Business Process Services

White Paper

Touchless Procure-to-Pay Processing:

The Robotics Way

About the Author

Pradeep Kumar Kalaimani

Pradeep Kumar Kalaimani leads the Finance Center of Excellence for global CFO
operations within the Business Process Services (BPS) unit of Tata Consultancy Services
(TCS). He has been managing transformation and digitization initiatives for multiple
nancial services clients for the last eight years. Drawing upon 18 years of experience,
Kalaimani helps deliver business value for nance and accounting customers and plays a
critical role in the consolidation of the nance market leadership. He is a certi ed Six
Sigma Master Black Belt, driving the implementation of quality management systems
and process improvements globally for internal and external customers. Kalaimani holds
a Master's degree in Business Administration and is also a certi ed Quality Manager from
the American Society of Quality.

Abstract

An eective accounts payable function can contribute strategic business value to

an enterprise. While CFOs had attempted to revamp the AP organization by
using enterprise resource planning (ERP) platforms, Optical Character
Recognition (OCR), Intelligent Character Recognition (ICR), Electronic Data
Interchange (EDI), and other technologies, these initiatives often did not yield the
anticipated results. With mounting pressure to reduce costs and achieve greater
pro tability, CFOs are counting on emerging technologies such as robotics to
bring transformative changes in the payables function.
This paper examines the role of robotics in automating key transactional procureto-pay processes, and the cost and eciency bene ts it delivers by leveraging
systemic controls and well-de ned business rules. Robotics can be combined
with highly con gurable work ow and data extraction solutions to enable data
structure automation, faster approval and exception resolution, and eective
vendor discount management. By driving standardization and reducing manual
errors, RPA eventually leads to greater productivity, better returns, and improved
vendor relationships.

Contents

Modernizing the Accounts Payables Function with Robotics

A Look at Robotics in Action in P2P Processes

Common Pitfalls in Procure-to-Pay Processes

Robotic Process Automation to the Rescue

Streamlining Invoice Processing

Simplifying Invoice Exceptions Management

Making the Most of Invoice Discounts

Gaining More Control over Vendor Data

Tomorrow is Here: Gearing up for Intelligent Autonomics

11

Modernizing the Accounts Payables Function

with Robotics
CFOs across industries are on a mission to build lean accounts payable (AP) functions that enable
strategic business value for enterprises. For many years, AP organizations functioned in silos and
leveraged manual processes that often resulted in inefficiencies, errors, and lack of visibility into
operations. The result? Accounts payable was perceived predominantly as a cost center. However,
increasing globalization and competition forced CFOs to reimagine AP as a strategic function that
contributes to overall business objectives. Automation emerged as the key enabler of such a shift. CFOs
have tried to automate and streamline processes by leveraging ERP platforms, OCR tools, EDI, e-invoicing,
purchase order (PO) flip, vendor portals, and other bolt-on solutions. However, these initiatives often
failed to deliver true business value, as they did not address the basic issues underlying the payables
function.
CFOs are now looking beyond traditional automation to robotic process automation (RPA), also known as
autonomics, to close the gap between expected and desired results. By mimicking human actions at the
user interface level and interacting with multiple applications, RPA provides advanced automation
capabilities for organizations that currently have a manual procure-to-pay process (P2P) cycle. Deploying
it in combination with relevant tools, technology, and platforms helps businesses effectively reengineer
the procure-to-pay process. This will help AP organizations drive reduced costs, improved efficiency,
greater on-demand scalability, regulatory compliance with smooth audit trails, and real-time visibility into
operations. In essence, RPA can help address many of the basic issues in the procure-to-pay process,
laying the foundation for a touchless end-to-end AP process.

A Look at Robotics in Action in P2P Processes

RPA can be used across the procure-to-pay cycle. It leverages configurable computer software or robots
that work on multiple AP processes by interacting with systems and applications including ERP systems,
documents, and databases through virtual machines and specific logins. They operate as a virtual backoffice processing center, automating repetitive, rules-based processes that are prone to human error.
Three questions play a key role in identifying P2P processes that are suitable for robotic automation:
1. What is the degree of robotic automation possible? This can be classified as low, medium, and high.
2. What is the potential speed of execution? This depends on the current process maturity, the level of
technology intervention deployed in the process, and dependency on human effort and judgment.
3. How much value will RPA generate? This can be categorized as low, medium, or high.

