AP Integration with ERP: Your Go to Guide for Enhanced Efficiency

Enterprise Resource Planning (ERP) offers wide functionality and manages various financial parts of organizations, such as accounts payable, purchasing, and accounts receivable.  

ERP can help to manage customers & inventories. It can also improve communication between team members & departments. About 45% of finance executives say AP automation has significantly reduced their costs by eliminating manual invoicing costs of paper and postage. Integrating AP with ERP adds numerous more benefits for organizations.

In this blog, we will discuss AP integration with ERP in detail. You will also understand how to do AP integration, its benefits, and business process pointers.
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From proof of payments or purchase orders, the AP (accounts payable) process is document-heavy. Effective AP is vital for business function as it affects operation and profitability throughout your organization.

What is the AP process in ERP?

Accounts Payable is the total amount your organization owes to vendors and suppliers for services or goods purchased.

“Accounts Payable shows liability on the balance sheet of the organization and affects the cash flow of your organization. Hence AP should be managed properly and integrated with the ERP system,”

- Shane Dsouza, Account Payable Management Expert from Calpion Inc.

The accounts payable process helps to check the financial liability of the organization on vendors and suppliers for services and goods purchased. The accounts payable department handles incoming invoices and bills, but they may offer additional functionality depending on the nature of the business and the size of an organization.

Difference between ERP and AP

All businesses are different, and there is no single fit for all software solutions. It is vital to know the difference between ERP and AP software.

ERPs offer broader business solutions in processes like accounting, supply chain, procurement, and human resources to address the most critical problems in a business. It links different business processes and allows seamless data flow across the organization.    

“Accounts payable software is a tool and ERP is a toolbox of an organization.”

AP software can streamline the invoicing needs. It helps businesses to allocate resources and lower costs properly. AP-software focuses only on accounts payable alone, while ERP acts as a bridge between all the business processes and helps to streamline them.

Why integrate AP with ERP?

ERPs record and store accounts receivable, general ledger, forecasting, and accounts payable information. ERP systems generally cannot cater to the specific needs of AP staff. It is vital for businesses to adopt AP automation integration to streamline their cash flow and unblock additional business efficiencies.

Invoice data is complex and expensive. Steps from collecting data to invoice management and payment collection get synced with ERP.

What are the business process pointers for AP and ERP integration?

With AP and ERP integration, businesses can add a master file that consists of vendor supply data directly from the self-service portal. You can automatically create tax compliance reports. AP integration can help to segregate vendors based on tax databases, regulations, and blocklists. You can receive electronic invoices from vendors in the supply portal.

AP automation integration with ERP helps in the 3-way matching process and detecting duplicate payments. You can electronically approve and communicate invoice information before making a payment. Businesses can access information, improve real-time reporting, and get simplified dashboards to streamline their cash flow.

Benefits of integrating AP automation with ERP

Businesses need an efficient system to interconnect all departments and seamlessly run operations. AP integration helps organizations feed accounts payable data into ERP, which leads to increased accuracy and reduced errors. Here are the other benefits of integrating AP automation with ERP.  

Enhance operational efficiency

Enhanced operation efficiency is one of the biggest benefits of AP integration with ERP. AP automation and ERP integration offer a single space to store all financial data. Decision-makers can access this data from anywhere at any time. The enhanced visibility helps business leaders plan strategies and make better decisions.

Reduced errors

Manual data entry is prone to errors. It is difficult to avoid errors if the accounts payable department manually enters data. Manual data entry errors include missing entries or number swaps. Organizations that neglect these errors lose a huge amount of money. With the integration of ERP with AP automation, there are zero to low chances to do manual data entry. Automation makes the work error-free and reduces employees’ workload. AP integration can handle billing and payment without human intervention.

Improved financial operations

Real-time access to financial data and automation workflow helps businesses monitor KPIs (Key Performance Indicators) and detect issues. The finance team can take productive steps using this data and work efficiently to remove all the hurdles in the AP process. The improved control leads to improved business performance and financial management.

Cost saving  

AP automation and ERP integration lead to significant cost savings. Automation reduces the time and workforce required for billing, invoice processing, and other AP tasks. AP automation reduces the number of FTEs needed to perform a certain task, which results in ample cost savings over time.  

Scalability

Financial operations become complex with the growth of business. AP automation integration with ERP offers scalable solutions to the business. These solutions handle increased invoices and other AP tasks without additional infrastructural or resource support. AP integration is ideal as it grows with business without additional effort.

Improved risk management & compliance

AP automation and ERP integration can improve risk management and compliance. It offers a complete audit of all AP activities. Audits give a thorough analysis of all the financial processes that make monitoring compliance with financial regulations easy. Automation reduces the risk of manual errors and fraud and provides real-time data on all financial operations.

Better supplier relationship

Accurate and timely payments are important for a good supplier relationship. AP automation and ERP integration improve supplier relationships by ensuring prompt and accurate payments. It improves overall supply chain management and leads to better relationships with suppliers.

How Hermes can help

Hermes is an AP automation software developed by Calpion to help businesses ease their financial operations. We are partnered with Oracle, Workday, Microsoft, Sage, SAP, Infor, and Epicor. Hermes can efficiently handle and process high-volume invoices 24/7. We help to save 90% of costs with 10% human intervention. Hermes can seamlessly integrate with your ERP and boost employee productivity by 65%. We reduce AP processing time by ten days, reduce operation risk & data breaches, improve vendor relationships, and enhance transparency to help you focus on high-ticket activities.

Hermes AP automation software can process unstructured and handwritten text and seamlessly process invoices without getting affected. We use AI, ML, RPA, and ML to develop an in-build analytics capability that helps to categorize the invoice type (Utility, payment date in next days, immediate due invoices, non-invoice documents). Hermes can also fetch custom fields from invoice documents (Business-specific key fields of an invoice).

We know how important it is to integrate AP with ERP quickly; we integrate with your ERP without affecting your present operation and the need to build additional IT infrastructure.

Do you want to know more about Hermes-AP automation software?