Why Attempting AP Automation Inside Your ERP Isn’t a Good Idea

Accounts payable automation continues to surge in popularity, as businesses across the globe now realize how imperative it is that they remove all the paper and manual labor from this all-important function. The cost savings that comes as a result of automation, not only in avoiding late-payment penalties, but also in taking advantage of early-payment discounts, is too valuable to a company’s bottom line to continue slogging through a manual process.

However, since the majority of companies run some sort of enterprise resource planning (ERP) system, they often attempt to achieve AP automation inside their ERP. It’s easy to understand why a company would explore this option – ERP’s are expensive and are touted as all-inclusive business solutions, and we all want one system to handle everything – but we strongly advise against using an ERP for AP automation.

The fact is, ERP’s, while extremely valuable business tools that work well for collecting, storing, managing and interpreting data from various business activities, fall woefully short when it comes to AP invoice capture via optical character recognition (OCR) and exception-based workflow. This is because ERP’s don’t have the ability to support the multiple processes (receipt, review, approval, etc.) that are prevalent with each invoice transaction. ERP’s are simply not specialized enough in any one area to provide the best AP automation solution you can get.

OCR, a vital part of any AP automation project, does not even exist inside an ERP system. Most of the design of modern ERP’s is based upon the premise that a person is going to manually handle all data entry and, as such, the developers of these systems do not focus on a technology which replaces that data entry. This fundamental design assumption also leads to poor exception handling, because the assumption is that humans have already corrected the data as they entered it. In reality, error rates through manual human intervention are fairly high while visibility and productivity remain low.

It’s worth pointing out that, while possible, upgrading an ERP to continue to handle ever-changing exceptions and business rules is difficult (lots of time required, expertise needed, and expense incurred). It’s made even more difficult when you consider some companies, because of acquisitions and mergers, have multiple ERP systems in use across a global enterprise, a situation that makes streamlined workflow in an AP process almost impossible to achieve. These are just some of the pitfalls that can be avoided by going outside your ERP for AP automation.

The primary benefits of an external AP automation solution include:

  • Greater visibility and control
  • A more user-friendly interface
  • Creation of an exception based environment
  • Greater support of shared service centers

Questions about how an AP automation solution outside your ERP can work for your business? Contact us at info@DataServ.com.

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