ITC Foods fuels growth by accelerating AP processes
Consumer goods business reduces cost per invoice by 20% and accelerates payments by 86% with OpenText™ Vendor Invoice Management for SAP® Solutions
About ITC Foods
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Suppliers:3,500
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Based in:Kolkata, India
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Annual invoices:200,000
Summary
Challenges
- Manually processed more than 200,000 accounts payable invoices a year.
- Paper-based invoices incurred delays, loss and late-payment penalties.
Solution
- Streamlined AP processes by integrating with existing SAP applications.
- Enabled remote deployment to minimize COVID-19 disruptions.
- Empowered vendors to submit accurate, electronic invoices.
Results
Reduced cost per invoice by 20%, boosting efficiency
Achieved 95% straight-through invoice processing rate
86% faster payments, reducing financial penalty risks
Challenges
- 200,000+ invoices to process each year
- Paper-based work delayed payments, risking financial penalties
Part of ITC Limited, ITC Foods is one of the fastest-growing foods businesses in India. With a portfolio of popular fast-moving consumer goods (FMCG) brands, the company covers a wide range of categories, including beverages, dairy, ready-to-eat meals, chocolate, coffee and frozen foods.
Subhasish Ghosh, finance function leader at ITC Foods, explains, “Our long-term goal is to become the largest FMCG company in India, and we’ve set a target to double our annual revenues. As we drive towards that objective, we anticipate that our foods business will grow by around 10% year-on-year.”
To produce delicious food for consumers across India, ITC Foods relies on a network of approximately 3,500 suppliers. Paying vendors on time is crucial—both to maintain strong trading-partner relationships and to meet regulatory requirements, as the Indian government mandates that small businesses must be paid within a specific number of days.
“Each year, ITC Foods’ accounts payable [AP] team handles around 200,000 invoices,” says Ghosh. “In the past, the AP team relied on manual, paper-based processes. As a result, it was extremely difficult to ensure a fast turnaround. The average processing time was approximately 30 days, and each month hundreds of invoices got lost in the shuffle.”
With business volumes growing rapidly, ITC Foods recognized that its manual AP processes would make it difficult to keep pace. At the same time, AP workflows were set to become even more complex with the arrival of a major tax reform: the Goods and Services Tax (GST).
Ghosh explains, “The new tax regime increases our invoice volumes further still, because many suppliers must now submit separate invoices for each state that they operate in. To meet GST requirements and achieve our revenue goal, we looked for a more efficient way of working.”
In the past, it took around 30 days to pay an invoice, but OpenText Vendor Invoice Management for SAP Solutions has helped us cut average payment lead time down to just four working days—86% faster.
Solution
ITC Foods engaged OpenText to design and implement a highly automated, self-service AP workflow. The solution is powered by multiple OpenText products to enable vendors to submit electronic invoices while retaining records for mandatory periods.
Products deployed
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OpenText™ Vendor Invoice Management for SAP® Solutions
Streamline financial processes across all departments
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OpenText™ Archiving and Document Access for SAP® Solutions
Manage SAP data and documents in a secure, enterprise-grade archiving platform
Streamlining invoice processes with SAP integration
After considering solutions from other leading invoice management vendors, ITC Foods determined that OpenText offered the functionality, accuracy and efficiency it was looking for.
“We rely on SAP ERP solutions to drive our operations from end to end, so tight integration with our SAP applications was absolutely essential,” recalls Ghosh. “With OpenText Vendor Invoice Management for SAP Solutions, we didn’t have to build any custom manual integrations—everything is ready to go practically out of the box. The strategic partnership between OpenText and SAP also gave us great confidence that the solution will continue to meet our needs for the long term.”
Ghosh continues, “We were also very impressed by the Flipper Portal. We immediately recognized that this new digital input channel would virtually eliminate the need for our AP team to manually re-key invoice data into SAP ERP—speeding up processing and reducing the risk of human error.”
