Suppliers think of invoicing as sending a bill into a black hole. They cross their fingers and hope that at some point, they'll receive payment.

But, with SAP Ariba you have visibility into invoice processing, so you know when you'll receive payment. You can view invoice status at any time for insight into expected incoming funds, which is extremely useful for managing cash in your business.

This article describes what happens after you create an invoice on the SAP Business Network and submit it to your customer. You'll understand how SAP Ariba offers huge advantages to you over paper processes.

Good invoice or bad invoice?

When you submit an invoice through the SAP Business Network it is first validated against your customer's invoicing rules. If it passes these rules, its status changes to Sent and it goes to your customer's Accounts Payable group for approval.

If the invoice amounts, quantities, and other information match the purchase order and receipt (if available), no human interaction is required and the invoice reconciliation process is "touchless." But, if invoice values do not match or there are other problems, then the invoice is flagged as an exception.

Matching is based on tolerances that are configured by your customer. For example, prices in an invoice can be slightly different than those listed in the purchase order and still be considered matching.

Note that if you discover that you made a mistake in the invoice after you submit it, you cannot cancel it. Instead, you must wait for your customer to reject it. Then you can edit it to correct the error and resubmit it. You might want to warn your customer about the incorrect invoice; for more information about contacting your customer, see this article.

Invoice exception

When there's an invoice exception, an A/P clerk must get involved. Common exceptions are invoice prices that are out of tolerance with the PO, incorrect units of measure, or POs that are out of funds. Or, the invoice might require approval from someone in a field office.

Exceptions kick off customer-specific processes, such as reaching out to the Purchasing Department to decide on a corrective action strategy, whether it is adjusting the PO, short paying the invoice, or rejecting the invoice.

Because exceptions require human interaction, they slow invoice processing and can delay payment. When you create invoices, do your best to prevent invoice exceptions so that the invoice reconciliation process is touchless.

Invoice rejection

If the invoice is Rejected (either automatically or by an A/P clerk), you're notified through an email message. You'll log in to your account and look for detailed information in the invoice's History tab. Then, you'll edit the invoice to correct the problem and resubmit it for validation again. Be sure your email address is current in the Notifications tab on the Account Settings page of your SAP Business Network account so that you receive these rejection messages.

What would cause your customer to reject an invoice? Rejection is often due to incorrect values for unit price, quantity, or total amount. Another reason is erroneous tax information, such as specifying the wrong state or province, or an incorrect tax rate. A PO-flip invoice would be rejected if items were not delivered or were incorrect, or if it refers to invalid requesters. A Non-PO invoice would be rejected if it references a sales order or contract that does not exist.

When will I be paid?

When your customer approves an invoice for payment its status advances to Approved. At this point, your customer can optionally send you a payment schedule, which specifies the date when you will be paid (calculated from the payment terms on the invoice) and any payment discount. You can view this document by clicking Payments > Scheduled Payments.

Money!

On the agreed payment date, your customer's payment system remits funds to your company and the invoice status advances to Paid. Your customer can also optionally send you a remittance advice, which specifies the invoice being paid and the payment method used. Matching specific payments to individual invoices can be a big pain point for you, but remittance advice documents makes this task much easier. You can view this document by clicking Payments > Remittances.

Money faster!

Invoicing and settlement through SAP Ariba is transparent and travels at Internet speed, so you have the opportunity to receive your money even faster. You can take advantage of SAP Ariba’s working capital management programs such as Dynamic Discounting.

Getting your money earlier might just be what you need to keep cash flowing at the right rate for your business.

For more information about SAP Ariba’s working capital management programs, see http://www.ariba.com/solutions/manage-cash.

Conclusion

Because you have visibility into invoice and payment processing, there's no need to call or email your customer. There's no "did you receive my invoice?" or "when will you pay us for the invoice we submitted last month?" Also, you can predict when funds will be sent to you, which helps you manage your cash flow.

With SAP Ariba, invoicing is no longer like sending a bill into a black hole!

SAP Business Network for Procurement & Supply Chain > Transaction Documents > Transaction (Invoicing)