When upgrading an enterprise resource planning (ERP) software platform, companies often implement major changes to the basic operational processes and structures. Modern ERP is largely built around identifying backend processes that, through the judicious application of software, could be streamlined or made more efficient via automation. Yet even when a company decides to invest a significant amount of time and resources in process automation, many ignore the time consuming tasks impacting accounts payable and invoice processing.
Not implementing AP automation as part of an ERP solution represents a missed opportunity to boost productivity, save money and give their financial professionals greater control over processes. While there are plenty of operational pain points mitigated by ERP, a company considering a full-scale ERP implementation should not neglect AP automation.
ERP Upgrade and AP Automation: Quick Overview
Fundamentally, ERP seeks to address many of the same challenges that AP automation tackles, albeit from an organizationally top-down approach. Given the expense of a full-scale software implementation, high-level decision makers and admins must keep the compelling reasons to invest in cutting-edge software front of mind: Manual processes take a long time, hard copy files go missing or are difficult to track down across multiple departments, and the resulting time crunch can be a drag on productivity. This is true within the accounting or accounts payable departments as well as numerous other areas of the business.
Just as ERP uses automation to address challenges related to project management, human resourcing and supply chains, AP automation simplifies processes involving invoicing and payments. AP automation reduces and often altogether eliminates the need to keep physical copies of many financial documents related to the AP process (invoices, internal paperwork, etc.), and also slashes the amount of time that needs to be spent on each invoice. Through AP automation, there’s no need to manually enter most data, and many approvals that might have previously been difficult to complete can now be taken care of with a few clicks of a mouse. In this regard, AP automation goes hand-in-hand with ERP and facilitates the process efficacy that drives cost savings.
Businesses See the Issue: Visibility (or Lack Thereof)
A recent poll of business owners from Wasp Barcode Technologies found that many businesses have to outsource a wide variety of back-end accounting efforts, including payroll, audits, tax planning and general bookkeeping. While AP necessarily must be handled in-house, owners nonetheless have concerns about their financial departments’ timelines, lack of guidance and inability to provide actionable advice. Many also cited challenges for their companies, including accurately forecasting cash flow and the management of paperwork each month – a familiar fact of life for those currently handling invoicing and payments manually.
While ERP seeks to streamline business operation as a whole, many of even the most robust ERP solutions lack built-in AP automation capabilities like those found in MineralTree suite of AP and payment automation software. Therefore, to spend a significant amount of money upgrading an ERP without focusing on the AP side of the equation leaves big gaps in operational improvements.
The granular visibility AP automation software provides may help with quarterly or even annual budgeting by:
- Giving controllers a more complete look at finances.
- Allowing controllers to schedule payments and reduce delays in closing out invoices.
- Reduce the amount of paperwork that needs to be managed in a given month.
- Freeing up financial professionals’ time, allowing them to devote more attention to value-added aspects of the job like long-term planning.
Accounting and AP Automation: Two Sides of the Same Coin
The two biggest issues businesses address when they upgrade their ERP are time and manpower. The same principle applies when it comes to automating AP. The idea that a company would upgrade its ERP but leave the AP process at least partly manual is counterintuitive, because of how time-intensive that makes one of the most critical aspects of a company’s overall financial processes. Moreover, because AP automation software typically works in tandem with most major ERP platforms, these system upgrades can occur simultaneously.
Likewise, when switching to a new ERP, workflows will necessarily change because these systems often differ significantly from previous platforms. This provides the opportunity to review your full process, including AP, from a holistic perspective and determine what is working, what could be working better, and what simply isn’t working. Upgrading ERP and adding AP automation at the same time allows you to test and troubleshoot new workflows, speeding implementation.
While such a move will come with an added cost for any business, AP automation can offer significant return on investment in a number of ways, above and beyond those that come with upgrading accounting software.
Under manual AP, each invoice carries a substantial cost just through the amount of paid labor it takes to process it. Automation reduces that time, and therefore that cost, and frees up man hours that can be devoted to other issues in the accounting department.
The more companies can do to learn about their options for ERP and AP upgrades simultaneously, the better off they will be when it comes to implementing those changes in a timely and effective fashion. However, these efforts must be undertaken with all due diligence to ensure the necessary financial information is ported onto the new platforms, and systems are functioning properly shortly after adoption. That, in turn, helps businesses maximize the time and money they invest to improve day to day productivity when they upgrade ERP.