Enabling remote deployment
As ITC Foods began to deploy the OpenText solution, the COVID-19 pandemic swept the world. To overcome the disruption of local lockdowns and travel restrictions, OpenText rapidly pivoted to a remote implementation methodology.
“The entire project—including workflow blueprinting, security auditing and vendor onboarding—happened virtually,” says Ghosh. “We were very impressed with how the OpenText team responded to the challenges of COVID-19. The project went smoothly, and we successfully transitioned to a fully digital AP process after a big-bang go-live.”
Digitizing vendor invoice submissions
Today, 98% of ITC Foods vendors submit invoices electronically via the Flipper Portal. Data flows from the portal directly into Vendor Invoice Management for SAP Solutions, which automatically routes each invoice to the appropriate employees for digital approval, then posts the invoice for payment in SAP ERP.
“We have configured Flipper Portal with strict business rules that prevent vendors from submitting invoices with incorrect data,” explains Ghosh. “For example, if a vendor attempts to submit an invoice that exceeds the amount available on the specified PO, the system automatically rejects the submission and prompts the vendor to correct it. As a result, we get high-quality data flowing into our automated processes, which allows us to achieve straight-through processing [STP] for most inbound invoices.”
Ghosh adds, “OpenText brought an extremely professional and effective approach to change management. Working together, we developed a package of digital tutorials to onboard our vendors to the new solution. The new AP workflow is a win-win for everyone: our suppliers can track the status of their invoices in real time and receive payments faster, and ITC Foods can process large volumes of invoices with minimal time and effort.”
We plan to leverage the OpenText solutions as part of a group AP transformation—allowing all supply chain partners to submit their invoices using Flipper Portal.
Results
ITC Foods has processed more than $2.5 billion USD in payments while dramatically reducing its cost per invoice. AP employees could also process invoices from home, enabling operations despite the COVID-19 disruption.
Reduced processing cost per invoice by 20%
By reducing the number of employees that touch each invoice, ITC Foods is driving down costs and boosting the scalability of its AP processes.
“Thanks to the OpenText solution, we’ve seen about a 20% reduction in the processing cost per invoice,” confirms Ghosh. “Part of the reason for that success is that we’re enforcing stringent controls at the data-entry stage. This helps to ensure that the information going into the system is correct and that no one in the AP team needs to touch the invoice.”
By negotiating with its suppliers, ITC Foods is confident that it can further reduce its costs by agreeing on discounts for early payments.
“We are now working with a partner to draw up service-level agreements [SLAs] with our vendors,” Ghosh elaborates. “The OpenText solution provides a full audit trail for every invoice, which will allow us to demonstrate our compliance with SLAs and apply the relevant discounts and payment terms automatically.”
Achieved a 95% straight-through invoice processing rate
Today, ITC Foods achieves an STP rate of 95% for invoice processing, allowing it to handle all compliance and control requirements with minimal human intervention.
“In the past, it took around 30 days to pay an invoice, but OpenText Vendor Invoice Management for SAP Solutions has helped us cut average payment lead time down to just four working days—86% faster,” says Ghosh. “Since we enabled suppliers to view the status of their invoices via the Flipper Portal, we no longer need to run a dedicated helpdesk. Instead of manually re-keying data and hunting down paper invoices, we can assign employees to work on higher-value activities such as compliance and supplier development.”
As ITC Foods moves towards its revenue goal, the group plans to replicate its AP automation success in other business units.
“We plan to leverage the OpenText solutions as part of a group AP transformation—allowing all supply chain partners to submit their invoices using Flipper Portal,” Gosh says. “Vendor self-service helps us to build credibility with our supply chain partners, negotiate more favorable contracts and drive down our operational costs.”
“Moving the whole group from paper to digital invoices will be a huge change-management exercise, but the systems and processes we’ve developed with OpenText will help accelerate the project significantly. We look forward to collaborating with OpenText as we set out on the next stage of our transformation journey.”
