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“It just pays my suppliers it is very simple”.

“Why should I look at AP – it works”

“If it is not broken why fix it”


Those are some of the comments I hear when I start conversations with clients about reviewing or enhancing their Accounts Payable process regarding process issues.


Standard Accounts Payable has not really changed since the implementation of MIRO and Logistics Invoice Verification. However there are a number of common mistake clients make that impact their business. Some clients are not really aware of the issue, as they throw resource at any issue and do not know how to deal with basic issues.


Before I review the types of issues it is best to quantify what the business impacts could be by having a poor accounts payable process.

  • o Loss of early settlement cash discounts from suppliers
  • o Suppliers being paid twice
  • o Over inflated team of Accounts Payable clerks
  • o Poor reporting for Vendor spend
  • o Loss of vendor volume rebates

The list of business impact should be taken very seriously. Some of the issues that cause the business impacts are very easy to resolve and the potential benefits of resolving them very high.


Accounts Payable Issues


Vendor Master data: It is important to have a clear and concise master data process. Ideally the volume of vendors should be kept to a minimum. If you can purchase the same item from a number of suppliers it is best to agree the best vendor and ensure your whole organisation where applicable uses that supplier. This will enable your procurement team to negotiate better terms of payment, or even volume rebates as well as early cash discount. In turn having a small number of suppliers will reduce the volume of invoices you need to process as you will be buying in bulk and the suppliers could have many orders on a single invoice.

Purchase Order requestors: If any user in your organisation can request to purchase something the consistency of creating purchase orders will be affected. Some users might only be raising one or two purchase orders a year, and there is an overhead on training and data entry. The other key area of entering purchase orders is the coding of the order. If a user is not used to creating a purchase order there is a higher chance that the wrong GL account, cost center or even material is selected. This in turn will affect the approval of the purchase order as the wrong approver could be selected. This will impact the time to gain approval of the invoice or the purchase order, which in turn could see early settlement discount not being applied due to this delay. By selecting the wrong GL account and material, this will impact the reporting providing decision makers incorrect information to negotiate with suppliers.

Manual data entry: No matter the volume of invoices that you will process there will always be a relatively high volume of effort to enter, approve and pay a vendor invoice. Some of the issues noted above could reduce the volume of invoices and so in turn reduce the effort to process all supplier invoices. However where a supplier provides a paper invoice copy to you there is still some manual involvement. There are options to automate this by scanning invoices and the entry of the invoice into the system. The SAP recommended tool is by Open Text “Invoice Management”. For further information please review the following link

The benefits here are significant. This should enable your organisation to reduce the head count in the accounts payable team who are entering and approving invoices. This in turn will enable the invoices to be processed via a speedier process ensuring that where possible early cash settlement discount can be taken as well as better reporting.

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  1. Nathan Genez
    the standard duplicate invoice check is not very good.  It requires additional checks on other posting attributes to be accurate yet few customers pursue it.  It’s not even that hard to enhance.
    1. Former Member
      Post author
      Hi Nathan,

      Thanks for comments – the LIV duplicate invoice check is poor, and if you have issues where you have duplicate vendors the job is near enough impossible.

      Some 3rd party vendor solutions will provide better checks.

    2. Former Member
      Although SAP has the ability to check for duplicates, ReadSoft’s COCKPIT will also identify duplicates based on a range of criteria and enable the AP administrator to manage the duplicates.
      This problem is easily solved.

      1. Nathan Genez
        It’s easily solved in SAP too.  It just requires that you specify additional criteria that the duplicate invoice check will check against.  If memory serves me correctly I think any field on the invoice is fair game.  No enhancements are required.
  2. Former Member
    I am always in for Invoice automation using OCR technology, the ROI is high.
    I like to know is
    What is difficult to achieve with this technology when compared to manual process?
    What are the additional maintenance efforts to make sure a high success rate for posted invoice?
    What is the usual of project payback?
    1. Former Member
      Post author
      Hi JH,

      Thanks for comment, and pointing out the typo. The issue is manual data entry, not automatic data entry.

      The benefit of OCR is reducing the effort for manual data entry.

      However to answer your question, if you were to implement OCR with poor master data the volume of invoice approval would increase.

      The project payback, will depend on the volume of invoices you are processing and the cost of the project excluding the licences.

    2. Former Member
      Hi JH,

      OCR makes up probably 20% of a total Invoice Automation Solution.

      First, OCR is highly accurate (not for hand written invoices) and looks for the relevant header and line item data based on rules/criteria. All invoice data is presented to an operator for any corrections or validations before being sent to SAP. All data sent to SAP is 100% correct.

      OCR will help to reduce data entry considerably and if you are using an OCR engine with a self learn ability, then the accuracies will increase considerably as you continue to use the system.

      The benefit of automating is automating! The more straight through processing that is achieved, the better the return.

      There are many examples of SAP customers that have a very high percentage of straight through processing. This means the OCR picks up all the data 100% correct, sends the data into SAP, a solution like ReadSoft’s COCKPIT will do all the matching automatically (with no parking I might add), and if everything matches, go straight to Post.
      No invoice will be posted unless it is matched 100%.

      Payback depends on business case of course. With AP automation there are at least 4 different ways to achieve this.

