Recommendations in SAP procurement and invoice processing

Based on years of experience with SAP improvement processes in the Procure to Pay (P2P) process, Avelon has established a number of best practices. Using these recommendations, significant improvements in the P2P process can be realized. In this blog we will discuss the do's and don'ts. They are summarized below, after which we will go into more detail in the following sections.

P2P best practices summarized

  1. Excellence in invoice processing is the result of excellence in procurement

    • Provides correct registration and authorization of purchase orders (POs):

      • Compliance;

      • Control (insight into spend/budget/liquidity);

      • Faster processing of invoices, higher percentage of timely payment and payment discounts.

    • Goal: Reduce percentage of non-PO invoices.

  2. Adoption POs by organization is only successful in an efficient and user-friendly process

    • Make registration and approval of POs as easy as possible;

    • Do not force goods receipts if they are not strictly necessary:

      • 3-way match if relevant for warehouse, stock or valuation;

      • 2-way match with agreed delivery upon invoice approval for other (indirect) purchases.

  3. Focus on XML invoices

    • OCR only as an alternative where XML is not allowed;

    • Allow paper invoices only if PDF & XML is not possible;

    • Goal: grow towards "touchless" invoice processing for accounts payable

  4. Integrate P2P solution within your SAP system

    • Harmonized user experience;

    • No interfaces, equal functionality within the process;

    • Security and authorizations within one system;

    • Leverage SAP investment and avoid SAP indirect license risk.

Excellence in invoice processing is the result of excellence in procurement

A major disadvantage of processing invoices that are not related to a purchase order (non-PO invoices) is that the financial classification elements such as cost centre, cost type, etc. are often unknown to the accounts payable department. This makes direct routing to the correct approver difficult. Approval of non-PO invoices is always necessary. Regularly this missing information ends up in the endless internal sending back and forth of the invoice. In addition to the lack of relevant classification elements, the lack of insight into obligations is a major disadvantage of accepting invoices without a purchase order reference. Enough reasons to reduce the percentage of non-PO invoices.

Acceptance of the use of POs can only be successful in an efficient and user-friendly process. The submission of purchase applications and their approval should be simple and user-friendly.

Adoption POs by organization only successful in user-friendly process

The P2P process is a process that affects a large number of employees in every organization. Especially when it comes to indirect purchasing, this is often carried out by employees whose administrative purchasing tasks are not part of their core activities. Partly due to complexity, purchasing is registered outside SAP, does not take place at all or many understandable mistakes are made.

The Avelon Procure to Pay suite helps address these challenges and professionalize the Procure to Pay process. The Avelon Procure to Pay suite includes the following solutions in the field of procurement: 

  • Avelon Purchase Order app

  • Avelon Purchase Order Approval app

  • Avelon Goods Receipt app

Avelon PO app

Avelon Purchase Order app

Registering and monitoring the purchasing process is crucial to achieve spending that complies with internal and external rules (compliancy) before the inevitable invoice arrives. purchase orders also ensures easy matching of the invoice and therefore fewer errors in accounting, shorter turnaround times and faster payment terms. Registration of purchase orders for services and consumables also gives the budget holder a better and more up-to-date insight into the available budget. Registering the (indirect) purchasing requirements is a tricky point in many organizations. The employees who are charged with this do not see it as a primary task and input is complex and time-consuming.

The Avelon Purchase Order Fiori app makes registering (indirect) purchase orders child's play and independent of time and place. It lowers the threshold to register and is therefore the perfect start to your excellent ordering process.

The characteristics of this solution are:

  • Easy and modern registration of purchase orders through Fiori app

  • Applicable in both decentralized and central purchasing scenarios

  • Smart Search, "Google like" search function for supplier and classification elements

  • Limitation of classification elements per employee possible

  • Insight into previously recorded purchase orders

  • Workflow log and own history of purchase orders visible

  • Possibility to add annexes (e.g. tenders) and internal comments

  • Various texts to enter on purchase order confirmation

  • Automatic creation and storage of purchase order confirmation in PDF

  • Create with reference, change and hold possible

  • Registration and insight into the history of purchase orders is independent of time and place (provided that mobile use of the Fiori app is permitted and arranged within your organization)

  • Substitute ATB in case of 1 to 1 conversion from ATB to purchase order

  • Compatible with SAP ERP and S/4HANA

Read more about the Avelon Purchase Order app here.

