When discussing the subject of streamlining accounting processes, the option of using your company’s ERP system always comes up. ERP systems are excellent for integrating accounting with things like order management, inventory, HR and customer relationship management, but probably not the best option for AP automation or making payments. In fact, there are good technical and strategic reasons why you should look elsewhere.
The Technology Issue
You want the best technology for AP automation. Therefore, it is critical to take a look at the overall functionality of your ERP system. While ERP systems have accounts payable functionality, there are still important technical issues to address.
- How do ERP files need to be manipulated for making payments, how often and what payment types?
- Is the payment transaction and transmission security adequate?
- What type of audit trail is created?
- Are additional add-ons required for electronic payments?
- Can you add and change banks easily?
- How easily are payment records reconciled?
Implementation Time: If you have an ERP system, you are aware of the length of time required for implementation. Will you have to wait a similar length of time to get started with executing payments?
Costs: Along with implementation time issues, you will run into cost issues. Traditional ERP systems are costly. They can become even more costly if you need an ERP application engineer to trouble-shoot problems and address support issues with add-on modules.
User Experience: User experience is another key element for successful implementation. Quite often, users become confused moving from one add-on module interface to another in the same system. The interface for a payment system integrated with an ERP will, by definition, be more complex because it is probably part of a larger system designed for other purposes.
Lack of Flexibility: Rigidity is another technical issue, since customizing an add-on products to the ERP may not be very easy. In many cases, accounting personnel will need to revise their procedures to conform to the capabilities of the add-on.
Access: Access to your ERP needs to be strictly controlled, so many companies disallow Internet access to the system. As a result, executives who want to use a mobile device for invoice approval may not have the opportunity. Reviewing background information about an invoice may also require access granted only to higher-ranking personnel.
The Strategic Issue
From a strategic standpoint, your decision about how to implement AP automation centers around the issue of “best-of-breed” versus fully integrated functionality. It is a decision between looking for the best solution for specific business applications, or using one system from one vendor that will integrate a variety of applications.
If you check the Gartner IT Glossary, you will find a definition of “best-of-breed” which states: “Although enterprise resource planning (ERP) vendors offer numerous enterprise applications and claim that their integrated system is a superior solution, all modules in an ERP system are rarely best-of-breed.” There are a number of reasons for that outcome.
SME Designs: Accounting subject matter experts design application-specific systems for things like AP automation. They have in-depth knowledge of the accounting process and design systems that satisfy those needs. They are also better able to anticipate customization requirements and make customization much easier and more effective.
Support: People who specialize in one software application and support one type of user who provide implementation and ongoing support.
Ongoing Development: Companies that provide specialized applications focus their efforts on maintaining and updating their software to remain competitive in one marketplace.
Interface Technology: Software applications do not need to be integrated into one application to work together. The technology is available to let different systems exchange information easily and securely.
If you’re looking into alternatives for automating your accounts payable and payment processing, know that the experts at ACOM can help you identify the best alternative for your business needs. Call us at 800-347-3638, or contact us online for more information.