Electronic Invoice Processing

Feature Article | October 27, 2011 by Frank Zscheile

TE Connectivity is the global leader in providing passive electronic components, network solutions, wireless systems, and underwater telecommunication systems. The company develops, produces, and markets products for customers in the automotive, kitchen appliances, and aerospace and defense industries, as well as in telecommunications, computer technology, entertainment electronics, and power engineering.

In Germany, TE Connectivity is represented by the companies Tyco Electronics AMP GmbH (in Bensheim) and Tyco Electronics Raychem GmbH (in Ottobrunn) and has five production sites. The accounting department, located in the town of Darmstadt, suggested implementing a system for processing invoices electronically. Andreas Bergdolt, IT project lead for SAP architecture, technology, and solutions at TE Connectivity explains: “With such a solution, we wanted to streamline internal processes, save unnecessary typing, and cut out potential sources of error in invoice entry and data synchronization.” The product that was chosen is a combined solution from SAP gold partner FIS GmbH, comprising the FCI document reader and the FIS/edc Workflow, which is completely integrated in SAP and which can be used to automatically process and approve invoices and other documents.

400 invoices every day – just in Darmstadt

The core of the project was Tyco Electronis AMP GmbH. Its accounting department receives around 400 invoices every day, which are read by FCI and then transmitted to Bangalore, India. Tyco Electronics Raychem GmbH has had an accounting service center there for a number of years already. They used to send the invoices by snail mail to Bangalore, and the Indian colleagues then entered the invoice data into the SAP system by hand.

Next, Tyco Electronics AMP GmbH became the first international subsidiary to make its invoices available to the service center in Bangalore in TIFF format by FTP server. Here, at validation work stations, the invoices are manually postprocessed if necessary and posted in SAP. With 98% of the invoices, the vendors are recognized correctly; and the FCI software recognizes more than 65% of all documents without the need for any corrections whatsoever.

In the second step of the project, Tyco Electronics Logistics AG (TELAG), located in Steinach, was hooked up. TE Connectivity uses this European sales subsidiary to process all its end-customer sales for the EMEA region. TELAG’s business concept enables TE Connectivity to present itself as a single company in the whole of Europe. In Steinach, the 250 invoices that arrive every day are scanned, exported to Bangalore directly from the scanning application, and then processed by the accounting staff there. Previously, invoice data used to be entered by hand by employees in Switzerland.

From Bavaria to Bangalore

 

The project gained pace: now Tyco Electronics Raychem GmbH in Bavaria also transfers its invoices by electronic means only. During a one-week implementation phase, Andreas Bergdolt set up four work stations for reading invoices in Bangalore. Volker Zimmermann, head of general accounting and reporting, FSC India coordinator, and responsible for coordinating the shared service center in India says: “This enabled us to speed up our invoice processing. The invoices are no longer physically sent from one location to another, the vendors are selected practically automatically, and the invoices are also posted faster when billing and order data entry are correct.”

Bangalore is gradually taking on invoice processing for all the major international subsidiaries with high volumes, that is, Belgium, the United Kingdom, and Ireland – in addition to Germany and Switzerland. Furthermore, TE Connectivity has set up another competence center in Schaffhausen (Switzerland), which is responsible for the smaller international subsidiaries, including the Nordics. For these subsidiaries, accountants fluent in the languages required process invoices and also perform entire month-end closings in Schaffhausen.

More than 30% no-touch invoices

 

At all locations – from international subsidiaries to service centers – the scanned invoices including index data are transferred by FCI to FIS/edc and, after various checks, an attempt is made to post them automatically. If the invoice is correct, the document is posted immediately and the supply chain is closed. Stefanie Hummel, head of SAP FI/CO EMEA at TE Connectivity, is responsible for coordinating the SAP part of invoice processing. She estimates that the proportion of invoices with a purchase order reference from SAP MM is around 70% in the German TE Connectivity subsidiaries, around 20–30% of which are “no-touch” invoices that the employees in the accounting department no longer have to deal with at all. This rate is continuously improving thanks to an intelligent invoice reader and regular advice to vendors about how they can present their invoices in even better quality.

Invoices without a purchase order reference are put into the FIS/edc approval workflow. This enables completely paperless approval, ensures that invoices flow through optimally, and increases transparency for management. “Above all, our purchasing department and the cost center managers greatly appreciate electronic archiving and the link between the scanned invoice and the SAP posting document in FIS/edc,” says Stefanie Hummel. “Paper invoices are no longer filed, but are only stored in the archive now. Every possible ambiguity can be traced immediately using SAP and FIS/edc by clicking the invoice image.”

International subsidiaries all over the world

 

In addition to the subsidiaries in Germany and in Switzerland and the shared service centers in Bangalore and Schaffhausen, many other international subsidiaries have now been equipped with FIS GmbH’s invoice recognition and workflow, including the Czech subsidiary in Kurim (with around 100 incoming invoices every day) and the U.K. subsidiary in Swindon (with approximately 350 invoices daily). The Swindon office also serves the TE Connectivity subsidiary in Ireland.

Since the start of 2011, Norway, Sweden, Finland, Denmark, and one of TE Connectivity’s French subsidiaries have been working with the system. What’s more, invoice recognition and the SAP approval workflow are now live at the American parent company, and Europe is following with Belgium, the Netherlands, and Turkey. The Chinese international subsidiary in Suzhou now deploys the solution, as well: Two scanning sites have been installed so far, and another five are in the pipeline. Processing will then take place centrally at the shared service center in Suzhou. Roll-outs are planned in other TE Connectivity subsidiaries in China.

Andreas Bergdolt learned that implementations take time and users need to be involved at an early stage. He now spends two weeks on-site at every roll-out, and so far they have all worked perfectly. Regular telephone conferences with all the international key users and other parties involved accompany the global roll-out.

 

Cache function guarantees worldwide access in milliseconds

 

For high system performance at an international level within the TE Connectivity organization, the invoice reader’s cache function is a must. TE Connectivity’s SAP archive is hosted in Frankfurt am Main, Germany, and in Harrisburg, United States. If colleagues from anywhere in the world had to access the German or American archive server to view an invoice, they would have to wait a number of seconds. But because FCI saves all the scanned material from the past three months on a local directory, FIS/edc first checks whether the invoice is there – and in most cases, it is. The result is access times in a matter of milliseconds.

In addition to incoming invoices, the FIS solution is now used for other types of documents, including delivery notes, customs documents, and customer orders. At the three German production sites in Darmstadt, Speyer, and Wörth, the delivery notes are read using FCI and stored in the archive with the index data. A further step will be to link them to the orders in SAP. Another product will be used for this: the FIS/edc Document Monitor, which can be used to assign any documents to SAP objects – in this case, a delivery note and the related order. 125,000 pages of delivery notes will then be read this way every year at TE Connectivity Germany.

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