In today’s fast-paced business environment, efficient management of financial processes is essential. One of the key areas where companies can streamline their operations and improve efficiency is in accounts payable (AP). By integrating AP automation software with an enterprise resource planning (ERP) system, businesses can unlock a wealth of benefits that ultimately impact the bottom line. In this comprehensive guide, you’ll learn how AP automation and ERP systems work together, the challenges they address, and the advantages of combining these powerful tools.
Introduction to ERP Systems
ERP systems are software solutions designed to help organizations manage various aspects of their operations. These systems typically encompass functions such as finance, accounting, procurement, inventory management, and customer relationship management. By centralizing data and processes, ERP systems enable companies to make better decisions, improve efficiency, and facilitate communication between departments.
Role of ERP Systems in AP
ERP systems play a crucial role in the finance department, serving as the system of record for financial data, including accounts payable, accounts receivable, and budgets. However, ERP systems often lack the specialized features and functionality needed to optimize AP processes. This is where AP automation software comes in, supplementing the existing ERP system and unlocking added efficiencies.
AP Automation Integration with ERP Systems
AP automation software streamlines the accounts payable process by automating key tasks such as invoice capture, approval workflows, and payment processing. By integrating an AP automation solution with an ERP system, businesses can achieve a seamless flow of data between the two systems and unlock numerous benefits.
Overcoming Challenges with ERP Systems in AP
While ERP systems are invaluable tools for driving efficiency, they also present several challenges for AP teams, including:
ERP systems are complex and highly customizable, which can make it difficult for staff to configure and manage the system. This often leads to the need for dedicated resources or outside consultants to help manage the intricacies and challenges of the ERP system.
Migrating from one ERP system to another is a time-consuming and complicated process. Ensuring data is accurately captured and workflows are uninterrupted is crucial, and the typical migration timeline can range from six to 18 months, depending on the size of the company and the complexity of its systems.
Linking Multiple Systems
Some large organizations may choose to use more than one ERP system to handle different aspects of their operations. This can create reporting challenges and communication gaps between team members, making it crucial to weigh the benefits against the costs of using multiple ERP systems.
Limited Functionality for Specific Departments
ERP systems often struggle to meet the specialized needs of individual departments, such as the AP team. As a result, many companies choose to integrate an AP automation tool with their ERP system to deliver the necessary functionality and streamline AP processes.
Advantages of Combining ERP Systems with AP Automation
By integrating an AP automation solution with an ERP system, businesses can unlock a range of benefits, including:
1. Efficiency Gains
Digital transformation is driving efficiency across back-office functions and reducing human error. By automating AP processes, companies can minimize late payments and streamline workflows, helping CFOs tackle today’s challenges more effectively.
2. Better AP Analytics
AP automation tools offer advanced analytics and reporting capabilities, allowing for real-time insights into financial data. This enables finance professionals to make more informed decisions and positively impact the company’s bottom line.
3. Virtual Card Rebates
Virtual cards offer numerous benefits, including revenue through rebates. AP automation tools can help companies maximize their rebates by streamlining the virtual card enrollment process for vendors.
4. Streamlined Invoice Approval Workflows
AP automation simplifies invoice approvals by automating reminders and eliminating the need for manual intervention. This not only saves time but also reduces the need for multiple ERP licenses, as unlimited users can review and approve invoices within the accounts payable automation tool.
5. 99.5% Invoice Accuracy
Combining OCR technology with human review, AP automation tools can achieve up to 99.5% accuracy in invoice capture, reducing errors and duplicate payments.
6. Powerful Scalability
AP automation tools can seamlessly integrate with ERP systems and scale with the business, accommodating growth and changes in needs without the need to replace the entire system.
7. Stronger Vendor Relationships
Maintaining positive vendor relationships is crucial for business success, and on-time payments play a key role in this. Accounts payable automation tools can help ensure timely payments and improve vendor relationships by allowing companies to pay suppliers in their preferred format and set payment dates directly within the system.
8. Continuous Two-Way Sync
With API-enabled ERP systems, AP automation tools offer continuous two-way sync, ensuring that both systems are always up-to-date and data discrepancies are minimized.
Steps to Integrate AP Automation into Your ERP System
To integrate an AP automation tool with your ERP system, there are two main types of integrations offered:
Direct API integrations involve connecting the accounts payable automation tool to the ERP system using an API. This process typically takes place during a 30-minute call with the system admin and allows for a seamless exchange of data between the two systems.
UC integration involves setting up a secure file transfer protocol (SFTP) site to facilitate data exchange between the AP automation tool and the ERP system. This process requires collaboration between the AP automation provider and the client’s IT team to ensure proper implementation and data mapping.
Integrating an AP automation tool with an ERP system enables businesses to harness the full potential of both solutions, driving efficiency gains, improving analytics, and strengthening vendor relationships. By combining these powerful tools, companies can streamline their financial processes, minimize errors, and maximize the value of their ERP system.