Integrating ERP Circle System with Invoice Approval System

By the ERP circle we’ll mean Enterprise Resource Planning software as well as financial, bookkeeping, warehouse and other accounting systems. The invoice approval system is a separate software product or service dealing with accounts payable process, which is different from accounts receivable one.

Why Invoice Approval Can Be Best Organized Outside the Accounting System

Despite the fact that some up-to-date accounting systems have BPM engines, organizing invoice approval process within such systems cannot be considered a logical step. There are several reasons to implement a separate invoice approval automation solution.

First, when using an accounting system functionality to carry out the approval process, it is necessary to connect additional users to the system and buy expensive licenses. Users, not specialized in the invoice approval process, but taking part in it occasionally, can be connected to the invoice approval solution at fewer expenses.

Second, in case of an independent invoice approval solution there are greater opportunities for scaling and customizing the system, including workflow. For instance, when the list of approvers needs expanding, one can handle it easier, faster and cheaper (sometimes for free) within a specially designed system.

Third, a specialized invoice approval system will store not only invoice data, but also document images. In some cases when approving an invoice, checking the image can be critical to make a payment decision.

Comparing Information Presentation in Accounting System and Invoice Approval System

In the accounting system data are strictly structured to be suitable for computer processing. This is what is called structured content, a “chart” form of information presentation.

As we have mentioned, the invoice approval system is supposed to have an electronic archive. If we put aside receiving invoices through EDI (a system dealing only with data that have been already structured), initially data get into the system in an unstructured form. In the invoice approval system incoming information gets processed, i.e. invoices acquire particulars and attributes. These document-related metadata are also structured content.

When integrating the accounting system with the invoice approval system one should first and foremost arrange structured data exchange. The accounting system may also have access to the invoice archive.

Accounting System and Invoice Approval System Data Interexchange

The systems can mutually exchange vendor information. Vendor additional particulars can get into the accounting system directly from the invoice approval system. On the contrary, the invoice approval system may need access to vendor relationship data to make an approval decision.

Indebtedness proving data (purchase orders, service orders, etc.) are sent from the accounting system to the invoice approval system. This information is used in the invoice verification and approval processes.

After the invoice is approved, financial information gets into the accounting system, where the invoice payment process is initiated.

When the payment is made (by integrating the accounting system and a banking solution, by another software or even manually), the accounting system notifies the invoice approval system of the payment, i.e. provides it with such key data as the amount and date.

Additionally, in the course of operation one may need to access document images stored in the invoice approval system from the accounting system.

Systems Integration Challenges

Naturally, some issues may appear during the joint systems integration and further operation.

First, one must define a master system for each data set (the system that stores credible master data). It may be the ERP or the Inventory Management System for POs, the ERP or some specialized accounting system for vendor information. But there is still an APA system for invoices.

Second, when integrating the two systems one should choose the data form and transport type. Data transport can be carried out by downloading/uploading files into a shared folder, through FTP, by means of mail clients, web services and so on.

Third, data exchange scheduling seems to be rather important, as in the case of the accounting system and the invoice approval system integration the interexchange cannot be properly carried out in real-time mode parallel to data accumulation. The reason is that the real-time data exchange uses much more system resources than the scheduled data exchange process. Moreover, not all systems ensure building synchronization mechanisms in real-time mode, and even if such a possibility exists, it may lead to increased complexity and expenses for connector design and support processes.

Fourth, the integrated systems must have a defined conflict resolution order for certain issues: data discrepancy in the two different systems, integrity violation, data lost in the course of transferring, etc.

Technology Solutions

Obviously, most often data exchange is done by downloading and transferring data in standardized format XML or any other text structured format like CSV. This method requires well-customized mapping processes in both systems. One may compare exchanging data by XML with transporting staff from one house to another. In the first house we have things packed, placed at the front door, but the owner doesn’t care who transports the boxes and how they will be unpacked in the other house. The situation is the same with transporting boxes in the opposite direction.

When one or both systems are cloud-based, i.e. they are not physically connected in one network, integrating the systems by web service connectors is the best variant. Connectors set unified rules for data transfer format, exchange start and reception on the opposite side. If we get back to our metaphor, staff transporting is well-organized here. We have tailored boxes, we have understandably numbered them, taxi truck makes scheduled trips between the houses. This is a convenient and popular method, developing the previous variant. The thing is, it suits the pair-wise integration.

The most complicated yet the most scalable option is integrating by means of an enterprise service bus. It is used to organize data exchange among three or more systems, with no main system and all systems exchanging data between each other. An enterprise service bus serves as conveyor belts connecting several houses, where things are being transported all the time. In our case, when it is necessary to integrate the accounting system and the invoice approval system, we don’t need to use such a complicated solution.

Integration Efforts Results

By integrating the invoice approval system and the accounting system one can get real benefits for business:

  • Financial database unity
  • Entering information within a single input
  • Increased transparency of financial operations
  • Invoice approval and payment mistakes elimination
  • Opportunity to analyze the situation in view of several systems