Avelon Purchase Order APPROVAL app

PO Approval app

In addition to creating purchase orders, it is also possible to approve purchase orders for which a release strategy applies via a Fiori app. The Avelon Purchase Order Approval Fiori app makes the handling of the purchase order for the budget holder easy and approachable. The app consists of the standard SAP Purchase Order approval app, which immediately shows how many tasks are still open for the budget holder. The app has been extended in a number of areas. The app has been translated into Dutch and insight into the complete treatment history has been added. Finally, it is possible to show a print preview of the purchase order confirmation so that the budget holder can see exactly which purchase order is sent to the supplier.

The app can be used not only in the workplace, but anywhere where there is an internet connection, on any mobile device. Not only is handling easy, but it also serves convenience! Depending on your internal security policy, additional measures are required for mobile use.

In summary, the features and benefits of the Avelon Purchase Order Approval app:

  • Lowers the threshold of approval of a purchase order by simple and modern ease of use for the budget holder

  • Relevant approval information such as classification, description, amount visible

  • Attachments and notes linked earlier in the ordering process visible to the budget holder

  • Possibility to show print preview purchase order confirmation

  • History log

  • Mobile use, wherever there is an internet connection (provided that mobile use of the Fiori app is permitted and configured within your organization).

  • Compatible with SAP ERP and S/4HANA

Read more about the Avelon Purchase Order Approval app here.

SAP Fiori goods receipt app in ECC

SAP Fiori goods receipt app in ECC

AVELON Goods receipt app

Processing a goods receipt within SAP is no sinecure, especially if it has to be done in the context of the 3-way match by someone who does not work in SAP on a regular basis.

The Avelon Goods Receipt App makes the recording of goods receipts a lot easier and also mobile. An important part of the app is the Smart Search functionality as also applied in the Avelon Purchase Order App. This makes the search for the right purchase order where the receipt should be booked much easier. You can search by order number, supplier name or item description.

After selecting the correct purchase order it is easy to enter the number of items delivered and if necessary add an attachment, e.g. a packing slip.

Summarized, the features and benefits of the Avelon Goods Receipt app:

  • User-friendly posting of goods receipt

  • Smart Search, "Google like" search function for quickly finding the right purchase order

  • Add attachments, e.g. delivery notes

  • Mobile use, wherever there is an internet connection (provided that mobile use of the Fiori app is permitted and configured within your organization).

  • Compatible with SAP ERP and S/4HANA

Read more about the Avelon Goods Receipt app here.

Focus on XML or E-invoices where possible

The goal is to achieve "touchless" invoice processing by accounts payable. Touchless invoice processing means that accounts payable do not have to perform any manual actions to record the invoice in the SAP system. The system determines any follow-up actions. These can range from automatically routing the invoice to the responsible party or parties if there are price or quantity differences between invoice, purchase order and goods receipt. In case of a so called 3-way match the invoice can be made payable automatically. In case of non-PO invoices the invoice needs to be approved at all times.

Several of our customers switched from in-house OCR processing to Avelon's PDF Validation Service. A solution in which the validation of PDF invoices is carried out by an Avelon partner. This partner retrieves the metadata from the invoice with a focus on the fields required for "touchless" invoice processing. This is done with a guaranteed, considerably higher recognition rate compared to an OCR process that is carried out in-house. The metadata and the PDF are then automated and processed in real time in SAP by means of the web service of the Avelon E-Invoicing Interface. This web service can also be called up by a service provider that is fully specialized in receiving, transforming and sending e-invoices (XML/UBL). As a result, your incoming e-invoices are also received and processed directly in SAP. Read more about Avelon E-invoicing here.

Advantages E-invoicing:

  • Lower costs

    • No more investment in own OCR systems and human effort in the validation of results and training of the OCR engine

  • Improving accuracy

    • Guaranteed recognition rates compared to manual validation and correction by our own accounts payable staff

  • Fast processing

    • Guaranteed processing times

  • Increase quality recognition and accounting

Integrate P2P solution within your SAP system

With SAP Fiori, SAP has been able to offer an award-winning user experience for several years now. Because of this user-friendly front-end, so-called business users can also be involved in previously difficult to understand SAP transactions. By offering a harmonized user experience in the relevant steps of the process for business users, they can be directly involved in the process. Previously, sub-administrations were often carried out by support services. With the deployment of Fiori, these are no longer necessary and security and authorizations are enforced and regulated within one environment. At the same time, high fines are avoided due to non-compliance with license agreements concerning the so-called indirect use of SAP software.

For questions or additional information on this subject you can contact recording with Sander van der Wijngaart.