      1-AP Savings-by reducing data entry, data entry mistakes, lost invoice, vendor queries etc will help to reduce the time spent processing invoices by AP. Typically, a single person once automated, can process 30-45,000 invoices per year as opposed to 5-15,000 manually.

      2-In many countries, GST or VAT rebate is available as soon as an invoice is visible. This means changing a business process to centralize (all invoices go to AP first not the business), scanning the invoice and having it available in SAP immediately. Early claiming of GST or VAT is a direct hard cost savings and an increase in working capital and in some cases, pays for the solution itself.

      3-Procurement-by being able to guarantee a supplier is paid on time and even early, enables you to negotiate early payment discounts or better rates with suppliers. Ask your top 5 suppliers if they will give you even a 1% discount if you pay on time. This could equate to millions of dollars saved.

      4-By automating AP, you reduce the amount of time spent out in the business approving/coding invoices. Typically, the savings between the business and AP is 3 or 4-1. This means if you save $1 in AP you save $3-4 in the business.

      I hope this helps and please let me know if there is anything else I can do to help.


      Jeff Leibovici

  3. Pablo Casamayor
    First of all, my intention here is to do some constructive criticism regarding this blog.

    I´ve read several times this blog and i think it would have been more positive for the reader
    if the author had taken an approach similar to this one :

    1.- State that OCR reduces errors (give evidence if possible)

    2.- have you got OCR? (you should adress both those who have and those who haven´t got it)
    2.1.- if yes -> congratulations (give evidence of how much better it is than SAP standard)
    Maybe giving a hint of what is being used instead of standard fm MRM_DUPLICATE_INVOICE_CHECK and demonstrating
    why it´s a better option.
    Maybe by means of a more precise comparison of what you´re getting with the standard
    and what you could get with the OCR solution.

    2.2.- if not -> provide some examples of how companies are dealing with LIV and still do a decent job.
    These are some hints of how people is dealing with problems in LIV here on SCN:
    Duplicate vendor Invoice check in FB60

    After reading your blog one gets the impression that it´s a question of: OCR or else…!

    I just wanted to say many people would love to have OCR but even if they don´t have access to it
    it´s still possible to do something good.

    Besr regards.

    1. Former Member
      Post author
      Hi Pablo,

      Thanks for your feedback.

      The purpose of the blog was a short sharp view of AP issues that would lead to debate and feedback. There was no intention to go into too much detail.

      The article covers three key areas, and only one of them focuses on OCR.

      Significant benefits can be achieved without OCR as you point out – it all depends what the starting point is.

      Some organisations will not even consider OCR due to the volume of invoices they have, and volume of Vendors etc.

      The key message of the article is to try and reduce the following to remove some of the issues mentioned.

                 Vendor Masters
                 Purchase requestors
                 Vendor Invoices

  4. Former Member
    Hi Mark,

    I have recently noted some comments/answers you have made regarding automated invoice processing.

    ReadSoft is the global market leader (number 1 tool) in providing Shared Service automation to the SAP community with almost 600 sites worldwide using our SAP certified, best practice solutions for amongst other processes, Accounts Payable.

    ReadSoft is fully certified by SAP and has been for well over 10 years.

    I would be happy to provide you and your readers with further information.

    Thank you

    Jeff Leibovici
    Sales Director SAP
    ReadSoft Oceania

    1. Former Member
      Post author
      Hi Jeff,

      Thanks for reading my article.

      Please not this blog is not about OCR Vendors but focuses more on the common issues within Accounts Payable.

      OCR is a tool that can aid the Accounts Payable process however there are a number of other issues that are common across all Accounts Payable team.

      1. Former Member
        Hi Mark,

        I know this blog is not about OCR vendors, I just wanted to make sure you had your facts straight.

        ReadSoft has well over 6,000 customers world-wide using our OCR solution. OCR is something we have done since 1991.

        We are also considered the global specialists in AP/Shared Service automation from a best practice approach and benchmark our customers against global best practice.

        I believe you should point any OCR/AP Automation questions to the specialists in this space as we live and breath these solutions and are across all potential “issues.”

        Might I also suggest, if you want un-biased information that you have a look at The Hackett Group, Aberdeen or Paystream Advisors.

        I would be happy to assist you or your customers with any OCR/AP Automation questions they may have.


        Jeff Leibovici
        ReadSoft Oceania

  5. Former Member
    OCR is not a suitable solution for all sites and its a bit of shame this blog has become a sales effort by one of the OCR vendors.

    I have an exampple of an accounts payable issue.

    When invoices are received with a valid price discrepancy that is outside of the set tolerance thresholds for a vendor – the amount of rework to process such an invoice is large.

    It typically involves reversing a goods receipt and rereceipting the material. For sites that have warehouse management this can be quite time consuming. Has anyone found a process to streaming processing such invoices?

    1. Former Member
      Post author

      Thanks for your comment.

      This blog was meant for questions just like your and not for 3rd party software.

      To answer your question – they key here is do you tackle the issue with a process change or a system change?

      The system change, could look at various workflows to resolve the issue.
      The process change, would look at why the error occured in the first place. Are the tolerances correct, is this a one off error, or does this happen frequently. Why has the price changed?

      There are two routes to tackle the issue, however, I would go with the process change route, to ensure “right first time”.


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