SUBMITTED BY Jamey Biegener, APPSC

At what point in your accounts payable process do you want invoice information entered into your ERP system?

Most AP professionals would say, “As soon as possible!” They believe that they need to see the information in their ERP system updated in “real-time” to respond to invoices in a timely and efficient manner. And if your ERP system is the only mechanism you have for tracking activity on invoices, then ASAP is the right answer.

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But what if we asked the question this way? “What is the right  time in the accounts payable process to get invoice information into your ERP system to meet the goals of your company?”

The ultimate goals for any accounts payable system are as follows:

  1. To process invoices as quickly and accurately as possible.
  2. To ensure that information is available to all parties when and where they need it.
  3. To ensure that penalties are avoided and discounts applied.
  4. To minimize risk.
  5. To ensure that personnel can function at their best potential and perform the highest value tasks.

Maybe these goals sound good, but extremely difficult to achieve. That’s probably because you’re looking at it through the lens of depending on your ERP system for all data access and financial controls. In that case, you are probably right – it would be virtually impossible to achieve those goals. But when you add AP automation to the process, it not only becomes possible, but it becomes consistent and dependable.

As we have discussed before, the core function of your ERP system is not payables or workflow. You may be trying to use it that way, or you may have complex spreadsheets or other tracking mechanisms in place to manage invoices. But if you think you need invoices to show up in your ERP software the day after they’re received, then you’re probably relying on your ERP system for things it wasn’t designed to do.

Knowing that, consider again our question: What is the right  time for invoice information to show up in your ERP system? If you are using your ERP software the way it was designed to be used – to streamline and compile master data – then the right time is when the invoice is cleared for payment or the data is needed for high-level reports, such as the end of a period or audit reports. Entering it before then can actually confuse the process, rather than making it more efficient.

Until the invoice is cleared for payment or finalized for reporting, it can hit any number of snags. There might be exceptions, such as a PO mismatch or a missing quantity discount, or processing delays from being routed to the wrong approver. Your ERP system isn’t designed to help you track an invoice before it’s been approved, and it’s certainly no help in resolving exceptions or getting the invoice to the right person for approval.

Now that we know when  it’s the right time to enter invoice information in your ERP system, let’s take a quick look at the requirements for each of the goals we’ve set to find out why:

  1. Process Invoices as Quickly and Accurately as Possible
    This is, naturally, the first directive of the AP department. It’s why most AP professionals are convinced that any automation solution they use must employ “real-time” integration with their ERP software. But the real challenge here isn’t paying invoices – it’s processing invoices. It’s getting them through the gamut of exceptions and escalations that are an inevitable part of the AP workflow. Handling invoice tracking, exceptions, flags, reminders, and escalation triggers in AP automation software is far more efficient and transparent than using ERP software.
  2. Ensure that Information is Available to All Parties When and Where They Need It
    If you’re used to depending on your ERP system or spreadsheets to track invoice status, then you already know the frustration and inefficiencies involved. But when the information is recorded in a SaaS-based AP automation system, it can be viewed and tracked by any employee from any location, as long as they have internet or even a mobile phone. If you are using our Digital Mailroom to receive, scan, and QA your invoices, then all invoices are accessible and visible in 24-48 hours. The invoices have already passed through all rules and controls, they are indexed and coded, and if you’re using AutoVouch™, they’ve also been matched and either cleared or routed as an exception.
  3. Ensure that Penalties are Avoided and Discounts Applied
    Escalation triggers are also added in the initial processing of invoice documents, so you can easily generate reports of invoices to be paid to avoid a penalty or take advantage of a discount. The system should also generate reminders and notifications so that you don’t miss those important deadlines. Your ERP system probably doesn’t do that.
  4. Minimize Risk
    Making data easily compiled, visible, and accessible makes audits easier and fraud more difficult. Using an AP Automation tool that provides analytics and metrics at your fingertips enables you to see risk in near-time and squash it much quicker.
  5. Ensure that All Personnel Can Function at Their Best Potential
    You may have a lot of latent talent going to waste. If your goal is that all of your employees have the opportunity to be performing the highest value tasks for which they are qualified, but they’re spending all their time doing detective work and putting out fires, then you’re both missing out. When invoice data is automatically entered, routed, and integrated into the ERP system at the right time, you will free your people to realize their potential in ways you might not be able to imagine today.

Look at it this way – your ERP software should be great at integrating invoice data into the bigger financial picture. It should not need  to be great at managing your payables. When you talk to potential AP automation partners, remember that getting the right data into your ERP system at the right time is far more meaningful than getting the wrong data into your ERP system in real-time.

Ready to learn more about integrating AP automation with your ERP system?  Contact us.
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