Santa was not the only one handling orders for presents…

The past year is a thing of the past and according to a survey conducted by Adobe, 51 percent of Germans intended to order all their gifts online. A majority of respondents cited low prices as the main reason for this mania for online shopping. But what about the orders your company places? Are they always determined by seeking economic benefits, or are they standardized processes? In this blog post, we will show you which analyses you can use to find answers to these questions.

The tale of the standard purchasing process in SAP

Purchase requisitions, or the purchase orders that follow on from that process, do not initially have any effect on P&L, are usually at the beginning of a purchasing process and yet can still be full of various pitfalls. In what follows, we will show just how diverse these pitfalls can be and which analyses can not only reveal procedural weaknesses in the purchasing process, but also have economic consequences.

Process-related weaknesses in SAP Purchase-to-Pay

Before we deal with the economic aspects of data analysis of orders in SAP, we will first address the issue of process standardization. An analysis of process standardization is essentially concerned with identifying those business activities in the process that do not comply with the standard. For those of you who have been following this blog from the outset, the words “outlier analysis” may spring to mind, but unfortunately this kind of thing happens more often than you may think, and is not so much a question of an outlier analysis, but a matter of the systematic circumvention of standard processes. This type of analysis includes, for example:

IndicatorDescriptionPotential Risk
Purchase order prior to purchase requisitionA purchase requisition was created after the purchase order.Incorrect purchasing process / circumvention of permits
FI documents without a purchase order contrary to expectationsLess than 30% of accounting documents with a specific document type do not have a purchase order reference.Avoidance of standard processes
FI documents referencing a purchase order although most documents of that type do not reference a POLess than 20% of accounting documents with a certain document type have a purchase order reference, contrary to expectations.Purchasing process takes place in an unusual way
Purchase order used multiple timesAt least three different accounting documents reference a purchase order with a period of more than 90 days between the documents.Avoidance of normal procurement processes or approval steps. Avoidance of master contracts.
Goods receipts without purchase orderUse of transaction type 501, which stands for “goods receipt without purchase order”.Difficult to verify invoice due to missing order

Thus, we have already shown 5 data analyses, which are not so easy to implement. Without a procedural connection, it is impossible to make statements about the sequence of business activities. However, SAP uses a clearing mechanism for documents with open items, so that it is possible to reconstruct business processes effortlessly. This means that each document that clears another document contains a reference to its predecessor. This reference uses our Financial Process Mining Algorithm to reconstruct the processes in your SAP system in a fully automated manner.

Only when the processes have been completely reconstructed can you analyze which activity was executed in the process before or after another one. This can be done either by simply looking at the results, or by means of another algorithm based on a certain degree of complexity.

When money is wasted in purchase-to-pay processes

Having taken a look at procedural weaknesses, we will now devote our attention to examining cost-effectiveness. We do not want to go into further detail here about duplicate payments, an issue which we already looked at in some depth last week, but instead we will focus on analyses which do not initially always bring in the “big fish”, but instead go by the motto that “the devil is in the detail”. A prime example of this is the payment terms in SAP. Missing terms of payment that occur from time to time are easy to dismiss, but what if several hundred orders are placed over the years without terms of payment? Then things can soon mount up to quite a considerable sum. Let’s summarize the analyses that zap Audit can perform in the area of cost-effectiveness:

IndicatorDescriptionPotential Risk
Purchase orders without payment terms or with incomplete payment termsDocuments with incorrect or missing terms of paymentLost discounts
Purchase order without request for proposalAt least 50% of a specific purchasing document type refers to a request for proposal. For other purchase orders, however, this reference to a request for proposal is missing.Missing request for proposal, possibility of cost savings
Items purchased with and without purchasing framework agreementsA particular material is ordered with and without a framework agreementUse of different purchasing conditions
Indications of duplicate paymentsInvoices paid twiceMultiple payment of invoices and thus outflow of liquidity
Indications of duplicate payments in respect of incoming one-time invoicesOne-Time invoices paid twiceMultiple payment of one-time invoices and thus outflow of liquidity

As you can see, there are even more ways to look for savings than simply devoting your attention to the old favorite of duplicate payments. Do not underestimate the potential of analyzing terms of payment. Especially if purchasing is not organized centrally, considerable differences may build up very quickly. Regardless of whether you are looking at the negotiating skills of the respective employees in purchasing or to see if someone forgot to use payment terms, this analysis can often reveal untapped potential.

In addition to process standardization and opportunities to make savings, our zap Audit Software also analyses compliance and correctness in purchasing. If you would like to find out more about zap Audit’s fully automated audit questions, you can find details of all the indicators for purchasing by clicking on the following link:


If there is an analysis you feel we haven’t covered, simply contact us here.

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