The Kronach, Germany-based electronics company, Loewe is a pioneer in the television industry with a rich history of providing premium audiovisual solutions for homes. Loewe has mastered the art of assembling its suppliers’ components into display panels capable of optimal image quality, and now the company’s accounting department has achieved a similar level of expertise. Though this area had already been maintaining a high standard in its work for some time, the implementation of a comprehensive, SAP-integrated solution from FIS GmbH for invoice processing has taken its accounts payable accounting to another level of quality.
By combining FIS/edc Workflow and an upstream invoice reader, FCI, for optical character recognition (OCR), the solution offers full SAP integration and a modular structure. This enables Loewe to process incoming invoices, EDI messages, and other scanned documents in an automated, standardized fashion.
Thanks to their new solution, the company’s accountants now face much less of the manual work that used to be commonplace at Loewe. FCI automatically extracts relevant information from scanned documents and verifies it based on master data or plausibility criteria before passing it on to the company’s SAP system. “The FIS/edc monitor makes it really easy to check and post invoices, send them to our e-mail system for approval, and keep an eye on the subsequent process,” reports Ilona Gerber, head of accounting at Loewe. The company uses this system to process some 70,000 invoices every year, including around 10,000 from its four European subsidiaries.
A purchase-to-pay solution and e-procurement
At Loewe, the electronic processing and archiving of incoming invoices are closely connected to system-based order checking in the area of overhead costs and services. Manufacturing material purchasing in Kronach alone comes to around €200 million each year.
Now, every order results in a mandatory purchase invoice. Loewe’s order systems for overhead costs and services in purchasing used to be fairly heterogeneous, which led to deficiencies in the company’s process workflow for invoice verification. Missing goods receipt postings for orders and incomplete references on delivery notes held up the flow of information and increased lead times up to the point of payment. In the end, the company was missing out on discounts and interest.
Loewe thus set its sights on implementing a new comprehensive solution. It was to consist of an SAP system-based e-procurement solution for purchasing indirect materials and C items, and software that would automatically process incoming invoices. By automating its purchase-to-pay processes with an electronic, SAP-integrated workflow, the company ultimately hoped to achieve better overviews, shorter lead times, and lower costs.
Overhead costs also processed in FIS/edc
This system now supports the entire posting process in Loewe’s SAP software, makes automated updates possible down to the item level, and is accessible to every employee thanks to an approval procedure involving the company’s e-mail system. In 2010, Loewe also implemented an overhead cost ordering system for verifying invoices based on goods receipts, which now enables the company to use FIS/edc to process overhead cost invoices, as well.
“Based on the order number, FIS/edc can identify whether an invoice pertains to SAP or our overhead cost ordering system and then process it fully as an MM invoice,” explains Gerwin Zwosta, who leads Loewe’s accounts payable accounting team. Those related to orders account for 80% of the company’s invoices, with FI documents making up the rest.
Invoices received at Loewe’s mail administration center are immediately passed on to Zwosta, who assigns them to his staff based on their respective areas of responsibility. As a result, every invoice received in the morning is scanned by 11:30 a.m. at the latest.
Integration into Loewe’s SAP system
Zwosta’s staff then compares the information scanned with the order data and prices in Loewe’s SAP system. On a monitor separated into three sections, they can simultaneously view the scanned image (or the digital data record), the data recognized, and the corresponding order. FI invoices then enter an approval workflow, while MM invoices are posted through and – in the event of price or quantity discrepancies – also transferred through FIS to the responsible material planner or purchaser for approval. More than 100 approvers are involved in this workflow at Loewe.
Meanwhile, FCI is now capable of recognizing virtually any document layout without any further “training.” According to Reinhold Bienlein, head of application support at Loewe, getting this component to identify vendor invoices with special layouts was a particular challenge at the beginning of the implementation project. Here, FIS/edc enables users to supplement its free-form methodology with a template solution that makes complete and automatic invoice recognition possible. The software also “learns” more every day and stores the corresponding data in its integrated knowledge database.
A potent solution for item data
“Considering the fact that we need to derive both header and item data from a wide variety of layouts, you could say that our demands are more than considerable when it comes to data extraction,” Ilone Gerber notes. To facilitate verification of incoming order-based invoices, vendors are also required to include the appropriate order numbers on these documents. For orders involving ready-made materials, for example, Loewe then receives collective invoices that can contain 40 or 50 items. This means the order numbers of the individual parts are more or less lost in a jumble of numbers, which the company’s employees used to have to compare one by one with the corresponding order in their SAP system.
Loewe’s software now finds and recognizes this item data on its own, extracts the prices and quantities, and passes the information on to the company’s SAP system and FIS/edc for automatic verification and posting. “Our accountants used to need half an hour to check just one collective invoice; now they only need to monitor the process, which takes about two minutes,” Gerwin Zwosta reports.
System in use at foreign subsidiaries
This IT automation has not led to any layoffs at Loewe. Instead, the company’s intelligent system is helping it process its increasing invoice volume in an efficient manner.
The benefits have become particularly apparent over the course of Loewe’s effort to incorporate its foreign subsidiaries into its invoice processing. Shortly after initially implementing the software at its headquarters, the company began a continuous rollout of the system to its locations in Austria, Italy, Great Britain, and France. Loewe’s base of operations in Kronach now manages these subsidiaries’ accounting activities, thus serving as a type of financial shared service center.
The company’s foreign locations handle account assignment for incoming invoices, scan them, and transfer them through a server connection to Kronach for postprocessing and posting. Overall, Loewe’s monitoring efforts are also improving thanks to its ability to access its subsidiaries’ accounting systems directly through the software.