How to choose the right SAP vendor payments ERP integrations

Running enterprise-wide vendor payment processes is a core challenge for finance leaders.

In a perfect world, payment processing would be transparent, efficient, free from fraud or errors, and seamlessly integrated with other processes in the P2P workflow.

The reality is different.

Multiple payment channels, error-prone manual processes, inconsistent standards, and a lack of integrated processes and systems keep life interesting for CFOs and treasurers. Not to mention the impact on your business -– late payment fees, expensive mistakes, and grumpy vendors.

It doesn’t have to be this way.

What if there was a solution to consolidate payment methods, improve transparency and control over payment processes, manage cash flow, and ensure vendors paid on time?

SAP users can leverage SAP’s functionality by implementing a third-party accounts payable automation solution that optimizes and streamlines payment workflows. With the right integrated payments solution, your business can access more payment methods, increase security and compliance, make reconciliations more efficient, and pay vendors on time.

In this guide, we’ll take a high-level look at how you can make vendor payments easier through third-party payment integrations in SAP S/4HANA.

Let’s start by looking at how businesses pay their vendors in SAP today.

Vendor payment processing today

For most businesses, making vendor payments follows a standard manual process. Here are the basic steps:

1. A supplier sends an invoice to the accounts payable department.
2. The AP team keys the invoice into SAP and adds GL codes to the line items.
3. AP matches the invoice to the purchase order and shipping receipt, and if there are no errors, forwards it for approval.
4. The approvers sign off on the invoice and send it to Finance for payment.
5. Finance ensures there is enough cash on hand to pay the invoice, then adds it to the payment batch.
6. Finance pays the invoices by check, ACH transfer, EFT, international wire, eCheck, or credit card payment.

Businesses can manage this process in several different ways in SAP. First, you can implement a banking integration within SAP to automate electronic payment processing and reconciliations. You can also use third-party payment solutions for SAP that automate processes for issuing checks or wire payments, payment optimization, and providing corporate or payment cards.

More on that in a minute. First, let’s discuss the benefits of automating payments for SAP.

Benefits of payment automation in SAP

In Stampli’s 2023 survey of finance leaders, AP in 2023: Expectations, Technology, Opportunity, 72% reported their use of electronic payments will increase in 2023, with 27% saying they expected the increase to be “significant.” This represents a seismic shift in how enterprises pay their vendors – and how they can streamline or eliminate manual payment methods.

It’s not hard to understand why.

Digital payment processes are more efficient and less prone to errors than manual ones. They offer a centralized payment method that allows for easy customization and control of B2B payments, with payment data synced with ERP solutions and accounting systems. Automation guarantees that finance teams are constantly up-to-date on payment terms, vendor payment details, bank accounts, credits, and discounts.

Integrating third-party AP automation and payment processing solutions with SAP can improve payment efficiency and enhance communication and data transparency throughout your procure-to-pay (P2P) process. Implementing payment automation can provide significant benefits to your company, such as:

Centralized payment administration

SAP is known for its complex organization of information and workflows, making it difficult for AP teams to process different payment types. By automating payments, you can consolidate various payment methods onto a single platform, simplifying the process of transitioning between paper checks and electronic payments such as ACH or credit cards – all within a single system.

Eliminate manual reconciliation

Data within SAP can be difficult to extract. Payment automation solutions (like Stampli Direct Pay) and bank integrations can automatically collect and synchronize invoice and transaction data with SAP to create a single source of truth. This lets your accounting and finance teams get real-time visibility and reporting on accounts and balances, and it also lets you automatically run reconciliations.

Improved risk management and security

Payment automation gives you more control over payment processes, which makes it easier to spot and stop fraud and errors. It also enables you to enforce internal controls, keep a good audit trail, and stay compliant with reporting requirements. Additionally, accounts payable automation ensures that invoices are verified and approved before payment, further reducing the risk of erroneous or duplicate payments.

Data-supported financial management

With access to accurate, real-time payment data, you can take advantage of software reporting capabilities to gain insights and make informed strategic decisions about cash flow management, future spending, and investment.

