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Streamline Costly, Cumbersome Invoicing Processes with Biller Consolidator from SAP

by Jürgen Weiss | SAPinsider

April 1, 2003

by Jürgen Weiss, SAP AG SAPinsider - 2003 (Volume 4), April (Issue 2)

Just as businesses scrutinize their supply chains, searching out inefficiencies, they are now beginning to examine their financial supply chains — starting with a consideration of how invoices are processed. Most SAP customers, large and small, are all too familiar with the cumbersome process of printing an invoice and mailing the copy to their customers; or, on the customer side, scanning or retyping each invoice, checking it, and finally sending a payment that the biller needs to receive and process. Invoices can go missing and open items remain unpaid, leading to books that cannot be closed on time.

Not surprisingly, this process is not only time-consuming and labor-intensive, it’s also costly. Some estimate the expense is currently upward of $15 per invoice.1 What’s more, customers — the recipients of these invoices — are starting to look to billers to cover these costs. In the U.S., it’s common to see billers charged fees for every paper invoice sent.

To streamline invoice processing, both billers and customers have looked to technology and hosted solutions from consolidators2 (typically financial institutions, central payers, electronic marketplaces, or private exchanges). For SAP customers, their business partners, and service providers, SAP has introduced the SAP Biller Consolidator. This application provides the interfaces and software that support an open network connecting billers and customers electronically.

With this portals-based approach, all parties can automate and simplify the invoicing process at each point of interaction and across a variety of systems and technology. The result is enhanced communication, fewer payment defaults, improved cash management, and optimal customer service.

SAP Biller Consolidator greatly simplifies the billing process, with efficiencies that, according to an Ovum study, can cut your costs by as much as 70%.3

An Introduction to SAP Biller Consolidator
In contrast to using electronic data interchange (EDI), which requires expensive point-to-point connections, maintenance fees, and proprietary hardware and software, consolidators can make use of the same network-based principles that have already proven successful for electronic purchasing. Through SAP Biller Consolidator, customers can give business partners of all sizes access to all the financial supply chain management functions of mySAP Financials.

SAP Biller Consolidator is an open system suitable for companies of all sizes and with different ERP systems — and even small companies without their own ERP system!

SAP Biller Consolidator supports an open network consisting of three software components that can be run either within the biller’s company or individually by separate service providers (see “Overview of the Biller Consolidator”):

  • Biller service provider (BSP) — The portal interface for the biller. The biller sends electronic invoices to the BSP, which forwards them to the consolidator. From the BSP portal, the biller can view and check receivables, drill down for invoice details and status, check on invoices released by the payer, and view bank credits (see Figure 1).

Figure 1 The Biller’s View of Invoices with the SAP Biller Consolidator

Overview of the Biller Consolidator

  Primary Functions Services and Features
Biller Service
  • Direct interface with the consolidator
  • Receives electronic invoices from biller
  • Handles communication with biller (e.g., reporting the invoice release by the payer, displaying bank credits)
  • Forwards invoices to the consolidator as standard electronic messages, or to customer as a print data flow via a print center
  • Can electronically forward to the consolidator all payment-related information only, or all the data it receives from the biller
  • Allows billers access for manual uploading of invoices
  • Converts the invoice data to format required by the customer (flat-file, IDoc, XML, EDIFACT)
  • Is able to sign electronic invoices, for legal reasons
  • Manages the relationships between the biller and his or her customers
  • Manages the customer’s communication preferences
  • Logs the current status of each business transaction
  • Provides converters for flat-file, IDoc, XML, and EDIFACT formats
  • Handles communication with financial institutions, such as transferring payment orders and accepting debit or credit memos, and supports these messages in different electronic formats
  • Identifies Biller Consolidator participants
  • Assigns unique transaction numbers for business transactions
  • Primarily responsible for presenting invoices the customer receives from the consolidator
  • Displays bill details, original bill, and debits to the account
  • Receives payment releases
  • Forwards data to the consolidator when bill is released via CSP portal
  • Informs the customer about status of an invoice
  • Displays bills and bill details as PDF file or HTML page
  • Includes due date, amount and currency, amount paid, and status in displayed information
  • Allows invoices to be imported into SAP (IDoc) or into other systems (via EDI)
  • Can be integrated into a customer's enterprise portal, or portal for electronic banking applications, via an XML interface
  • Offers a client-capable portal function, which can provide platforms for a web interface to connected financial institutions or service providers
  • Customer service provider (CSP) — Primarily responsible for presenting invoices from all billers to the customer. The CSP also converts invoice information into a customer-appropriate format (see Figure 2). From the CSP interface, the customer can make a payment, check on the status of an invoice (open/released), and check payment releases and debits to the account.

