ERP and AP Integration: Why It Matters for Finance Efficiency

ERP systems and integrated AP automation solutions are essential for managing business processes in a unified system.  

AP automation software-ERP integration bridges the gaps in ERP software to increase missing functionality and streamline end-to-end accounts payable processes through touchless efficiency in supplier invoice processing. Automation of procure-to-pay provides opportunities for cost reduction, improves risk management and compliance, and enhances supplier relationships through timely payments in local currencies and automated updates on payment status.

An Overview of Modern ERP 

A modern ERP system is cloud-based. The ERP is enhanced with optional modules or third-party applications to increase business process functionality. Increasingly, ERP systems provide real-time functionality. 

Modern ERP systems are priced using a SaaS subscription plan model. The latest ERP systems have dashboards, business intelligence, machine learning, AI, and IoT sensors for real-time monitoring and alerts. 

The most advanced ERP systems, like SAP S/4HANA, Microsoft Dynamics 365, Oracle and NetSuite ERP, offer AI-driven capabilities. These tools perform business analysis and intelligence functions, extensively communicate, and drive actions. 

Cloud-based systems have automatic updates and backups. On-site IT staff requirements and costs are significantly lower with cloud-based ERP systems compared to legacy or other on-premises systems. 

What is an ERP System?

An ERP (enterprise resource planning) system is a software system with a unified database for handling business processes in many functional areas, including:

• Accounting
• Planning and budgeting
• Procurement
• Inventory management
• Manufacturing 

ERP systems can be modular. They offer add-on software, including CRM, Human Resources, and AP automation, which increases functionality. 

Types of ERP systems deployment can be cloud-based, on-premises, hybrid, or multicloud. On-premises systems, which require the purchase of computers, servers, and networking equipment, as well as an IT staff, typically offer hosting services for a monthly fee. These are primarily SaaS products, although other license types are provided for older ERP systems. 

What is AP Automation?

AP automation is integrated cloud software that digitizes and automates end-to-end routine payables processes. AP automation uses AI-assisted technologies and business rules to capture and process invoices within the procure-to-pay process. It provides real-time dashboards with relevant metrics and insights. 

AP automation begins with self-service supplier onboarding, performs invoice verification, 3-way matching, and automatic GL coding. It routes approvals, makes electronic global payments in local currencies, performs instant payment reconciliation, and provides payment status. 

Why ERP and Accounts Payable Integration Matters 

ERP with accounts payable integration is essential because it:

1. Unifies the system into a complete payables and invoice payment solution 
2. Eliminates error-prone manual processes
3. Strengthens internal controls and risk management
4. Solves approvals and payments bottlenecks
5. Enables better cash management
6. Improves supplier relationships
7. Accelerates the accounting close 
8. Frees finance team time for value-added projects
9. Enhances staff motivation and accounting recruitment
10. Enables real-time visibility by entity and the combined organization
11. Helps your business improve regulatory and tax compliance
12. Saves time and money

1) Unifies and helps complete the company’s system

Instead of using siloed systems that offer limited tools for invoice data capture or payments without complete automated invoice processing coverage, end-to-end integrated AP automation seamlessly integrates and syncs data with your ERP for the data-heavy procure-to-pay (P2P) process. 

2) Eliminates manual processes

A standalone ERP accounts payable system enables manual processing of accounts payable invoices that is subject to errors, duplicate invoice payments, and fraud risks. AP automation with ERP integration digitizes and automates routine invoice processing as a touchless system, achieving significantly greater efficiency with minimal human intervention. 

3) Strengthens internal control and risk management

Integrated AP automation, rather than solely relying on ERP system accounts payable functionality, enhances internal control and risk management by incorporating segregation of duties with role-based access, as well as thousands of automated algorithmic rules to identify and flag potential exceptions for follow-up, and optional fraud detection monitoring. 

Management may assess the effectiveness of its ICFR (internal control over financial reporting) voluntarily or for SOX compliance as a publicly-held, large accelerated filer or accelerated filer in its “Management Internal Control Report.” AP automation can be considered a contributor to more effective internal control because its functionality acts as a deterrent to fraud. 

When auditors conclude that internal control is strong, they may be able to place more reliance on financial controls to reduce the extent of transaction testing, reducing client audit fees. 

Enterprise risk management (ERM) encompasses a broader scope than internal control. AP automation validates suppliers with IRS TIN matching to prevent paying fraudulent suppliers and avoid 1099 penalties for submitting incorrect TINs. 

The most complete accounts payable automation systems perform automated global regulatory compliance, handling OFAC or other sanctions list scanning, AML (anti-money laundering), and KYC (know your customer) compliance tasks. 

