So you’ve got your SAP AP automation sorted. Art Sarno explores what you might consider next to continue to improve your financial processes.
As a visionary leader in finance or shared services, you’re committed to continuous improvement, driving best practices, and digitally transforming internal processes with innovative technology.
If your organisation has engaged in an accounts payable automation project, congratulations! AP automation is often the first opportunity that companies identify for process automation in SAP. It’s the low-hanging fruit, delivering a rapid return on investment and solving painful points in manual processes like invoice receiving, information matching, and exceptions and delays in processing.
Going beyond the low-hanging fruit
AP automation is an easy starting point that immediately adds direct value to your SAP system and has indirect effects like happier staff (freed from rote, manual, mind-numbing tasks to do more meaningful work) and reduced errors that help protect against compliance issues.
But AP automation is just the first step in harnessing maximum value from your SAP system. Going beyond a point solution to automate the bulk of your ERP-related processes has major rewards, driving what Ardent Partners calls a “sizable performance advantage” for best-in-class enterprises. Not only can you capitalise on a single point of entry solution for all financial processes, but automating upstream and downstream from AP creates a holistic continuous improvement revolution throughout the financial cycle.
9 essential areas to automate in financial processes
Financial processes flow through vendors and suppliers to and from your company, and through clients and customers to and from your company. Throughout these workflows, process automation will result in significant productivity and ROI gains. Here are eight areas beyond AP you should consider automating next:
- Procurement and purchase requisition: How much of your organisation’s purchasing is contracted? Experts estimate that 30-45 per cent of indirect purchasing is not contracted, which results in much higher prices – around 35 per cent – than contracted prices. Automating purchase requisition processing not only simplifies the process for those purchases currently being made under contract, but it can also improve user adoption and compliance to reduce those expensive non-contracted purchases.
- Order confirmations: This manual process usually takes place in the procurement department, where an incoming order confirmation indicates that the P.O. will be filled as requested. Later, the delivery note is manually compared to the purchase order and variances entered as credit notes into SAP, then manually approved. With automation, the order confirmation is automatically captured and matched against the PO and existing master data in SAP. Only confirmations with discrepancies are flagged for manual approval, and both automated and manually approved order confirmations have a complete audit trail.
- Delivery note processing: Like order confirmations, delivery notes, which arrive with shipments, are matched against purchase orders and used to create a goods receipt note (GRN). Imagine if you could digitally capture the delivery note information, transfer it to SAP and automatically compare with the warehouse delivery. Discrepancy? No problem. Workflows for resolution are automatically initiated before the GRN is posted.
- Invoice processing: Matching vendor invoices against purchase orders is often an incredibly manual process. An Institute of Financial Operations study shows that about half of all invoices are still paper-based. Automating the capture, extraction, matching and verification process of invoices – even paper-based – against the PO, master data and goods received information in SAP could save up to 80 per cent in processing costs.
- Payment approval: In a manual process, invoices are typically gathered in a document and circulated for approval. Information from this approval process is manually transferred to the payment proposal, then executed as a payment run in SAP. With automation, a workflow notifies approvers, then automatically transfers the information to the payment proposal. A history of the entire process is stored within SAP.
- Sales order processing: Within the order-to-cash cycle, the manual nature of sales order processing can create big risks for transcription errors. In an automated process, orders are automatically captured, regardless of format, and information such as stock availability, pricing, discounts and master data is checked and validated against SAP data. Discrepancies are moved into an automated workflow for resolution, and validated data is transferred to create a sales order and an order confirmation for the customer.
- Payment advice / remittance advice: Manually keying each invoice from the remittance advice into SAP is a time-consuming, labor-intensive process that results in high amounts of unallocated cash left on account, waiting to be posted to the appropriate invoice. With automation, the conversion of receivables to cash is more efficient, with automated data matched line by line in order to clear open invoices quickly and update the accounts receivable ledger daily.
- Master data management: Maintaining accurate master data records for vendors, customers, general ledger accounts, cost centers and profit centers is critical for continuous process improvement and customer satisfaction. Automating a master data management workflow for collecting and approving change requests not only makes the process simpler, but improves records accuracy and the downstream effect of starting with the right information.
- Financial close: At the end of each month, quarter, and year, accounting and finance teams must complete hundreds or even thousands of simple tasks that require a high level of manual interaction. Those error-prone and time-consuming reconciliation tasks can be automated with robotic process automation, a digital robotic workforce that can perform administrative work essential for financial reporting in less time with no mistakes, freeing your staff to perform the higher-value work of interpreting financial results.
How will your organisation go beyond AP automation? Learn more about essential areas to automate in ‘The Outperformer’s Guide to Total Financial Process Domination: Automating P2P Processes and beyond in SAP.’ Download your copy now.
This article is sponsored by Kofax. Art Sarno is a product marketing director at Kofax, where he manages financial process automation solutions, including procure-to-pay, order-to-cash, and record to report for SAP and Oracle, as well as robotic process automation for finance and accounting.