Figure 1 indicates that transactional P2P processes such as vendor master data management and invoice
processing offer greater opportunity for robotics deployment with a higher degree of automation and
high speed of execution. Processes that require a set of business rules and exceptions fall in the medium
category of adoption, since these need artificial intelligence.
It is more difficult to use robotic process automation for processes that are analytical and call for greater
human discretion. However, certain aspects of such processes can be managed by robots with some
human intervention. For instance, enterprises can deploy human touch points alongside robots to
effectively manage vendor relationships. Supplementing RPA with smart vendor communication can
help businesses quickly and intuitively resolve some of the persistent issues related to non-PO invoices.
Robotics can be applied by integrating a repository tool with the ERP solution to store invoice and PO
data, and enable automated posting of non-PO invoices after business units update their service entries.
Invoice Processing

Speed of Robotics Automation

Vendor Master

Vendor
Reconciliation

Issue Resolution

Invoice
Exceptions

Payment
Run

Travel
and Expense

Speed of
execution

Propensity in terms
of % eort reduction

Value
bubble size

1- Low

1- <10%

1- Low

2- Medium

2- 11-30%

2- Medium

3- High

3- >30%

3- High

Propensity Towards RPA % Eort Reduction

Figure 1: Suitability of RPA for P2P processes (TCS internal research)

Common Pitfalls in Procure-to-Pay Processes

In order to unleash the power of RPA, enterprises first need to understand the underlying issues
associated with P2P processes. We discuss some common challenges below.
Lack of standardization: Invoices may be in different formats handwritten or printed invoices, faxes,
and PDFs attached in emails. This makes it difficult to validate inputs and quickly process invoices that
match the PO.
Inconsistent and unstructured data: AP organizations typically handle large volumes of varying and
inconsistent data and documents across the lifecycle from PO generation to invoice receipt and
approval. This leaves them with the tedious and repetitive task of transferring the data to a standard and

structured format, increasing the risk of errors.

Process inefficiencies: These may include missing vendor codes or data discrepancies between POs and
non-PO invoices. Another impediment to efficiency is the presence of a manual approval process that
leads to delays, and in some cases, increases vulnerability to fraud through the possibility of postapproval modifications. For non-PO invoices, approval with the general ledger (GL) code and cost center
becomes critical for timely and correct payment to vendors.
Without effective process discipline, enterprises struggle to ensure 'first time right invoicing.' The result is
an increased number of exceptions, requiring time and research for effective resolution. Exceptions are
typically triggered due to data that does not conform to standards or mismatch with other data (price,
quantity variances being top contributors of invoice exceptions) and there's an underlying need to use of
specialized workflows for routing approvals, setting dynamic tolerance limit to negate price/quantity
variances and ensure no/minimal follow-up actions for timely invoicing.
Manual, error-prone controls: In a manual set up, the effectiveness of AP processes depends on the
team's discipline, skill sets, and experience. The use of manual controls instead of systemic controls
increases the chances of making duplicate, wrong, delayed, or excessive payments.
Reactive process fixes: Most AP organizations resort to reactive fixes by deploying a dedicated team or a
process owner to manage ageing invoices, delayed payments, and increased vendor queries. However,
permanent and proactive fixes to the upstream processes in the vendor master system are essential to
address persistent P2P problems. This ensures that price, quantity, and tax variances are addressed.

Robotic Process Automation to the Rescue

Many transactional and rules based processes can be easily automated to drive greater efficiency and
accuracy. Let's explore how this can be done.

Streamlining Invoice Processing

Invoice processing involves receiving the invoice, indexing key fields, and posting the invoice in the ERP
or legacy system through threeway or two-way match between the PO, invoice, and goods received
note (GRN) for PO and non-PO based invoices respectively. These data entry processes can be easily
automated. In order to apply robotics, it is essential to first migrate manual invoices to e-invoices. Manual
touch points are then replaced by robots to handle invoice receipt and allocation, and ensure accurate
processing to achieve first time right invoicing. By enforcing well-defined business rules at a granular
level, RPA drives effective automation.
Enterprises also need to invest in robust supplier education programs to drive standardization of invoices
across geographies and vendors supporting different lines of businesses. If standardization is not viable,
enterprises must equip robots to collate invoice data across different modes of invoices. Robotic
automation components such as data extraction tools that are based on OCR and ICR technologies can
be used to meet this need. Using tools that help read manual or e-invoices reduces dependency on
manual data entry. Enterprises can leverage identified patterns of picking data fields in invoices that are
7

