Let’s say you have two amazing friends. These friends would make a powerhouse couple. Together, these people could recreate what it means to take over the world. There’s one problem. Your amazing friend, AP, is stuck on this ERP processing.
Yes, the ERP has been around for ages. Yes, it takes care of AP- sorta. Yes, it works- for now. I would ask though, does it really know what AP needs? Does this ERP system care about the audit tracking and controls that AP does? The answer: Only when auditors come a’ knocking.
Let’s be clear, an ERP system focuses on two main areas without fail, a company’s accounting GL tracking and the company’s inventory. I don’t think I’d argue against the importance of either of these areas, what kind of student of business would I be to say an ERP is irrelevant!? Well, since you asked the question…
Does anyone know what a blockchain is? Let’s remove the bitcoin drama and just talk about what this decentralized system has done for us. Cryptocurrency is NOT the only thing that blockchain has brought us.
So, quick background on what the blockchain is if you haven’t heard anything about it. I’ll use your vendor master for an example.
As any AP department knows, they must obtain a W9 and banking details from every vendor they do business with. This ensures our 1099s are correct and controls fraud. AP obtains these documents and then enters all the details into the vendor master to initiate the transaction within their ERP system. We all know these vendors have multiple contracts with other businesses, and all those businesses have good AP Managers working to ensure a W9 is obtained and the vendor’s information is added to their own ERP system. Think about how many vendors a billion dollar business has. 10K? 20K? How many times is a vendor duplicated out there in the world of ERPs maintained at different companies?
Now, imagine there is one vendor master for ALL AP departments. Imagine that a vendor doesn’t have to give out their W9 or banking every time they start a new contract, but instead, verify that they are doing business via their electronic blockchain identity. Every business available to work with for a country or state would be available to connect via the blockchain. There would be no misspellings or bad bank account fat fingerings, there would only be a connection made on the blockchain. Essentially, an electronic contract.
Boom, you have a PO. Boom, now you have a tracking number imported into the blockchain via the shipping handler. Boom, now you have a receiver when the items are dropped off at the facility. Boom, now you have an invoice electronically created and matched. All of these steps are done automatically, because all of the vendors (even the shipper) is on the blockchain and is part of the electronic contract. Boom boom… mind blown!
The blockchain is an amazing tool. The initial use and creation of the tool was for cryptocurrency, and it makes sense to want to keep that aspect alive to empower competition, but what blockchain has opened up is safe global connectivity. Business or otherwise! This kind of technology has taken the IT world by storm and we should all understand how it works because soon enough it will replace all our data tables housed in our own company’s broom closets.
Why should AP be so aware of this technology now? Think about how entwined AP is with data tables now and what would happen if suddenly those tables were gone? Other areas of business will find the best way to use blockchain for their own departments, so should AP. Supply chain processing will be impacted, I’ve already bet about $17.84 on the change, so we’ll see how it goes. Maybe I’ll be a winner and get that $35 my portfolio manager promised me!
If AP continues to stay loyal to the ERP system it will become harder and harder to detach when the time is right. It’s time for AP to become a free agent and look at other ways to solve invoice processing.
What is Accounts Payable? 