4) Solves approvals and payments bottlenecks

Manual systems tend to prolong invoice processing due to time-consuming manual processes and delays in approving invoice payments. Bottlenecks may arise when paper-based invoices and matching documents are missing, and approvers are unavailable during the approval process due to business travel. 

Using EFTs (electronic funds transfers) with AP automation for making global electronic payments saves time and money and avoids bottlenecks. Paper checks used in a traditional ERP system require time for printing, signing, envelope stuffing, and mailing. (Some companies do use EFTs with their ERP alone.) 

With a manual accounts payable ERP system, AP teams and signers must be available in the office to perform their tasks. If not, bottlenecks and delays occur. Paper checks are particularly susceptible to fraud because they can be stolen, altered, and reprinted with higher amounts, then deposited into accounts controlled by fraudsters. 

5) Enables better cash management

AP automation integration with your ERP gives your finance team near real-time visibility into cash requirements for making vendor invoice payments by due date. Without AP automation, supplier invoices may be unrecorded for a longer time before payment and your business may experience unexpected cash drains. 

6) Improves supplier relationships

AP automation ERP integration improves supplier relationships in several ways. Suppliers in your supply chain expect to receive timely and accurate payments, which AP automation is better equipped to deliver. Suppliers and vendors like receiving payments made in their preferred payment method and local currency. 

Some ERP systems alone aren’t equipped to efficiently make cost-effective global cross-border payments with a variety of payment methods. 

7) Accelerates the accounting close

Instant payment reconciliation is a desirable feature of AP automation that syncs with your ERP or accounting software at the subledger level, automating payment reconciliation for each batch payment. This streamlines the accounting close process, allowing your business to close the books earlier, giving the finance team more available time. 

8) Frees finance time for value-added projects

AP automation with ERP integration frees accounts payable and finance and accounting staff time. The AP department has more time for resolving any invoice discrepancies. It doesn’t need to face constant interruptions from supplier payment inquiries or other bottlenecks in the AP process. 

Accountants can contribute to your company with meaningful projects that improve business results. Financial management, such as the CFO or Treasurer, doesn’t need to waste time making international wire transfers or signing checks. 

9) Enhances staff motivation and accounting recruitment

When it moves beyond a manual accounts payable ERP to AP automation, your staff will experience less frustration from resolving errors, responding to bottlenecks, and handling supplier payment complaints and inquiries. Suppliers are less likely to stop shipments due to late payments, which slows manufacturing or other business operations and impairs the finance department’s reputation. 

Although AP automation can reduce hiring needs through its scalability and efficiencies, the best accounting candidates, including professionals, Controllers, and CFOs, expect to work with modern systems, such as AP automation, to make their jobs easier and enhance their career trajectory. 

10) Enables real-time, multi-entity visibility

ERP accounts payable automation integration enables real-time and multi-entity accounts payable, providing increased visibility by entity and across the combined corporation. The most robust AP automation software can deliver these capabilities when this functionality is enabled in an integrated ERP (or accounting software). 

11) Helps improve regulatory and tax compliance

The best accounts payable automation software, integrated with an ERP, provides automated global regulatory compliance and simplifies tax compliance. 

The AP automation software collects W-9 and international W-8 forms before the first supplier payment is made. The accounting staff won’t need to scramble to collect these forms last minute near calendar year-end to prepare the required 1099-MISC and 1099-NEC forms. 

AP automation software should have functionality to calculate tax withholdings and track supplier payments with simple 1099 and 1042-S tax preparation reports. Some AP automation software has native integration to import calendar-year payments through optional partnered e-filing software for preparing and distributing 1099-MISC and 1099-NEC forms. 

12) Saves time and money

AP automation software integrated with your company’s ERP or accounting software reduces invoice processing costs by eliminating manual data entry and paper-based processes. With timely invoice processing, your business can maximize its early payment discounts, such as 2/10 net 30, offered by suppliers. 

Early payment discounts reduce the cost of purchases and improve cash flow, gross margin, and profitability. Hiring needs may be lower, resulting in reduced future expenses and cash needs compared to a manual system. 

Real-World Examples of Successful Integrations

Example Tipalti customer stories include ServiceRocket and Endera.

