ABB Schweiz, one of Europe's leading providers of power and automation engineering, chose Kofax to help it end an inefficient invoice outsourcing arrangement. The change to in-house processing with Kofax software has helped the organization take as much as 10% more in cash discounts than before.
ABB Schweiz’s Shared Accounting Service Center is located in Baden. It is responsible for invoice processing for ABB Schweiz, as well as for the corporation’s international headquarters in Zürich. The company receives about 400,000 invoices annually. Until now, a service provider had opened the mail, sorted, scanned, selected, and validated the invoices, then delivered the data sets to ABB.
After a thorough evaluation of the situation, ABB decided to implement a new solution. It was crucial to the company that the switch to in-house invoice processing would significantly improve both the quality and productivity of its resources.
“We weren’t happy with the outsourcing situation. We had high costs, even though the quality of the data that our service provider delivered was unsatisfactory,” says Maik Zimmermann, Head SAS Accounts Payables, Shared Accounting Services, ABB Schweiz AG. “So, we brought the entire process back in-house. Our ‘Scanning Center of Excellence’ processes all of ABB Schweiz’s invoices, as well as those of ABB headquarters in Zürich.”
The greatest challenge was to plan the new “Scanning Center of Excellence”, to select the software, implement it, and get it up and running –all within a year, because accounts-payable processes are “too critical to fail.” So, after the expiration of the outsourcing contract, the new installation had to be ready to use as soon as possible.
Now, employees digitize incoming mail at the scanning center. Fujitsu production scanners transfer the electronic documents to the Kofax® system. Kofax software reads the invoice information and checks the data sets. To this end, ABB loads the current day’s master data into the system every morning – for instance, tables of orders, complete cost centers, and the internal organization chart.
“In the morning, we take the invoices out of the mailbox, scan them, and a short time later we already have the first invoices in the system and at the workstations,” reports Maik Zimmermann. “In fact, we are able to distribute all the arriving invoices to our employees and validate them daily.
ABB employees do not have to type any information into the system, since the Kofax software automatically recognizes which supplier has sent an invoice. The solution locates the order number on the invoice, matches it to the order lists, then compares the amount, currency, who is responsible for the account, document numbers and dates, as well as additional data.
“All important data is automatically read from the invoice,” says Zimmermann. “Even during the first test runs, we achieved excellent results in terms of recognition rates. In the medium term, we want to achieve a recognition rate of 90 percent.”
Invoice processing is a highly critical process. No wonder that ABB Schweiz’s CFO was involved in the project. ABB’s CIO had signed off on the final decision for the project at ABB headquarters. For all concerned, costs, quality, and productivity were the criteria for a seamless integration.
“We could successfully implement all three aspects,” says Zimmerman with delight. “And all three factors intertwine when calculating the break-even point.” A decided advantage is that in the future, invoice-processing quality will lie in the hands of ABB employees. “Because ABB employees know precisely what the individual locations on an invoice signify, which data and information on an invoice are important, and how they are allocated and posted in accounting.”
“We have noticeably improved the quality of our work, and our suppliers immediately noticed the positive effects,” adds Zimmermann. “We can scan invoices in the morning and validate them on the same day. This lets us avoid payment errors, benefit more from cash discounts and, as a result, we are generally able to increase accounts-payable productivity. Thus, we expect to reach the break-even point comparatively quickly.”
In fact, Zimmermann and his team saw the first positive results after only a short time. The new system went into operation on October 27, 2014. And by the end of the month, the team was already celebrating early success. The volume of invoices processed was about ten percent higher than before. Of course that pleased the employees in ABB’s Shared Accounting Services and also improved the entire team’s motivation.