  • Consolidator — The consolidator is not visible to the biller or customer; the BSP and CSP act as the direct interface and integrate the customer/biller information via the consolidator. The consolidator logs the current status of each business transaction. Once the customer makes a payment, the consolidator sets the status of the invoice to “completed” and closes the transaction. The consolidator also handles communication with financial institutions, transferring payment orders and accepting debit or credit memos.
Figure 2 The Customer’s View of Invoices with the SAP Biller Consolidator

Other business transactions in the financial supply chain that SAP Biller Consolidator supports include issue and reversal of an invoice, release and rejection of an invoice, individual payment, credit memo and credit memo reversal, and dunning notice.

Integrating Your Business Partners: How It Works
You may look to incorporate the entire Biller Consolidator into your operations, take on the CSP or BSP functions only, or use the services of an ASP. In any case, if you are already running SAP solutions, you will benefit from additional features available from the Biller Consolidator for more efficient invoicing and payment.

As long as a biller is able to create a structured XML invoice, they can access the Biller Consolidator’s BSP and upload invoices. For billers with SAP systems, though, adding the SAP Biller Consolidator also allows you to create an electronic invoice using an IDoc (the INVOICE02 IDoc)4 instead. The SAP Business Connector5 at the biller’s site then automatically converts the IDoc into an XML IDoc format and sends it to the BSP. The BSP contacts the Consolidator using an XML message and checks whether the customer is connected (and known) to the system, and which format the customer requires.

In either case, what if your customer requires an invoice in an EDIFACT format instead of an IDoc or XML? The BSP would convert the SAP IDoc into the EDIFACT format and forward this file to the consolidator, all without an additional EDI sub-system.

With an SAP system on the customer side, you can receive electronic invoices directly into your system, instead of accessing the CSP. You simply need the SAP Business Connector to receive invoices as XML-IDoc. The SAP Business Connector converts these XML-IDoc invoices into the INVOICE02 IDoc. The type of invoice verification you use will drive activities in the system, such as the approval workflow or matching of orders and invoices.

One further benefit of the IDoc approach is the additional data — a transaction reference number and a URL — that comes to customers from the Consolidator system. To speed up invoice processing and reconciliation, the transaction reference number is a unique identifier assigned by the Biller Consolidator to each business case, and the URL contains a link to the original invoice, stored at the BSP. Both are automatically linked with the open item in the SAP system. This gives the clerks handling invoice verification immediate access to the original invoice, without scanning or re-entering invoice data.

What’s more, if you are using an optical archive, you can receive the entire invoice as a PDF document, store the PDF in your archive, and link directly to the open item via the archive link — making invoice verification that much easier.

This improved exchange of information achieved by streamlining your invoicing process has immediate impact on time, costs, and labor expenses. It reduces the average number of days sale outstanding (DSO) for billers, thereby improving their cash flow, and shortens the time needed for customers to review and pay bills. Customers can integrate invoice data with their accounts receivable system and eliminate rekeying of information. Even non-EDI customers can exchange invoice and payment information electronically.

SAP Biller Consolidator is one component within SAP Financial Supply Chain Management (FSCM), which is a key functional area of mySAP Financials. Other FSCM components include SAP Biller Direct, SAP Dispute Management, SAP Credit Management, SAP In-House Cash, and SAP Treasury and Risk Management.

For more information on the SAP Biller Consolidator, visit

1. Source: Datamonitor.

2. For an overview of options for electronic payment, see my article “Empowering Your Customers with Electronic Bill Presentment and Payment (EBPP)” in the October-December 2001 issue of SAP Insider (

3. See the Ovum research report, “Electronic Bill Presentment & Payment: Creating Opportunity from Necessity.”

4 IDocs are an SAP data container for the exchange of data between SAP and non-SAP systems.

5 Billers and customers with an SAP system need SAP Business Connector to integrate their applications with Biller Consolidator. SAP Business Connector provides bi-directional synchronous as well as asynchronous communication to and from applications in an SAP landscape, including SAP and non-SAP components and applications, as well as web applications.

Jürgen Weiss is Director of Product Management in the GBU (General Business Unit) Financials. He has degrees in Economics and Business Administration from the Universities of Heidelberg and Hagen. Jürgen joined SAP in 1997 after a previous position as PR Manager in a large German bank. He held various positions within the company and joined the Financials GBU in 2000. Jürgen is globally responsible for the Financial Supply Chain Management applications, including Electronic Bill Presentment and Payment, Dispute Management, and Credit Management. Among his tasks are the roll-in of customer requirements and the roll-out of the solution.


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