A flexible invoice capture solution winning partners around the world
Interview with Erwin Schwarzl, TCG Process Managing Director from Germany
The DACH region, where you are, is very advanced and competitive in the AP automation market. TCG has been successful in getting AP automation technology providers to use your invoice capture abilities for front-end recognition and validation--essentially the TCG platform becomes part of their solution. Why is this region of the world so advanced in this AP automation space?
When you think of Germans, you often think of engineers--whether it’s creating classical music or building cars. This market is more advanced because Germans want to automate everything, and they are bent on perfection. It’s in the DNA here. Capture technology came from Germany, it started in here and many of the patents - particularly as it relates to invoice recognition - reside here.
Additionally, Germany and the DACH region have a heavily regulated labor market. Labor is expensive and we consider labor a fixed cost (not a variable cost). Not just in this part of the world, but in a growing number of countries, labor is expensive. This means most companies want to keep their workforce slim. And so you automate whatever you can automate to support that goal.
Most companies in Germany already have an approval workflow. Because we are a large SAP ERP market, an ERP where the native workflow tool can be a challenge, TCG’s alliance partners often provide workflow tools either inside of, or external to, the SAP environment.
TCG came late into the invoice capture market when we arrived in 2008. Most of our customers already had an invoice processing solution in place which was feeding their AP workflow with data. What we found was a customer need for a more accurate and flexible tool than they had initially purchased in the first generation of invoice capture technologies.
Because of the way in which data capture has evolved, with the addition of artificial intelligence (AI) and improved learning with bots, our customers are excited for the option to upgrade their invoice recognition and extraction tools with new ones.
TCG’s platform allows them to do more sophisticated extraction, on a wider variety of financial documents, than previously seen. They are validating more information on the invoice, doing cost accounting, etc.
These companies have realized that the accuracy of the data going into the workflow is as important as the workflow itself. Accurate data leads to the highest possible automation rates, which is the ultimate goal.
What is it about the TCG platform that has AP automation providers selecting TCG to partner with for the invoice capture part of their solution?
As I mentioned, here in Germany AP capture is a replacement market. Of the hundred plus invoice recognition solutions we’ve installed, more than 90% are replacements of old technology. We are the next evolution of this technology; some in the market call what we do Capture 2.0.
TCG invoice recognition is the most evolved solution available on the market, and once a partner evaluates the platform, they can clearly see the impact of modernization and smart incorporation of new technologies like AI.
Often a workflow provider will decide to partner with us for two primary reasons: accuracy of capture and modern infrastructure.
Of course, we have competitors in the market, many with simple, point solutions or inflexible technologies. If a customer wants something to address a related financial document or specific piece of additional invoice data, like returned pallets for example, many competitive solutions are unable to manage those credit items when listed on invoices.
In addition, validation of key invoice data - before it is delivered to the workflow solution - can help support higher automation rates for the workflow partner. Another good example is when orders are tied to market price. The customer wants to ensure the right index price, based on date of ordering, is applied to the invoice; these are the types of validation the TCG platform can easily handle. This allows the workflow tool to really focus on managing typical financial exceptions.
The partnerships work well because TCG has a special mix of both great technology and large volume of internal TCG knowledge and experience with accounts payable--from the development team to consulting services. This allows TCG to be a better partner and separates us from the competition here in Germany and across Europe and the world.
We understand the accounts payable process and controls, regulations by country, etc., versus just an understanding of how to capture information. And because of our experience, we know how to integrate better with a variety of financial systems, too.
What other document types have the AP automation providers asked you to be able to capture effectively in addition to invoices?
It’s quite a list. Payment advices, POs, delivery notes, sales orders, order confirmations (or order responses) … really anything involved in the financial process that links buyers to goods or services can easily be managed with this solution.
The platform is flexible enough to capture those AP process-associated documents and still packaged to be delivered swiftly, regardless of ERP or workflow environment.
The TCG invoice capture solution also sees a lot of success in one area where many other capture tools struggle: our recognition is great for multi-page and multi-line invoices.
With the amount of PO matching in the manufacturing space, and manufacturing being so important to the market in Germany, is this ability to read multi-page and multi-line invoices a large part of the success that TCG has gained in this market? Are there any other verticals that also have this need?
Definitely. As you’ve noted, manufacturers often have very long invoices. And many manufacturers have EDI set up with their largest suppliers. Their main suppliers send invoices by EDI but that often still leaves thousands of invoices that fall outside of the EDI process.
Hospital groups are another industry where a single invoice can be complex to capture and match. When these multi-location hospitals get medical goods invoices - for medicines for example - the supplier typically submits a single invoice with hundreds of pages of line items. Before the TCG solution was available, in those first generation capture systems, this invoice data was not able to be processed automatically. People would sit for hours with a single invoice and manually key in the data.
Today, even these types of complex invoices are easily managed by the TCG platform; it can process huge invoice documents in a matter of minutes or less.
One of our clients is the biggest retailer in Europe; they process all non-PO invoices across multiple countries. And today, no matter the country, language or country-specific requirements, all invoices are processed on the TCG platform… This includes Chinese (Kanji characters) and Japanese invoices.
There are so many examples: the world’s leading dialysis provider uses the TCG platform for invoice processing in 42 countries around the world; and a large logistics company leverages the platform in Hong Kong to service the Asian market. This logistics company processes invoices from Japan, South Korea, Taiwan, Malaysia, India … all countries with double-byte or non-Latin character sets. We are even processing Russian invoices in Cyrillic.
Can you share how the emergence of AI has helped with the classification and capture of data from supplier invoices?
One large improvement TCG has made with the help of AI is in classification. There are only so many systems that are used by companies to produce invoices, and the majority of all invoices exchanged in the world today arrive as a .pdf, generated from the ERP. We utilize classification first to determine from which invoice printing system this invoice was generated by (ex. SAP or Microsoft Dynamics or Netsuite), which gives you 80% of the knowledge you need to capture data correctly. Add in machine learning, which happens seamlessly as users validate invoice data, and you very quickly increase your touchless processing, and approach full automation.
There’s another benefit to these system-generated electronic invoices: as the volume of paper invoices decreases, it removes the poor quality you sometimes see with invoice scan and capture.
More than 50% of invoices we see come through the TCG invoice capture solution are received as PDFs, and this is not a new trend. It continues to ramp quickly in Europe, as EU regulation mandated all public agencies must be able to accept electronic invoices (PDF, XPS or other types of electronic invoices).
In addition to having a great technology, what other commercial, personnel and deployment advantages does TCG offer to AP automation partners?
I mentioned before the AP-specific experience of our consultants makes for very successful partnerships and customer projects.
Our commercial options are as flexible as the platform is: we offer both perpetual and subscription licensing, as well as multiple deployment options including on prem and private or public cloud.
Many partners elect for our invoice capture as a service option. We can hook up to their approval workflow in SAP (even if capture is in cloud) or to any other workflow they offer.
What do you think is the next major trend in business process automation that people should be paying attention to today?
The move to the cloud is the major trend today, as it benefits the customer experience in two key ways: a pay-as-you-go pricing model and the freedom to move more easily from one invoice capture service to another.
The cloud easily supports a consumption pricing model, which means customers can consider the cost as an operating expense instead of a CAPEX. And with the fluctuations that come with international, modern business, this consumption pricing model means customers aren’t locked into a high processing cost if there are changes to its business that impact invoice volumes.
The cloud trend can make it harder for invoice capture providers that don’t put a focus on customer service, but we welcome this challenge.
The TCG culture is focused on win-win relationships with its customers and partners, and we feel confident the freedom the cloud model offers customers will further differentiate us from other vendors.