referenced to 'proto invoice models'. The proto invoice model allows vendors to enter data in predefined
fields of proto invoices and generate invoices automatically based on the nature of supplies and invoice
category.
Digital workflow solution tools play a key role in streamlining invoice processing. Paper invoices can be
scanned via the FTP server, mail, file or share folder. Multiple printed or e-invoices can be captured at a
line item level, and sequentially allocated to robots for greater efficiency. Furthermore, a combination of
several tools such as desktop automation, navigator, and script tools help post data extracted from
multiple sources to the ERP.
The approval activity can also be simplified through rules based, auto-approved, workflow criteria
limiting human involvement to specific approval situations. Robotics can thus minimize and eventually
eliminate approval delays, leading to higher efficiency and timely payment to vendors.

Simplifying Invoice Exceptions Management

Exceptions are one of the top reasons for late payments, higher operating costs, and unhappy customers.
Pre-defined rules are typically used to check and remove invoices from the ERP system based on
exceptions that may range from lack of funds and price or quantity variance to PO mismatch and nonexistent vendors. The primary reasons for high exceptions are non-standardized practices and nonautomated processes that cause slowdowns and errors.
Rapid automation helps address this complex issue by enabling the deployment of tighter upfront
controls such as a dynamic tolerance limit for quantity variances. However, AP functions should not fail to
analyze the top reasons for increased exceptions at a granular level. Robotic cognitive intelligence, if
applied systematically, can be used to differentiate, learn, and build invoice exception patterns. A robust
RPA solution can be used for real-time monitoring of invoices to flag exceptions for rule reviews and fraud
detection. Well-defined redistribution rules can be designed to identify and escalate exceptions to
employees with the right skill sets. Enterprises can further address the root of the issue by educating
suppliers on best practices to reduce mismatch and streamline invoice data.

Making the Most of Invoice Discounts

By effectively utilizing vendor discounts, enterprises can not only gain cost savings but also enhance
vendor relationships. Robotic automation components can be used in conjunction with the ERP workflow
to quickly track and process vendor discount invoices. RPA helps streamline vendor invoices and enables
enterprises to avail all available discounts through faster scanning, indexing, and processing.
Robotics can be used to design robust AP controls at every stage of the process within the ERP or design
the bolt-on workflow to drive better process compliance and discipline. However, it is important to
evaluate and fix the failure of controls that halt or slow down processes to ensure that robots function
independently over time. In the example listed below, robots with business rules can be used to gather
relevant data from the invoice in predefined formats. In addition to that, robots with Artificial Intelligence
can be used for invoice exceptions that require analysis (such as issues related price or quantity
variances). A pre-defined list of business rules can be used to re-route invoices for early or timely
payments to avail 100% of invoice discounts.
8

Figure 2 provides a comprehensive picture of how RPA transforms invoice processing, exceptions
management, and vendor discount management processes.
Invoice Processing, Exceptions, Discounts

Receive vendor
invoice in
physical
/scanned form
Before
RPA

After
RPA

Finalize list of
invoices to be
paid & make
payments

Ensure 2/3 way

match with
PO/invoice/
GRN

Approve
invoices and
update details
in ERP system

Identify
exceptions and
reasons

Verify
vendor details
remittance,
discount terms

Research and
analyze
exceptions

Contact
procurement
team to resolve
issues

Organization
receives
scanned
invoice copy in
work ow

OCR updates
invoice data in
ERP and does
3-way match

Organization
Matched
pulls
records are
exceptions and
automatically
analyzes
updated in ERP
reasons

System checks
for dynamic
discounting
and makes
payments

Matched
records are
approved and
pushed to
payment queue

Work ow based
query resolution Invoices are
automatically
is done for
updated in ERP
unmatched
records

Robots built with

business rules

Benets of RPA

Reduction in cycle time from

invoice receipt to payment

100% use of vendor

discounts

100% accuracy and on-time

payment

Increased vendor
satisfaction

Reduction of human
dependency/manual eorts

Eective query
management/reduction in
vendor queries

Robots built with

Arti cial Intelligence

Figure 2: The potential impact of RPA on invoice processing

Gaining More Control over Vendor Data

AP functions need to focus on fixing upstream master data processes of vendor master, PO management,
and the Purchase Receipt (PR) to PO cycle rather than downstream processes involving invoice and
payment. The vendor master creation process starts when a request is received for vendor code creation
along with a set of input documents. Vendor maintenance entails managing details such as change in
address, banking details, or payment terms based on business volumes. Robotics plays a critical role in
these upstream processes.
Rapid automation leverages business rules and linkages across other processes to help set up upstream
processes accurately, identify differences effectively, and ensure timely fixes right at the time of creation.
By drawing upon a highly automated flow of structured data between buyers, the AP function, suppliers,
and third parties such as scanning vendors, enterprises can drive robust reporting, analytics, and
decision-making.
9

