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Enterprise resource planning (ERP) systems have been around for several decades. They have been useful in addressing sophisticated supply chain management problems and they have been employed in many different settings that require an effective solution for data-sensitive activities. Accounts payable (AP) automation, on the other hand, has progressed steadily. It has become more efficient and responsive to the needs of businesses. However, not many pay attention to the link between ERP and AP automation.
Companies like Omicron Solutions Ltd. offer solutions that integrate and streamline different business processes. In particular, they provide managed IT solutions that stabilize and secure systems with the introduction of various IT tools, upgrades, and patches. This integration of multiple business tools and services is arguably one of the inspirations in bringing together ERP and AP automation.
ERP as an accounting solution
ERP software can serve as a useful tool to augment existing accounting systems. It can combine with a robust AP automation platform for a more efficient setup. This is similar to what the collaboration between PYMNTS and Bottomline Technologies has achieved. Combining AP automation and ERP reveals several advantages. For one, it results in a superior invoice-to-payment and payment-to-reconciliation process.
Most AP solution providers don’t provide the functions that enable the most efficient record-keeping processes. They don’t deliver rapid invoicing and payment processing functions, something many small and midsize businesses want to have. ERP and AP automation need to grow together to achieve these efficient features in a unified system.
The industry report “Next-Gen AP Automation Tracker” points out that adding AP automation to an ERP system creates the benefit of simplifying the invoicing process such that it reduces invoice processing to only $2.74. This is drastically lower than the industry average pegged at $15.02. Additionally, the report reveals a significant reduction in the time it takes to process an invoice. Accordingly, the difference is around 66%, from 10.3 days to only 3.5 days. It would be unwise to ignore these quantified advantages.
Scouring hidden efficiencies
The integration of ERP and AP automation tends to uncover hidden efficiencies as these systems fuse into a single platform. These newly discovered advantages are attributed to the reduction of human and computer errors, which usually result in missed payments, the duplication of invoices, and damage to business relationships.
The integration between ERP and AP automation is not easy to achieve. In many cases, potential issues are amplified or exaggerated. However, a few companies have already developed integrated solutions that have been polished overtime to eliminate the jitters and achieve a truly effective unified solution for accounts payable automation and enterprise resource planning.
Just like managed IT services that feature a combination of different solutions, integrated ERP-AP automation will likely gain more popularity as it continuously improves over time. There are challenges in achieving seamless integration, but they are unlikely to hamper the mainstream adoption of ERP-AP automation systems.