With these benefits in mind, let’s walk through some options for automating supplier payments in SAP.

Options for automating supplier payments in SAP

Let’s take a high-level look at the two main ways you can streamline and optimize supplier payment processes in SAP.

First, we’ll look at built-in SAP options to integrate your bank with financial systems to facilitate payments and reconciliation. Then, we’ll discuss how third-party AP automation and payment integrations can integrate with SAP to provide a seamless supplier payment workflow.

Let’s start with banking integrations.

Banking integrations with SAP

SAP S/4HANA provides several ways to integrate SAP with your bank. These include manual file uploads, host-to-host connections, multi-bank connectivity channels, and financial service provider connectivity as a cloud service.

Manual file uploads

Manual file uploads are the simplest way to connect with banks. You manually enter the payment information into SAP, generate a payment file, and upload the file to your bank for processing. As the name suggests, manual file uploads can be slow, inefficient and unsuitable for large payment volumes.

Host-to-host connection

A host-to-host connection is a direct system-to-system integration between SAP and your bank providing secure end-to-end file transfer. This is a more efficient way to connect with your bank than manual file transfers. However, each bank has its own standards. That means it can take a while to get set up with a new or additional bank, and it can tie up resources to manage each connection.

Multi-bank connectivity channels

One alternative to host-to-host connections is a single multi-bank connectivity channel such as SWIFT or an API solution. This lets you send payments via a single channel (and in a single format) to a group of banks using a digital payments add-on solution like the SAP Integration Package for SWIFT.

Bank connectivity as a cloud service (SAP Multi-Bank Connectivity)

SAP Multi-Bank Connectivity (MBC) is a cloud-based service that connects enterprises with banks and financial institutions over a secure cloud network owned and managed by SAP. It provides integration with SAP S/4HANA, support for SWIFT and EBICS, and automated bank integration. MBC works with SAP’s AP automation solution to automate and streamline payment processing and integration with multiple banks.

Challenges with making payments within SAP

SAP banking integrations can streamline and optimize payment processing. However, they may still rely on manual processes within SAP or need to be integrated with SAP’s accounts payable solutions. Also, SAP segregates related functions into different sections, forcing users to toggle between screens and menus and making it difficult to navigate through payment processes.

SAP customers managing multiple companies often face the challenge of frequent switching between accounts to process and view invoices. Stampli addresses this by offering AP Assignments, which streamline invoice processing across various SAP companies. This feature automatically routes invoices to the correct AP individuals, teams, accounts, and workflows, eliminating the need for excessive navigation.

Some SAP customers reported they face difficulties integrating SAP with their bank’s payment gateway. For example, one customer said that “sometimes it is difficult to integrate it with the payment system of national banks,” and that getting the SAP integrations to work required modifications, expert consultants, and extra costs. Other users reported that integrations were difficult and “requires a lot of time, automation is not that advance[d] within the system and requires external process to maintain.”

Finance teams may also face challenges producing AP and payment reports in large ERPs. Very often, they need to create custom views within the ERP to enable AP departments to access and review reports. As these reports are needed for AP to function properly, this requirement can slow down payment processing.

Third-party payment integrations, like Stampli Direct Pay, leverage SAP’s power and flexibility while providing a simpler and more customizable payment solution. Let’s look at two third-party accounts payable and payment automation integrations that offer full automation and payment flexibility.

Another challenge is for organizations with two companies in SAP as they have to switch back and forth. Stampli solves this with custom sources which allows AP to use a single Stampli instance which is able to send payment information back to SAP and allocate to two different SAP companies.

Third-party SAP supplier payment integrations

Third-party AP automation and payment gateway integrations work seamlessly with SAP to eliminate manual processes and share accurate real-time payment data. These solutions are an alternative to having all your eggs in one basket by keeping your P2P processes in SAP.

We’ll examine two leading AP automation integrations for SAP 4/HANA: SAP’s own SAP Concur solution and Stampli, the industry leader in accounts payable solutions.

Let’s start with SAP Concur.

