xSuite Blog

Expert Knowledge on Digitalization & Automation of Business Processes

xSuite Blog

Expert Knowledge on Digitalization & Automation of Business Processes

Background Posting: End-to-End Automation for Invoice Processing

Topic: Invoice


Integrated end-to-end automation is the ideal when it comes to digitalizing operational business processes. In reality, however, the landscapes of most companies tend to resemble a patchwork quilt. Indeed, in its Digital Office Index 2020, rating digitalization in companies*, Bitkom—the industry association for the German information and telecommunications sectors—found that, on a scale of 0 ("not digitalized at all") to 100 ("fully digitalized") points, the companies surveyed scored an average of 55.

In practice, what this means is that in most companies some processes have been digitalized and automated, some are digital but not automated, and yet others remain paper-based, and as such are purely manual. Therefore, the claim of having end-to-end automation seldom reflects actual reality. This blog article will take a look at how end-to-end automation can be achieved in the area of invoice processing—and what exactly is behind the "background posting" approach.

Background posting defined

"Background posting" refers to the fully automated processing of an invoice from its receipt to its payment. The information on the invoice is automatically extracted, the data is automatically checked according to various criteria, and then the invoice is automatically paid. Automating all these steps in invoice processing offers great potential for companies in reducing costs and increasing efficiency. In general, one can summarize it as follows: the higher the rate of posting in the background, the greater the savings in processing costs.

What keeps companies from posting in the background?

When looking at the definition of background posting, the advantages quickly become clear. But why do so many companies still tend to rely so little on this approach, or fail to use it at all? To get to the bottom of this question, let us look at what is actually required for invoices to be posted in the background.

First of all, we should be clear about the fact that when background posting occurs, a document is not posted unchecked. Rather, verification simply runs on an automatic basis, and the document passes through the various checkpoints to payment without ever appearing on the monitor of an employee for checking.

For the system to carry out this kind of automatic verification in the background, fixed criteria must be in place, as well as a set of rules determining how verification is to be carried out. An example of this is the three-way match.

The three-way match for invoices with PO reference

"Three-way match" relates to the matching of purchase order, goods receipt and invoice. If invoice criteria such as price and quantity match the values in the purchase order, and a goods receipt has already been posted, a three-way match will have been found. A workflow system can perform this comparison automatically in the background — and, barring discrepancies, perform background posting of the invoice directly as well.

Other control procedures for invoices without PO reference

If an invoice does not have a purchase-order reference, the three-way match approach outlined above cannot be used for automated verification. However, this does not mean that invoices lacking PO reference cannot be posted in the background. If, for instance, you receive invoices from a trusted supplier and have agreed upon a different approval procedure with them, you could still use background posting. Manual approval will also be superfluous if there is another path of verification such as prior controlling in the context of a project.

These examples are, however, rather special cases. If you want to get started with posting invoices in the background, the first thing to focus on is the area that has the most potential for automation — the three-way match for invoices that do have PO reference.

Trust is good — control is better

There is no need to blindly rely on the system for background posting. You can make settings to route a percentage of invoices posted in the background on to an employee for additional manual verification. Or you can set amount limits and only allow background posting — even using the three-way-match procedure — for invoices that have totals under a certain amount.

Background posting as the next step in automation

Automated background posting of incoming invoices is an important building block in achieving end-to-end automation in P2P processes. Even processing a smaller number of your invoices in the background will make a significant difference in speeding up processes while simultaneously reducing effort. The approach is particularly suitable for invoices with a PO reference because an automated check can be carried out by the workflow system according to the principle of the three-way match.

If you wish to know how this can be implemented with our Invoice solution for SAP, have a look at our white paper, which can be downloaded here: White Paper Download "Background Posting"

*The Bitkom Digital Office Index 2020 can be downloaded with this link: www.bitkom.org/Bitkom/Publikationen/Bitkom-Digital-Office-Index-2020




Dina Haack is Head of Marketing at xSuite Group. She has been at home in the B2B software industry for around 10 years. At xSuite in Ahrensburg, her main topics are: SAP-integrated invoice processing, electronic invoices and automation.

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