You might be using an ERP to manage your various financial processes today, but is it giving you everything you want or need? When it comes to managing supplier invoices in particular, chances are you are still doing way too much manual work and a lot more than you need to be. A well-designed ERP system integrates multiple business functions into one, but it won’t be enough to resolve your AP issues.
Previously, ERPs were primarily used by multinational corporations, mainly because they were the only ones who could afford to implement them. But, with the rise of cloud-based ERP solutions, this trend has changed. Apps Run the World estimates that the cloud ERP market size will balloon to $32.1 billion by 2025 globally, with total ERP market values rising to $98 billion.
ERPs are designed to simplify business processes and record information, but they won’t help if you want to turn your AP department into a profit center. ERPs simply aren’t designed for invoice capture, approval, and matching. When you consider a recent report by Levvel Research ranked manual routing of invoices for approval and manual data entry as the two biggest challenges within the AP process, it’s clear that your ERP will not solve your AP issues.
What ERP Systems Do
ERP systems are a series of integrated software programs designed to record and store data. They can either be stored in the cloud or implemented company-wide on physical servers. ERPs are mostly used for three major functions.
1. Supply Chain Management
ERP systems give employees the ability to manage business relationships through a centralized platform. Supplier data can be entered, and orders can be tracked, including lead times and average order value (AOV).
2. Managing Human Resources
ERP systems are designed to help in the management of all business resources, including the company’s human capital. ERP platforms can be used to track employee performance, calculate payroll, and evaluate employee performance over a specific period.
3. Accounting and Finance Management
The first ERP systems focused primarily on helping businesses manage their money better. ERPs were originally designed to assist in accounting and finance. However, modern ERP systems require integration with other accounting software to complete tasks that they cannot.
For instance, ERPs are not designed to track and manage invoices – a critical workflow of the AP department. This means integrating an AP automation solution with your ERP for granular visibility over annual budgets.
Where ERP Systems Lack
Simply relying on an ERP to manage your business is risky. ERPs can’t tackle the challenges that AP automation can, which limits their usability considerably, especially in the AP department.
Very Basic E-Invoicing and Requisitioning
To turn your AP department from a cost center into a profit center, simply relying on an ERP is not going to help. You can’t expect an ERP system to capture and code data like line-item information or amounts from invoices.
They are also not designed to identify errors, duplicate invoices, or to automatically send invoices for validation and approval. They also can’t match invoices to purchase orders or Goods Received notes.
Invoice matching is incredibly beneficial to companies as it helps save both time and money. Three-way matching helps eliminate fraudulent invoicing and minimises the risk of overpaying. It works by automatically checking relevant documents to prove that the business requested the goods or service, and that goods or services were received before the invoice is cleared. If you’re experiencing issues in any of these areas, you must look at an AP automation solution.
Effective contract compliance is the key to reducing costs but is also one of the greatest ERP limitations; most platforms are unable to manage contracts properly, if at all. These are core financial processes, and most ERP systems simply aren’t designed for them.
These ERP limitations become more discernible as your company begins to grow. Your AP department will have to deal with an increasing number of invoices and multiple contracts with suppliers, and business processes are likely to become more and more complicated.
Comprehensive Data Analysis
While data can be visualized and presented in multiple ways with an ERP platform, it’s important to understand that AP automation software gives you a more comprehensive range of analytical data and reports to make strategic decisions.
Your ERP system can’t be expected to capture data from invoices but, with an AP automation solution, you can easily get access to more comprehensive data that can help you make important decisions related to the performance of your AP department.
The Solution: ERP Integration with AP Automation Software
If your company already has an ERP, you need to focus on integrating AP automation software to address growing AP challenges. By integrating your ERP with an AP automation solution, you will create an efficient system that mitigates the risk of human error, invoice fraud, and duplicate entries in addition to removing the multiple manual touchpoints that you are currently experiencing through automating the process.
Integrating an AP solution also reduces the risk of missed invoices, which ultimately results in improved relationships with suppliers. An ERP system that’s closely integrated with AP automation software can also provide greater depth into payment history and invoices, further tightening control over cash flows.
Decision makers can benefit from increased transparency, as they can trace the entire process from when the invoice is received to payment and reconciliation directly from the ERP.
SoftCo integrates seamlessly with existing ERP systems at a single point, thus offering access to real-time information and data.
SoftCo Accounts Payable Automation Gives You The Best of Both Worlds
SoftCo Accounts Payable Automation is an AP automation solution designed for businesses that want to cut down on inefficiencies. It’s the ideal AP automation solution for growing businesses already using an ERP. SoftCo ERPConnect is a secure, highly configurable cloud-based platform which manages all of the data exchange between the ERP and SoftCo. SoftCo has over 30 years of experience seamlessly integrating with all major finance systems, databases, and ERP systems via SoftCo ERPConnect standard adaptors. SoftCo ERPConnect has integrated with over 200 different systems including all the industry leading ERP’s – SAP, Oracle, Microsoft Dynamics 365, Microsoft Dynamics GP, Infor and Sage.
More than 1 million global professionals use SoftCo to automate their AP processes including companies like PwC, SunnyD, The Finnish Government and Gesa Credit Union. If you want to know how it can help you transform your accounts payable department and boost profitability, request a demo today!