Worldwide Rollout of an Invoice Processing Standard

Kirchhoff Automotive is globally present as a development partner to the automotive industry and a full-range supplier of complex metal and hybrid structures for crash management and dashboard supports. Since its founding in 1785, the family-owned company is part of today’s Kirchhoff Group, which is made up of the business units Kirchhoff Ecotec, Kirchhoff Mobility, and Witte Tools. Kirchhoff Automotive has 9,000 employees and 26 production plants in 11 countries, making it the largest business unit of the Kirchhoff Group.

Up to a few years ago, the different plants in the various countries where Kirchhoff operates handled their accounts payable on their own, and the finance departments acted more or less autonomously. The group has been and continues to undergo steady growth and acquires new plants in the process. It was therefore inevitable that there would be slight differences in how each location handles its invoice processing and establishes its processes and logic. An example is the area of shipping invoices, where the way the process chain “Generate purchase requisition in SAP—approve—order and delivery—invoice” was performed sometimes varied from location to location.

Differences such as these tend to produce more work. This is particularly the case when an SAP purchase order is absent, because then the question often arises as to who is responsible for releasing the invoice. A typical scenario was when someone would place orders over the phone, which would not show up in SAP. As a result, goods were delivered without PO reference, and a search ensued to find out whose invoice it actually was. “This made it difficult to draw comparisons,” says Martin Jonczyk, Global Consultant for the xSuite solution at Kirchhoff Automotive. “The turnaround times before an invoice was posted and released varied widely. Therefore, when the invoice receipt software was implemented, a key system of control was set up. We now use it to compare these processes in the respective plants, with the aim of uncovering any unnecessary wastage.” To unify processes, the company implemented xSuite’s solution for processing incoming invoices. “We particularly liked the fact that the validation of invoices takes place in SAP. The price-performance ratio was good, and the interpersonal aspect felt right too,” says Jonczyk.

New Financial Shared Services Center

The decision to go with xSuite was made in 2013. Since then, the software has been rolled out step by step in different national subsidiaries, with new functions being added bit by bit. Over the course of the implementation, Kirchhoff Automotive also set up a financial shared services center near Porto in Portugal. “The plant there was best-practice in processes. We were able to use it as a blueprint for standardization to exploit future synergy effects,” explains Jonczyk, who coordinated the implementation of the invoice processing solution from the very beginning.

By the end of 2020, the invoice workflow had been activated in thirteen subsidiaries. Kirchhoff processes 250,000 invoices a year worldwide, 80 percent of which are ones with PO reference in SAP MM. Barring any price or quantity differences, 80 percent of these MM invoices are posted directly. Of the invoices that the company receives today, 75 percent arrive by e-mail in PDF format and are routed to a central mailbox in the shared services center. There, the xSuite software extracts header data in the first step and then starts the release workflow for the cost invoices from SAP FI. Worldwide, as many as 2,000 individuals are now connected to the workflow. They check the invoices via their SAP account and then release them. After final posting, the software takes over the posting. The next stage of installation will involve extraction of line-item data.

Transparent overview for accountants

The 25 percent of invoices that still come in on paper are sent by suppliers to 26 plants in 11 countries, where they are scanned and transmitted to the shared services center for further processing. Local SAP FI key users support end users in the plants and drive important improvements forward.

Accounting specialists can click right into the data that will give them a clear overview: How many invoices are currently in circulation? Where are they stored? Today, information of this sort is standardized and readily available in the SAP system. Based on these data, an external central system of financial controls was developed for comparing and analyzing processes, in some cases on a daily basis.

Profits achieved through discounts granted on the basis of early payment definitely play a role at Kirchhoff Automotive. Although, according to Martin Jonczyk, this sort of cash discount tends to be more of a factor in German businesses, the foreign plants also benefit from the recent implementations, as processes have been simplified to a significant degree, and payments are made more quickly. The information regarding the amount of work that goes into processing an invoice has therefore gained in value. It’s all based on the principle that the simpler the process, the more invoices an individual can process per hour or day. This is particularly important when seen against the backdrop of a steadily growing volume of invoices, which Kirchhoff Automotive has been recording for years in tandem with its growing business volume.

Starting in early 2021, Kirchhoff Automotive plans to connect its plants in Mexico to the workflow, followed by the plants in the U.S. and China. The automotive supplier also intends to intensify its shift to the XML and EDI formats. This will raise the level of automation and lead to improvement in validation processes.