Integrate AP Automation with ERP to Boost Efficiency and Save Money

Almost all businesses today have Enterprise Resource Planning (ERP) software. ERP software allows companies to manage various aspects of their business, such as financial planning, supply chain and human resources. 

ERP software is also an essential tool for accounting activities. Both purchasing and accounting departments must ensure that all accounts payable, accounts receivable and other purchase data are correctly entered into the ERP software. Thus, integration tools like AP automation with ERP software are necessary. 

Why ERP software is not sufficient for AP

Though it is possible to process invoices and directly enter them into the ERP software, this process poses multiple challenges to the accounts payable department. ERPs are not explicitly catered to AP functions and hence can produce complications. Here are a few difficulties of using ERP that AP departments face: 

Complex software

ERPs are complex and must be modified to the organization's specific needs. This makes it challenging for accounts payable staff to manage invoice and vendor data on the software. Moreover, recovering insights specific to AP from ERP might become challenging as the particular ERP used by the company might not be catered to accounting. 

Improper integrations 

The accounts payable department might use multiple accounting software and the ERP to cope with the lack of functionality. The lack of integration and two-way sync between these software might create issues for the team. For example, a bill that has been paid might not get reflected in the ERP on time, causing the transaction to not reflect in financials. 

Difficulty in migration

Switching ERP software is a time-consuming and cumbersome process. Continuing daily accounting operations might be challenging when a migration is in place. ERP migration can take months or even years to complete, hindering the daily activities of an accountant. 

Inability to detect errors

ERP systems might fail to detect accounts payable entry errors or duplicate invoices, causing AP teams to lose time and money. 

What is AP automation software?

AP automation software automates your end-to-end accounts payable processes from invoice data entry to paying vendors. These solutions help reduce the manual workload of your company's accounting department and aid in an error-free and timely process. 

Integrating with ERP solutions is an essential factor when it comes to selecting an AP automation solution. A suitable solution should be able to automatically transfer data to and from the ERP software without any errors. Having an AP solution that works perfectly with your existing ERP software can be greatly beneficial. 

Benefits of integrating your ERP software with AP automation

Efficient two-way sync 

With seamless integration and two-way sync between your ERP software and AP automation tools, your accountants can avoid the hassle of entering invoice data into multiple systems and ensuring each invoice is accounted for everywhere. With just a few clicks, information easily flows between the two systems. 

Real-time visibility 

AP automation is catered to your accounts payable needs. As such, it provides you with real-time helpful AP and spend insights, allowing you to ensure your vendor spends adhere to your set budgets and can quickly identify how many invoices are getting posted on time. 

Scalability

AP automation software can process multiple invoices without much need of manual intervention. This ensures that you can scale your business without adding additional headcount. Choosing software which integrates with multiple ERPs can also ensure continued use even when migrating ERP software. 

Improve accuracy

AP automation software removes manual errors from your invoice processing data with the help of OCR technology. This ensures that your accounting processes are accurate and that your accounts payable processes are less prone to leakages in spend. 

Improve compliance

AP automation software provides you with an elaborate accounts payable audit trail. This allows you to easily view the entire journey of an invoice, making your processes ready for both external and internal audits. 

Improve vendor relationships

Timely payment of invoices and keeping your vendor in the loop allow you to foster better relationships with your vendors and gain better negotiating power. 

How ERP software and AP automation integrate

Data flows to and from the ERP software efficiently at multiple steps, ensuring your accounting data is up to date in every software. 

Invoice data extraction

When an invoice is received in the AP software, data such as line items, invoice amount, invoice date and payment due date are extracted from it with the help of optical character recognition technology. This data is reviewed and rectified wherever necessary by the accounts payable team. The AP team also ensures that correct GL codes and cost centers have been assigned to the invoice. 

Once an invoice has been reviewed and verified, the details are synced with the ERP software. 

Approval routing 

The invoice is then sent for approval to the relevant business approvers. After the invoice is approved, it can be paid. 

Payment

Once the invoice is approved, it can be paid to the vendor. This can be done by multiple payment methods such as ACH or check directly via the accounts payable software. 

Invoice reconciliation

The invoice is then reconciled to the ERP software via the AP automation software. This sends the invoice journey back to the ERP, such as invoice received and payment transactions. In case of payment cancellation, the data is again synced back to the ERP. 

How to select the right AP automation software

Selecting the correct AP automation software for smooth invoice processing is a must for businesses nowadays. While choosing the correct software for your company, you must keep in mind factors such as scalability, setup time, supported payment modes and ERP sync. Software such as ClearTech integrates with multiple common and uncommon ERP software like QuickBooks, Oracle, NetSuite, SAP and Sage Intacct. ClearTech also ensures configuration and setup in a few days and provides benefits such as accurate invoice data extraction via OCR and managed services, configurable approval policies and real-time data analytics in the form of interactive dashboards. You can also get important insights, such as spikes in line item trends and duplicate invoices on the invoice processing screen itself, saving you time and money. 

Conclusion

• ERP software and AP automation software need to integrate seamlessly to ensure the smooth functioning of business processes.
• Most ERP software are complex and not catered to any particular department. 
• Integrating an AP automation system with your ERP can improve compliance and ensure the accuracy of data. 
• AP automation software can also provide audit trails and invoice history to ensure compliance. 
• Accounts Payable automation software syncs all data to the ERP, such as invoice details and payments, in a timely and accurate manner without manual intervention. 
• It is important to select an AP automation software which integrates with your existing ERP solution and gets set up in a short amount of time.