CloudX Blog

8th Day of Christmas - Integrating Accounts Payable Software to ERPs

Posted by Chris Cosgrove

Dec 12, 2012 12:06:00 PM

Santa loves AP automation! 

Santa is not well known for his physical prowess, so it’s important at this time of year to reflect on his other unique qualities.  No, I’m not talking about his reindeer whispering skills…I’m talking about a much more profound characteristic that only the jolly man in the red cap can claim (though the blue guy from Sesame Street could give him a run for the money)…competitive eating.  I mean, has anyone actually tabulated the number of cookies that Father Christmas actually ingests…oh the horror.  (What would Mayor Bloomberg think of all the trans-fats he packs down?) And thinking about cookies too much, I am drawn to America’s most famous cookie…the Oreo.  Yes, the Oreo has a legendary quality about it few cookies can compete against, and most importantly the unctuous white colored paste in the middle that necessitates best practices discussions to govern the correct way to eat it. 


Alright, I know you’re thinking…enough with the cookie references, I’m about to run to the vending machine…what does this have to do with Accounts Payable process improvement?

Only everything…


Successful AP automation initiatives rely on converting invoice data at the outset of the process.  Additionally, as we’ve explored they involve using artificial intelligence to expedite and workflows to improve document routing and latency.  We’ve discussed how these processes flow and can be improved based upon invoice categories, but one of the underpinnings to improving the process is all about how the Accounts Payable software integrates to the back end Accounting (ERP) system itself.

The word ‘integrate’ is defined as ‘to form, coordinate, or blend into a functioning or unified whole’ by the Merriam-Webster dictionary.  Interestingly, for the purposes of our discussion, the integration of Accounts Payable software platforms and Accounting back-end systems (ERPs) can be likened to the bond that holds the delicious chocolate disks together on our beloved Oreos.  Integration links the two systems inextricably and makes the whole a functioning unit.

 Integrating Accounts Payable Software & ERP's is like the inside of an Oreo!


Impactful Accounts Payable software integration enables the following items:


1.  Reverse look-ups – The AP Software can check the Vendor Master File for validation purposes to determine if a Vendor does/does not exist and will escalate the invoice in question appropriately.


2.  PO/Line Item Mismatches – The AP automation solution can also bounce off a PO table to search for active, open PO’s and ensure that line items on the invoice match the line items on the PO itself.  This can also be enhanced by including the Receiver information to this check as well, enabling the automation of the 2/3 way match.


3.  Invoice Image Call Ups  - This enables the AP staff to image enable the ERP system with invoice images.  In this way, they can have access to the invoice data and the supporting document.  It’s best to keep this outside of the ERP for system performance reasons.




4.  Automated Invoice Processing/Entry – All of the data conversion that we’ve discussed is for naught if you can’t effectively get it into the ERP itself.  This is best done through an 810 EDI file format.  Effectively, through the approach that we are discussing, you can convert all of your paper invoices (and imaged invoices of course) to EDI through intelligent OCR conversion technology.  What’s the gain to you?  Well…like the Four Non-Blondes album…it’s bigger, better, faster, and more (powerful that is).


There are other means to pass the invoice data between systems in the event your ERP system is incapable of processing EDI transactions.  (However, if your system can’t process EDI, it’s dated and you might want to consider overhauling that as well). 



Here’s a short list of alternative approaches to move the data in your Accounts Payable process:

XML / Web Services – A very common means to moving data between systems that most modern Accounting systems will accept.

CSV Files – Also a common means for moving data, often done to export data out of legacy systems.

Information Exchange Utilties – Essentially ‘screen scraping’ technology that can effectively ‘cut and paste’ information from screen to screen.  This enables one to move invoice data via a macro function by invoice in the instances where an automated integration is infeasible.   It still gets you out of the mundane data entry, and into the world of being able to manage and route invoices electronically.  The point is that you can still obtain the benefits of automation even if you’re behind the eight-ball with respect to dated ERP technology if upgrading your ERP is not in the cards at the time.


With all of these options available to make invoice processing easier through systems integration, there is certain to be a methodology that is workable for you, depending on how your systems are structured.  This, too is like the Oreo, which comes in all kinds of shapes, sizes, flavors, and colors…and now I’ll let you get back to that vending machine raid.

Stay tuned for the 9th Day of Christmas in Accounts Payable, where we’ll discuss AP audits and how to make those easier on your staff and auditors!

CloudX provides AP services, solutions, and process engineering to help clients achieve maximum levels of AP productivity!

