In the world of Accounts Payable automation, efficiency is king. One of the standout innovations in Open Text Vendor Invoice Management (VIM) for SAP Solutions is Smart Coding — a feature designed to make invoice processing faster, more accurate, and less dependent on repetitive manual entries.

What is Smart Coding?

Smart Coding is a machine learning–driven function in VIM that helps users automatically assign coding proposals to invoice line items. Instead of manually entering cost centers, GL accounts, or other coding data every time, VIM learns from historical postings and suggests coding values during document indexing.

Benefits of Smart Coding

• Time savings: Reduces manual effort in entering repetitive cost allocations.
• Consistency: Ensures coding aligns with historical and organizational patterns.
• Fewer errors: Minimizes the risk of incorrect GL postings.
• Scalability: Supports large volumes of invoices without increasing headcount.

Basic Model and PAL Model: What’s the difference?

In Open Text VIM Smart Coding, the Basic Model and the PAL Model differ mainly in complexity and accuracy.

The Basic Model is a simple, frequency-based approach. It analyzes historical postings for a given company code and supplier, then suggests a GL account and cost object based on how often that combination was used before. It’s easy to set up and works as a foundation, but it’s limited to pattern recognition and doesn’t adapt well to complex scenarios.

The PAL Model, on the other hand, is powered by SAP HANA‘s Predictive Analytics Library (PAL). It applies machine learning, using multiple factors like company code, supplier, requester, expense type, tax rate, and invoice amount to generate proposals. This makes it far more accurate and dynamic than the Basic Model, but it requires SAP S/4HANA with PAL installed and builds on the Basic Model‘s training.

In short: the Basic Model is static and straightforward, while the PAL Model is context-aware and designed for higher accuracy in real-world invoice coding.

How to activate Smart Coding

Step 0: Read the documentation and test in a sandbox environment first.

Make sure to check chapter Smart coding in OpenText Vendor Invoice Management for SAP Solutions: Configuration Guide for Invoice Solution. Please understand that Step 1 deletes all coding statistics from your system.

Step 1: Delete Coding Statistics

To start with a clean surface the first step is to delete what is in the system using T-Code /OTX/PS302_TRAIN_CODING_DELETE.

Step 2: Train Coding Statistics: Basic Model

Now that we have an empty Smart Coding environment we start by training the basic Smart Coding model using /OTX/PS302_TRAIN_CODING.

For the first run always use the “Test Mode” to make sure everything is working correctly. If the first run in test mode was successful, it can be repeated without test mode.

From this point of time it is already possible to use smart coding in the system by clicking on Smart Coding button in the Line Items Tab on the Indexing Screen:

Step 3: Train Coding Statistics: PAL Decision Model

To use the more advanced PAL Decision Model you must ensure that your system has the following prerequisites in place:

• SAP S/4 HANA
• PAL model installed and activated
• Basic Model training is completed (Step 2)

Similar to the Basic Model: for the first run always use the “Test Mode” to make sure everything is working correctly. If the first run in test mode was successful, it can be repeated without test mode.

Once you have completed the training for the PAL Decision Tree Model you can see an entry in VIM Central Workplace (/n/OTX/PF03_WP) in work center Smart Coding:

Final Thoughts

Smart Coding in OpenText VIM can offer significant benefits — especially for organizations processing moderate to high invoice volumes. It has the potential to reduce manual data entry, improve consistency, and help teams spend less time on repetitive tasks. However, it’s important to keep expectations realistic:

• Smart Coding usually requires a period of training before it produces reliable results. Initially, proposals will need review, and accuracy may be limited for uncommon combinations or new suppliers.
• The PAL model improves accuracy over the basic model, but it also requires a solid foundation: enough historical data, correct setup, and ongoing monitoring.
• Smart Coding won’t eliminate coding errors entirely. Edge cases, exceptions, complex allocations, or unusual cost objects will still require human intervention.
• Benefits are greatest when invoice volumes are high and coding rules relatively stable. In very volatile or complex environments, the value may be less dramatic.

In short: Smart Coding can be a useful tool to help reduce workload and increase consistency, but it’s not a magic bullet. Proper expectation setting, pilot testing, and incremental rollout are key for getting good value.

What has been your experience with Smart Coding so far? Did it meet your expectations, or did you run into challenges? Share your thoughts in the comments below — I’d love to hear them.