Remember the System of Record
I am going to write something that I believe is controversial… Meaning I don’t know if people buy into the idea that the accounting system is the ultimate system of record, so here goes.
My Version of Controversy
Your company’s accounting system is always the system of record. Whenever financial reports are run, checks are cut, or cash is managed, it will always be in the accounting system. Beware! There are accounts payable automation companies out there that will compete with your accounting system for dominance. Here are the four questions to ask in order to determine if there is going to be competition.
- Does the AP Automation system update GL directly?
- Will the AP Automation system create a vendor with an ID?
- Does the AP Automation system help manage cash and bank accounts?
- Is the integration of the AP Automation system custom?
Answering yes to any of the above questions will indicate there is going to be competition between the AP Automation system and the accounting system. When writing competition, I am referring to which system is going to make critical financial decisions. Chances are, unless you are running your accounting on spreadsheets (which I have seen), your accounting system has an Accounts Payable module. This module is designed to take approved expenses and post them to the general ledger to be paid. When automating AP the process/service/software you will need to work with that AP module, not replace it.
The reason for this is to maintain secure cash management. If you have more than one system of record you will greatly increase the chances of invoices being double approved, not approved at all or not correctly approved. Based on the questions above, the key to look for is where all the heaving lifting is done. Where are the vendor records being managed? What system has access to the General Ledger (GL)? To ensure the system you create is fully secure make the account system the system of record.
If you buy into this notion that your accounting system is the system of record the next few articles will work better for you… if you don’t buy into the idea, I would love to hear from you (fill in the contract from below). In my experience I have worked with over 50 accounting systems… there are a lot more than 50 accounting systems on the market, so I can’t claim to know them all.
Tomorrow I am going to write about large accounting systems, better known as ERP systems and their relationship with AP Automation.
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