ERP systems have long been the backbone of businesses, streamlining processes and optimizing functions across departments. However, when it comes to accounts payable (AP), even the best ERP systems can struggle to handle the complex tasks, such as invoice processing. This is where AP automation comes in, complementing your ERP system and taking your business to the next level.
In this guide, we will explore the benefits of integrating AP automation into your ERP, discuss the different types of integration methods, and provide tips on how to choose the best AP platform for your business.
Enterprise Resource Planning (ERP) systems are comprehensive software solutions that help businesses manage and optimize their core functions, such as accounting, finance, HR, and purchasing. On the other hand, AP automation is a specialized software solution designed to handle complex and less structured accounts payable tasks, such as invoice processing.
While ERPs excel at rules-driven functions, they often fall short in handling the complexities of accounts payable. This is where AP automation comes in, streamlining and managing complex AP tasks and integrating with the ERP to share accurate, real-time data.
2. The Need for AP Automation in ERP Systems
Integrating AP automation into your ERP system can bring numerous benefits to your business. By automating and optimizing complex AP tasks like invoice processing, you can enhance the capabilities of your ERP system, providing accurate and up-to-date data that enables better decision making and improved efficiency across the organization. Moreover, AP automation can help reduce manual processes, error rates, and costs associated with invoice processing, resulting in significant cost savings and improved productivity for your business.3. How AP to ERP Integration Works
AP to ERP integration enables your ERP system to act as a single source of truth for transaction data across your organization, providing transparency and efficiency across the procure-to-pay process. Integration involves seamless data transfer between the AP automation system and the ERP, facilitating:- Invoice data capture and management
- Payment processing
- Invoice posting
- Reporting and analytics
- Invoice workflow
- Compliance and controls
- Invoice reconciliation
4. Benefits of AP & ERP Integration
Integrating AP automation into your ERP system can bring several benefits to your business:- Invoice processing cost savings
- : Automation can reduce the cost of processing invoices from over $10 per invoice to $2 or less.
- Improved employee productivity
- : AP automation can significantly increase the number of invoices processed per employee per year.
- Faster invoice approval process
- : Automated invoice capture and routing ensure quick and accurate approvals.
- Reduced errors and duplicate invoices
- : Automatic invoice entry, coding, and verification eliminate duplicate invoices and errors.
- Enhanced transaction data and process visibility
- : Real-time data and insights are provided through visual dashboards, helping decision-makers identify trends and bottlenecks.
- Quick and simple integration with legacy ERPs
- : The best AP automation platforms can quickly and seamlessly integrate with most ERP platforms without changing existing rules or processes.
5. Types of AP to ERP Integration
There are several methods for integrating AP automation into your ERP system, depending on the compatibility and requirements of both systems. Some of the common integration methods include:API
Application Programming Interface (API) integration is a popular method for connecting cloud-based AP automation platforms with ERP systems. APIs allow for real-time, two-way data exchange between AP and ERP systems, ensuring accurate and up-to-date information across both platforms.cXML
Commerce eXtensible Markup Language (cXML) is a standard for the exchange of e-commerce data, such as purchase orders and invoices. cXML integration enables seamless data transfer between AP and ERP systems, facilitating efficient and accurate invoice processing.iDOC
Intermediate Document (iDOC) is a standard data structure used by SAP ERP systems to exchange data with external systems. iDOC integration allows for the communication and synchronization of data between AP automation platforms and SAP ERP systems.EDI
Electronic Data Interchange (EDI) is a communication protocol used to exchange business documents, such as invoices and purchase orders, between computer systems. EDI integration streamlines the transfer of data between AP and ERP systems, reducing manual processes and improving data accuracy.JSON
JavaScript Object Notation (JSON) is a lightweight data interchange format that is easy for humans to read and write and easy for machines to parse and generate. JSON integration allows for the exchange of data between AP automation platforms and ERP systems in a human-readable format.SFTP
Secure File Transfer Protocol (SFTP) is a method for transferring files securely over a network. SFTP integration involves the import and export of data files between AP and ERP systems, ensuring a secure and reliable data exchange.6. Choosing the Best AP Platform for ERP Integration
When choosing an AP platform for ERP integration, consider the following factors:- Ease of integration
- : Ensure the AP platform supports seamless integration with your existing ERP system, including two-way communication and synchronization of data.
- Support for specific requirements
- : Look for an AP platform that supports custom data fields, multiple ERPs, multiple locations, jurisdictions, subsidiaries, and currencies, and integration with accounting systems.
- User reviews
- : Check software review sites like G2 to gather insights and feedback from other finance leaders about the AP automation platforms you are considering.
- ROI analysis
- : Speak to vendors or other businesses to understand what ROI you can expect from the integration and on what timeline.
- Trial subscription
- : Many AP automation platform providers offer a free trial to help you assess whether their solution will work for your business.
7. Implementing AP Automation into Your ERP
Once you’ve chosen the best AP platform for your business, follow these steps to implement AP automation into your ERP system:- Develop an implementation plan
- : Outline the goals, requirements, and timeline for integrating AP automation into your ERP system
- Configure the AP platform
- : Customize the AP platform to accommodate your specific AP processes and requirements.
- Connect the AP platform to your ERP system
- : Establish a secure connection between the AP platform and your ERP system, using the appropriate integration method.
- Test the integration
- : Ensure the seamless data transfer between AP and ERP systems by testing various scenarios and workflows.
- Train your team
- : Provide training and support to your AP team, ensuring they understand how to use the new AP automation platform and its integration with the ERP system.
- Monitor and optimize the integration
- : Continuously monitor the performance of the AP automation platform and its integration with your ERP system, making adjustments and improvements as needed.
8. Best Practices for AP & ERP Integration
To maximize the benefits of AP and ERP integration, follow these best practices:- Establish clear goals and objectives
- : Define the specific goals and objectives you hope to achieve with the integration, such as cost savings, improved efficiency, or enhanced visibility.
- Ensure seamless data transfer
- : Prioritize real-time, two-way data exchange between AP and ERP systems to ensure accurate and up-to-date information across both platforms.
- Implement strong data validation and error handling
- : Develop robust data validation and error-handling procedures to minimize errors and duplicate invoices.
- Optimize workflows
- : Configure the AP platform to support efficient and effective invoice processing workflows, such as automated routing and approval.
- Maintain a strong focus on compliance and controls
- : Ensure that both the AP and ERP systems enforce internal controls, maintain a complete audit trail, and support separation of duties.
9. Potential Challenges and Solutions in AP & ERP Integration
While integrating AP automation into your ERP system can bring significant benefits, it’s not without its challenges. Some potential challenges and solutions include:- Incompatibility between systems
- : Ensure the AP platform you choose supports seamless integration with your existing ERP system and can accommodate your specific requirements.
- Complexity of integration
- : Choose an AP platform with a straightforward integration process and consider leveraging the expertise of vendors or consultants to help you navigate the integration.
- Resistance to change
- : Provide training and support to your AP team, emphasizing the benefits of the new AP automation platform and its integration with the ERP system.