, sorted and integrated into company processes manually. The related workflows are supported with various Microsoft Excel tables and email streams.
Issues to be solved: Delays, chaos and flying blind
Our client’s employees listed at length and in detail the problems that are becoming more critical day by day, which have resulted in constant supplier complaints, internal conflicts resulting in significant turnover, manual coordination tasks that consume a lot of resources and are of questionable efficiency, and uncertainty due to the lack of up-to-date and reliable data.
We have identified the following main problems in the management of vendor invoices:
- Adhering to the payment deadlines is a significant challenge, delays are common, because the internal approval and authorization process takes more time than the specified period of the deferred payment.
- In many cases, the receipts disappear, get lost, and this only comes to light when the supplier complains about the expired claim. In such cases, it is not uncommon to have to re-request the affected invoice and start the approval process from the beginning.
- In the case of internal approval processes, it is a daily challenge to decide which employee’s contribution is required for a given case, and whether the person concerned even knows that he or she has a task to perform in this regard, which in many cases causes conflict.
- Only general ledger analysis of supplier invoices is available after the end of the given VAT period, retroactively. There is no real-time, reliable, meaningful data available for the preparation of various forecasts, cashflow planning, and financial planning at the partner level, which makes it impossible to make well-founded decisions.
- The management, filing, binding, and foldering of various documents consumes a lot of resources.
Are the above problems familiar?
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Solution 1.0 – Optimizing the processing of incoming invoices
After identifying the issues and requirements, our company’s experts first outlined an application for our client that optimized the process of handling supplier invoices and other documents at the following points:
- All incoming invoices and receipts are digitized, so the data content of the documents are available in the database after digital processing, where they are stored as digital data, i.e. not only in image format.
- Steps of digital processing:
- If it is a readable PDF file, then the application extracts the data content of the document.
- In the case of a paper-based receipt, after scanning the document, the data is digitized using optical character recognition (OCR).
- Through the National Tax and Customs Office (NAV) interface, the application queries supplier invoices with domestic tax numbers from the database of the tax authority.
- If necessary, the data content of the invoice will be recorded manually.
- All incoming invoices are received digitally, storing the exact time of reception using a time stamp. The time-stamped digital document is equivalent to the paper-based document, so its storage and foldering is unnecessary. Thanks to this, the company only has to keep digital copies of the receipts.
- Paper-based documents can be stored in bulk, without sorting and categorization, or even destroyed. The time stamp is integrated into the system using Netlock’s service.
- During the initial account assignment, in the case of invoices with several item lines, the item data is also recorded, using digital data extraction or, in the case of exceptions, manually. In the initial account assignment phase, the rate of digital data extraction exceeds 80 percent.
- During the execution of the invoice verification and approval process, all incoming invoices are signed or rejected by those responsible in accordance with a predetermined process. The invoice verifying processes run digitally (workflow), the rate of automation is over 90 percent. In the vast majority of cases the system starts the appropriate approval process automatically based on digital data processing, without any human intervention. In the remaining exceptional cases, an operator decides who should approve the given document.
- In the steps related to the supplier master and assignment, the system continuously imports the company’s central supplier master data from the SAP ERP system via an interface (LINK to the Onespire SAP services page).
- During digital processing, the incoming receipt is automatically assigned to the supplier. When required, an exception process is initiated if the invoice was sent by a partner, which is not yet included in the supplier master data sheet.
- The consistency of the system is ensured because it operates from the supplier master of the SAP ERP system and the data remains synchronized.
- The initial account assignment data and the invoice values assigned to the supplier are sent to the general ledger in such a way that the system we developed transfers the digitally processed and pre-billed data according to the company’s own business logic to the SAP ERP system through an interface.
- After that, the accountant checks the submitted data and, if necessary, corrects it before accounting. However, there is no need to record the data content of the invoices again, our solution does it automatically. Based on practical experience, a small percentage of items require correction before processing, after the verification they are posted in the ledger without modification.
- In our solution, it is possible to display the initial account assignment data at report level, in the form of Microsoft Excel tables and dashboards, as well as the efficient execution of financial planning tasks, such as cash flow, supplier-level financial planning, various forecasts, or cash discount based on real-time and reliable data.
- In the digital invoice and document repository in our application, all receipts can be retrieved based on various metadata, such as name, date, amount, period, or product group.
Benefits provided by Onespire Ltd.’s invoice management solution
With the help of the corporate document management, digitization and workflow automation solution developed by our company, we had the following experience with the issues that previously caused critical challenges for our client:
- The approval process of supplier invoices has been significantly accelerated, the turnaround time has been shortened from several weeks to a few working days, ideally a few hours. This practically eliminated supplier complaints, which greatly improved our client’s reputation within a short period of time.
- All approval process steps have a clear status, employees know exactly who handles a given item. Thanks to this, the previous conflicts in the distribution of tasks and responsibilities also disappeared, and in turn the fluctuation also normalized.
- The approval process and financial preparation of the receipt, the initial account assignment, now take place simultaneously. Thanks to this, the finance department knows about the receipt and can see the process of approval or the possible rejection.
- After the implementation of our solution, the “document hunt” within the company, which used to take a lot of time for the employees, essentially stopped.
- Digital processing has freed up significant resources, which can now be used for other value-creating processes.
- With the introduction of our application, documents are now stored digitally, so the previous time-consuming and wearisome binding and boxing is a thing of the past.
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Additional optimization possibilities
Solution 2.0 – Introduction of new functions and services
After the implementation of the enterprise document management system developed by our company, we identified additional points with our client where we can make the management of documents even more efficient and smooth with the help of the Onespire DocuLine solution, further reducing resource expenditures:
- Reconciliation of incoming invoices and especially collective invoices with delivery notes (significant delivery and reception of goods vs. one collective invoice).
- Reconciliation of purchase documents (PO, Purchase Order) created in the SAP ERP system with incoming invoices.
- Up-to-date monitoring of the financial status of procured items.
- Digitization of the small-value purchases process from request to posting in the ledger.
- Structured and digital storage of contracts, incorporating the digital signature provided by Netlock.
- Creating a digital document library of company projects, with a project view. With this, all documents can be viewed in one place, such as invoices, performance certificates, contracts, and project documentation.
Discover how Onespire Ltd. can support the efficient operation of your company with its enterprise document management application, digitization, invoice management and workflow automation solutions!
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Optimizing the supplier invoice management process at a Hungarian electronics trading company
Case study by Onespire Ltd.
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