Fire, Ready, Aim

As I started writing this series of articles, it occurred to me that I don’t have a good definition of what constitutes a large to a medium to a small size accounting system. The best I can do is associate the type of accounting system to the size of companies. This won’t completely be black and white…. there will be shades of gray (not like to book), but I think it will get the point across about Accounts Payable Automation.

The Big Boys

With larger size companies, I have mostly dealt with accounting system like SAP, Oracle, PeopleSoft and JD Edwards. I know there are more out there, but these are the big names in the accounting system industry. Each of these systems have embedded workflow capabilities and document management.

AP Automation Formula

There is a simple formula that is required to enable Accounts Payable (AP) Automation. All that is needed for AP Automation is:

1. Data Capture and Conversion
2. Workflow or Electronic Approvals
3. Document Storage

In my experience, most large accounting or ERP systems have at least two of the three element. The one that the systems are missing normally is the capture and conversion process. It would seem logical that a company would just add a capture module to their existing  workflow and storage components.

Yes and No

I think there is a lot to be said for, “one stop shop” especially if it saves you time and money in the long run. Here is a warning, however, traditionally using the existing modules don’t save time and money.  The thing you have to be concerned about is the original purpose the workflow and storage process was created. Fortunately, the storage modules in the bigger systems are not built, for the most part, for invoices. The purpose of AP Automation is to get rid of paper and track and speed up the approval process before the invoice is committed to be paid. Given that information, the downside to the ERP’s document storage capabilities is the models are not just for invoices and the attempt is to store all types of documents. That will put you in a situation to where the  document storage has unused or missing fields as well as less control over critical fields or functions. This is not a big problem, but it will put you in a position of customizing the system, which creates additional expense.

Anything Wrong With Workflow?

The same problems apply with workflow that applies to document storage, however, one additional thing to keep in mind with workflow is the robust nature of the module. I have found that invoices don’t necessarily need the complex approvals other documents need. That creates a complexity that has to be managed which requires a specialist that knows what they are doing, and in turn creates more expense to manage the process.

They are out there!

There are companies that will provide best in breed AP Automation outside of the accounting system, but when looking at those companies make sure that when or if they connect or use the same database the accounting system is running that it does not interfere with your accounting system’s service agreement. The best way to insure that won’t be a problem is if the service provider is “certified” integrator. Not all accounting systems have a certification program but you should know or ask around your company if your accounting system has a program like that.

Final Thought:

I hope I have saved the best for last. When it comes to Automating Accounts Payable it is important to have goals. I write a lot about that in The 8 Pitfalls. It is the part that most companies skip. When you have goal, you have direction, but make sure they are the right goals and directions.

Tomorrow I am going to write about mid-size accounting system and Accounts Payable Automation.

You Should Buy My Books!

To buy the book – The Argument to Automate – How Innovation Can INSPIRE Not Fire – click here to buy

(Also) To get your copy of The 8 Pitfalls of Accounts Payable Automation – click here to buy