Ways ERP and AP Automation Work Together 

ERP and AP automation work together to produce these benefits:

1. Clean vendor master file: more accurate data from the supplier onboarding portal, without duplications
2. Invoice capture: digitally captures heading and line item data with OCR and AI/ML improvement for increased accuracy
3. Streamlined, digital workflow automation: eliminates paper and time-consuming manual data entry and other manual tasks, including manual 2 or 3-way purchase order /GRN (goods received note) matching steps and approver routing 
4. Global payments: provides more cost-effective EFT payment method choices, offers payees local currencies in many countries, embeds currency exchange, and reduces finance team time
5. Instant payment reconciliation: automatically syncs with your ERP or accounting system and reconciles payment batches in real-time to accelerate financial close
6. Automated supplier payment status: supplier notification reduces supplier inquiry follow-up time by AP staff
7. Multi-entity, real-time: the best robust AP automation software offers this functionality with these integrated ERP or accounting software capabilities
8. Tax compliance: simpler tax compliance with upfront W-9 and W-8 form collection, TIN matching, tax withholding calculations, and 1099 preparation reports 
9. Automated global regulatory compliance: checks for sanctions, AML, & KYC 
10. Business intelligence: better spend visibility with real-time results, KPIs, and AI-assisted analysis for informed decision-making
11. Audit trail: provides an automated audit trail for internal controls and auditors

Invoice data can be complex and expansive. With an AP automation add-on to your ERP system for accounts payable, every step—from supplier data to invoice management and payment reconciliation—is synchronized with the ERP system. 

The sync facilitates timely and accurate decisions. The sync enables visibility in every step of the payables transaction cycle. The automated payable software should enhance ERP functionality:

• Maintain a clean vendor master list
• Report invoice workflow status to ERPs
• Track payment activities, issues, and transaction fees
• Reconcile to the general ledger systems faster to simplify the financial close

Steps for Integrating ERP with AP Automation

1. Assemble a team to identify both the necessary and desired features in an AP automation system within your company’s budget.
2. Determine which AP automation systems meet your criteria, and connect with your existing ERP system via flat-file or API integration.
3. Additionally, consider using mass payments automation software for payouts. 
4. Check online reviews for the best AP automation software.
5. Ask the AP vendor about customer retention statistics and read customer stories that highlight the results. 
6. Request customized quotes for the SaaS subscription and all related costs to expect from the best-fit AP automation vendors, including options and per-transaction fees.
7. Finalize the budget for an AP automation system. 
8. Request a customized analysis and report of the return on investment (ROI) that can be expected from the first year of implementation. 
9. Select an AP automaton system and start an add-on app SaaS subscription using a plan that matches business needs.
10. Plan and train for the implementation, using consulting, customer support, and online documentation for a fast start.
11. Review and streamline business processes to achieve best practices with the AP system.

How Tipalti Seamlessly Integrates with Your ERP

Tipalti offers robust AP automation functionality with ERP integration. Optional functionality, such as multi-entity, Tipalti Detect® for fraud detection, and advanced foreign exchange, can be added as your small business grows and becomes more complex. 

Overview

Tipalti AP automation is cloud software with ERP integration (or accounting system integration) for processing and managing end-to-end payables. An AP solution should integrate with these popular brands for ERP integration. 

Tipalti uses API or flat-file integration, depending on the integrated system. Tipalti’s customers are primarily medium-sized companies and fast-growth small businesses (that can become large) in a broad range of industries. 

Tipalti ERP Integrations

Tipalti AP automation integrates with almost every ERP, including these ERP and accounting software brands:

• Acumatica
• Infor SyteLine
• Microsoft
• Odoo
• Oracle NetSuite
• QuickBooks
• Sage
• Sage Intacct
• SAP
• Workday
• Xero

Tipalti AP Automation Functionality

Tipalti offers a unified AP automation platform that includes:

• Supplier onboarding and compliance: Self-service portal, TIN matching, regulatory screening, and tax prep support (1099/1042-S)
• Invoice automation: OCR/AI-driven capture, PO matching, GL coding, and approval workflows
• Global payments and reconciliation: Pay to 200+ countries in 120 currencies with 50+ methods; instant batch reconciliation
• ERP integration and scalability: Real-time sync, multi-entity support, and built-in controls for complex finance operations
• Optional tools: Fraud detection, advanced FX management, procurement, and expense management

Tipalti’s 50+ payment methods include these types of electronic fund transfers (EFTs):

• ACH
• Global ACH (like SEPA)
• Credit cards
• Debit cards
• Wire transfers
• PayPal
• Checks

Money Services Business (MSB)

Tipalti is a registered money services business (MSB), enhancing its trust and reputation through oversight and enabling it to conduct global payment transactions as a payment provider for its customers. Tipalti AP automation offers enterprise-grade security. 

Tipalti AP Automation Integration Benefits

With Tipalti AP automation, your business can:

• Optimize payables invoice processing efficiency 
• Lower payables processing costs 
• Take more early payment discounts 
• Reduce fraud risks, duplicate payments, and errors 
• Improve tax compliance 
• Strengthen internal controls
• Gain spend and cash management visibility
• Enhance supplier relationships and communication

To optimize your ERP in accounts payable through automation, download our free eBook, The Last Mile of ERP, and learn how to unlock the full potential of your finance tech stack.