Here is a breakdown (as shown in Figure 3) of how robotics can be used to streamline vendor data
management:
Creating standard template, vendor portal, input requests: A standard vendor request template is
required to extract data and create vendor code in the ERP using robotics. It is also essential to follow a
structured process to provide the option of receiving input requests in different forms and modes. This
will enable robots to pick all the relevant data fields.
Evaluating and reviewing critical input documents: Setting up RPA with a workflow or document
solution with extracts allows robots to check critical parameters containing defined business rules. Alerts
can be triggered for exceptions, ensuring accurate and timely setup of RPA.
Updating records: Requests for change in vendor records can be sent through specific templates used
for creation, indicating the nature and type of change. These can be updated by robots quickly, resulting
in the maintenance of an updated vendor database.
Invoice Vendor Master Maintenance

Receive Request
on email for new
vendor creation

Manually update
data in ERP

Before
RPA
Delete vendors
from database

Check
unused/duplicate
vendors lying in
database

Receive request in
work ow for new
vendor setup

Verify vendor
details, updated
directly by
vendors

Verify and identify

exceptions and
send emails

Generate monthend reports

Perform system
validation &
generate list of
unused/duplicate
vendors

Perform monthend reporting

Benets of RPA

Call/email vendor
for queries

After
RPA

100% consistent , reliable,

and accurate vendor master
records

Improved turnaround time

for creation and
maintenance of vendor
master with real-time
updates

Reduction in query
management timelines

Increased vendor
satisfaction levels

Vendor replies in
work ow, attaches
documents

Robots built with

business rules

Figure 3. A breakdown of how RPA streamlines vendor master creation and maintenance

10

Tomorrow is Here: Gearing up for Intelligent

Autonomics
The stage is set for robotics to play a bigger role in the P2P process cycle. As AP processes continue to
mature at a rapid pace, they will greatly benefit from the growing breed of robotic solutions. The next
wave of transformation will see automation extend beyond transactional to high-end processes such as
generation of exception triggers and subsequent resolution, reporting, and decision-making support.
From merely automating repetitive work, RPA will gradually enable the human workforce to work smarter
by enhancing their creative problem solving abilities. Enterprises will thus be able to achieve business
benefits beyond cost savings. New capabilities such as payment reviews and authorizations via mobile
devices will further evolve, complementing the advantages offered by robotics.
The most important result of robotic automation is the generation of large volumes of process data. While
robotics reduces inefficiencies, data analytics will empower enterprises to deliver greater business impact
by discovering and applying smarter insights. This means enterprises must anticipate a data rich scenario
and be prepared with relevant skill sets and expertise to gain real value from information. The adoption of
robotics in the AP organization is largely dependent on senior leaders' interest in incorporating robotics
as an integral part of their vision for the organization. As they include robotics as one of their top business
priorities, senior management will need to enable and support change management across the
enterprise. The success of this technology as of all transformation initiatives hinges on the collective
cooperation of internal and external stakeholders. It also depends on an enterprise's commitment
towards making essential changes to processes and practices, and its ability to establish strong process
and data governance.

11

About TCS' Business Process Services Unit

Enterprises are looking to drive sustainable growth and profitability, and stay relevant to their
customers in increasingly regulated, competitive, and global markets. TCS fosters proactive and
strategic partnerships with its clients to achieve these goals.
Our ValueBPS approach helps enterprises achieve significant and sustained business outcomes by
leveraging our deep domain expertise and operations redesign methodologies such as FORE . Our
approach also encompasses robotic process automation (RPA), analytics and insights, our unique ITBPS synergy, Business Process as a Service (BPaaS) models, and business process management
(BPM).
TM

TM

TCS' Business Process Services include core industry-specific processes, analytics and insights, as
well as enterprise services such as finance and accounting, HR, and supply chain management. Our
cross-industry solutions ensure faster realization of business value. TCS has consistently been
recognized as the leader in various service lines by leading analyst firms.

Contact
For more information about TCS Business Process Services Unit, visit: www.tcs.com/bps
(http://www.tcs.com/bps)
Email: bps.connect@tcs.com

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