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Topics: Accounts Payable Process, AP Process, Accounts Payable Automation, accounts payable system, Invoice Processing, Invoice Conversion, edi, electronic data interchange

Streamlining your AP System: Turning Paper & Invoice Images to EDI

Posted by Chris Cosgrove

Oct 26, 2012 8:00:00 AM

AP System Automation is a big deal!

Streamlining your AP System


I came across an interview recently on some of the challenges associated with implementing e-invoicing  technologies for public and private sector companies.  While many subject matter experts agree that e-invoicing represents an optimal approach to managing supply chain transactions, the results for most organizations are often less than desired.  In the case of the article I read recently, PerkinElmer (who was the primary contributor to the article), identified four primary reasons that they have found it difficult to gain traction with  managing e-invoicing.  And this after six years of having the system in place!

The primary challenge stems from a simple concept.

 The issue becomes one of supplier resistance to adapting to your protocols and ways of doing business. 

This may be possible if you are an 800 lb gorilla in your industry, though unless you have the clout of a Fortune 100 company, chances are you’re going to run into similar roadblocks.  However, even if you do have the brute force to mandate adoption across your supplier base, one has to the question…is it worth it?  I mean if you can’t get 100% of the transaction volume across to the new e-invoicing network, you’ll be left managing multiple processes.  In this instance, you’ll be devoting resources to an emerging, complex transaction system and to a typically antiquated means of processing physical paper and image based invoices.  What’s a Finance leader to do?

For starters, we believe that a better approach to invoice automation is the shortest path to glory in terms of making the Accounts Payable process effective and profitable.  In this case, it centers around adopting invoice file conversion standards within your AP system.  What do I mean by that…?  Let’s take a look:

For most US based companies, the ANSI 810 EDI X12 is the gold-standard for EDI invoice file transactions.  For businesses that have the IT resources and bandwidth, EDI is the most efficient approach to processing supply chain transactions bar none.  However, without significant IT resources in play, getting moderate to high levels of supplier adoption is near impossible.  The good news here is that if you are in the midst of pursuing EDI as your preferred means of transacting purchases, get ready to be excited.  Nearly every client we have consulted with still has suppliers that for whatever reason, still supply them with paper –based invoices, necessitating multiple approaches to processing their invoice files.  With the development of more robust and refined technologies around document management, it’s now possible to take any remaining paper or image (PDF, Tiff, etc.) invoices and convert these to EDI.

This is a big deal for a variety of reasons. 

AP Automation is a Big Deal!

1.  You can get 100% of your invoices to be processed as EDI with few barriers to adoption.

In most cases, the only thing a supplier has to change is where they send the invoice.  If they can send it to a centralized PO Box drop for scanning, great.  If they are submitting via supplier portal or even email, those invoices can be ingested through electronic workflows and be brought through the same conversion process.


2.  You don’t need to invest in highfalutin (technical term) technologies with long-term ROIs, and multi-year strategies to get this done. 


With cloud based applications and services, you can get the results TODAY, not 5 years from now! (Sidebar---if you’re getting pitched a long term ROI or multi-year plan by a vendor in this space…BUYER BEWARE, you are going to be beholden to their business model, which is quickly being outmoded by more agile approaches to invoice processing – ie. big cap ex investment up front vs. transactional pricing that adjusts to YOUR business)


3.  Converting all invoices to EDI empowers you to monetize the invoice data to your gain. 


If your invoices remain in paper or image format they will by default take longer to process as you won’t be able to leverage automation to drive straight-through processing of PO based invoices or workflow automation for non-PO invoices.  Longer processing cycles translates to missed discounting opportunities and in some cases even late payment fees.


Never Too Late

It's never too late to convert paper to EDI in your AP System!


    If EDI is not a standard you’ve adopted yet in your business, especially if you are a Mid-Market enterprise, don’t sweat it.  A quality invoice processing provider can convert the invoice data to a variety of formats that can still expedite the transaction processing while giving you visibility to the data at all stages of the approval process.  Some legacy ERP systems can’t handle EDI and therefore, you can leverage workarounds by getting the data integrated through other means…XML, CSV, Flat-File feeds, and others can all be made to work so you can get the benefits of automation.

    Any way you slice it, you want to get the invoices to a data format that your ERP can ingest.

    This way you can get out of the data entry business and focus on empowered management of the data to your advantage through early payment discount capture, interdepartmental linkage, and supplier dispute resolution/invoice insight.


    You can read more about our thoughts on AP Automation vs E-Invoicing here:

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    Topics: Accounts Payable Process, Accounts Payable Process, AP Process, Accounts Payable Automation, Improve Accounts Payable, ap system, accounts payable system, Invoice Processing, Invoice Conversion, e-invoicing, edi, electronic data interchange

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