Efficiency is the name of the game when it comes to running your business — and it all starts with managing resources and payments smoothly. That’s where ERP systems come into play.
ERP systems are powerful tools that simplify your entire operations, from inventory to accounting. But choosing the right ERP isn’t one-size-fits-all.
Let’s break down the different ERP types, how they handle invoice processing, and how to choose the right one for your needs.
What is an ERP?
An Enterprise Resource Planning (ERP) system brings your operations together in a centralized platform, streamlining how invoices are processed and payments are managed.
Within the accounts payable (AP) process, ERPs manage all steps of an invoice’s journey — from receipt to final payment. ERP systems help you avoid costly mistakes and focus resources on other key priorities by automating repetitive tasks, like matching purchase orders, processing vendor invoices, and scheduling payments.
Without an ERP, your AP team may rely on manual steps that slow down workflows and increase the risk of errors. But with ERP invoice processing, these steps become automated and integrated. This speeds up transactions, improves accuracy, and gives you full visibility into your cash flow.
5 Types of ERP Systems
There are many different types of ERP systems. Choosing the right one for you depends on your industry, business size, and unique needs.
1. On-Premise ERP Systems
On-premise ERP systems are installed directly in your company’s servers and hardware. This “traditional” setup gives your business complete control over your data, which can be critical for industries that deal with sensitive information or have strict compliance requirements, like the higher education, healthcare, or government sectors.
Invoice Processing with On-Premise Systems: On-premise ERPs are typically known for being highly customizable to meet your company’s specific workflows — including how you process invoices. However, these systems do generally require high implementation costs, ongoing maintenance, and IT resources.
2. Cloud-Based ERP Systems
Cloud-based ERP systems are hosted on remote servers and accessed through the internet — meaning your team can log in anytime, anywhere. Cloud-based ERPs offer flexibility, scalability, and lower upfront costs, and are especially great for businesses that want to reduce IT expenses and scale quickly.
Invoice Processing with Cloud-Based Systems: With a cloud-based ERP, you can process invoices wherever there’s an internet connection. These ERPs also update in real time, so you always have accurate, up-to-date financial information — which is essential for smooth invoice handling.
3. Hybrid ERP Systems
Hybrid ERP systems combine the powers of both on-premise and cloud solutions. With a hybrid system, you can store sensitive data on-premise, but use cloud software for less critical tasks. These systems are perfect if you’re looking for the flexibility of cloud technology but still want control over certain aspects of your process and data.
Invoice Processing with Hybrid Systems: Hybrid ERPs provide flexibility within customized invoice processing workflows. While this seemingly offers “the best of both worlds,” it’s important to keep in mind that managing both systems can be complex and requires careful planning and resources for seamless integrations.
4. Industry-Specific ERP Systems
Some industries require highly specialized ERP systems. For example, manufacturers need ERP solutions that focus on supply chain management, while retailers need ERPs tailored to point-of-sale and inventory tracking. That’s why industry-specific ERPs come with features and functions designed for the particular needs of different target industries.
Invoice Processing with Industry-Specific Systems: For industries with complex invoicing needs — like manufacturing or construction — an industry-specific ERP can provide tools to manage multi-step processes, like three-way matching. These systems are great for avoiding discrepancies and ensuring that invoices are processed only after goods are received and verified.
5. Open-Source ERP Systems
Open-source ERPs offer ultimate customization by letting you access and modify the system’s source code to adapt the ERP to your exact needs. Open-source ERPs require a high level of technical expertise and ongoing support.
Invoice Processing with Open-Source Systems: Open-source ERPs give you full control over how you manage invoices. But while this sounds great, it can make setting up and maintaining your system difficult and complex. Unless you have strong technical support, another ERP type may be better suited to your needs.
Choosing the Right ERP for Invoice Processing
With so many different ERP types, how do you choose the right one for your needs — especially when it comes to your AP and invoice processing workflows?
Here are some things to consider:
- Business Size and Growth: If you're a small business or startup, a cloud-based ERP might make the most sense for your needs. It’s an affordable, scalable option that doesn't require a lot of technical oversight. For larger, more established companies, an on-premise or hybrid solution could be better — especially if you want to control sensitive data or customize your workflows.
- Industry Requirements: If your business operates in a niche market, like manufacturing or healthcare, an industry-specific ERP may be right for you. These systems come with built-in tools that cater to your industry’s invoicing challenges, such as multi-site vendor invoices or PO-based invoice processing.
- Customization Needs: Companies that need a high level of customization and flexibility may want an on-premise or open-source ERP system. However, these systems often require more time, money, and resources to manage.
- Remote Work Capabilities: If your team works remotely or across multiple locations or time zones, a cloud ERP can ensure that your invoice processing runs smoothly — no matter where or when your employees are based.
The Bottom Line: ERP Types and Invoice Processing
Whether you need a cloud-based ERP for easy access, an industry-specific system for tailored tools, or an open-source solution for complete control, there’s an ERP type that meets your needs.
Ready to explore an AP automation solution that can integrate with your ERP of choice? Learn how Nimbello’s innovative solutions can meet your ERP integration needs by scheduling a demo today!