AP and payment automation with SAP Concur

Traditionally an expense and travel management solution provider, SAP Concur offers accounts payable automation through its Concur Invoice solution. Concur Invoice integrates with SAP S/4HANA and other ERP systems and automates invoice processing, approvals, and supplier payments. It also provides visual dashboards and reporting capabilities to give visibility into KPIs and AP workflows.

Customers say SAP Concur’s strength is its “Good centralized management for vendor management and payments.” However, as with other ERP-based solutions, Concur’s complexity can create challenges. Many ERPs have a specific structure for menus and workflows. This structure can make it difficult for AP teams to access the people and resources needed to process payments efficiently.  “Good software, rough user experience,” said one reviewer. “Finding the functionality you’re looking for, or the expense type you need, or adding a vendor, etc. just isn’t as easy as it should be. It’s also not readily apparent where you should go if you can’t find what you’re looking for…there are other options whose features, functionality, and ease-of-use rival or exceed it.”

Concur manages payments via check, ACH, or credit card or through pre-selected payment providers.

Vendor payment freedom with Stampli

Enterprises choose SAP for its power and customizability, but it’s notoriously difficult to use, complex, and inflexible. Stampli for SAP is the most powerful, flexible, and quickest accounts payable solution. Together with Stampli Direct Pay, Stampli gives complete control and transparency over vendor management, payment processing, and corporate card spending in SAP. Stampli customers love Direct Pay’s efficiency and ease of use. “The best feature so far is Direct Pay,” says one G2 reviewer. “This add on has allowed us to improve our AP processing time and the option of paying Vendors ACH is great!”

SAP provides a traditional approach to accounts payable and payment processing. Stampli is accounts payable evolved. It simplifies communications with a centralized, intuitive interface that puts everything AP teams need in one place — including vendor payment processing. With Stampli, you can create and modify dynamic workflows for invoice processing, approvals, and payments to simplify AP processing. “It’s such a time saver by having everything in one place,” said a Stampli user. “Prior to using Stampli to pay our vendors, I was using at least 3 different steps to pay a vendor. Now it’s literally one click. It also helps me worry less about making a human error.”

Stampli, a 14-time G2 Grid Accounts Payable Leader, is the ideal option for managing payments in SAP. While customers complain about SAP’s complex processes and steep learning curve, Stampli customers rave about Stampli’s “Excellent Program with Stellar Customer Service,” saying “I love that everything is in one place. I’m able to see all of my invoices, make notes, ask my team members questions, see my vendor’s details, and even ask questions directly to the vendors. Direct Pay is one of my favorite features!”

With exceptional implementation, strong customer relationships, and proven results, Stampli offers flexible and powerful payment management.

Here are the top advantages of automating accounts payable with Stampli:

• Navigation: Complex ERPs often segregate related functions into separate sections, complicating manual navigation and creating a reliance on shortcuts for access. Stampli offers an intuitive, single-screen interface that enhances user experience, removing the need to open multiple tabs across menu sections and removing shortcut dependency.
• Invoice processing: Traditional ERPs often differentiate sections based on whether invoices, bills, and expenses are PO-backed or not, necessitating toggling between sections for processing. Stampli provides a single filterable view for all invoice, bill, and expense types.
• Communications: In many ERPs, departmental workflows are organized distinctly, potentially creating silos that hinder information flow. Stampli facilitates interdepartmental communication on top of the digital invoice, thereby streamlining information flow, accountability, and context.
• PO matching: Some ERPs require a dual-screen approach for matching invoices to POs, involving multiple documents and a need to navigate through several sub-tabs for accurate matching. Stampli enables PO-to-invoice matching without the extensive clicking and or the need for multiple screens.
• Reporting: Finance personnel are often required to build custom views for AP to access reports in the ERP. Stampli provides readily accessible reports with built-in analytics and visibility into invoices, employee productivity, and AP processes.
• Workflows: Some ERP systems require consultants or IT support to update workflows when processes change. While Stampli also provides fixed workflows, customers can opt for dynamic workflows powered by AI and machine learning that automatically learn your processes and make adjustments upon changes, which reduces the dependency on extensive workflow.
• Flexible payment options: Choose your preferred payment method, whether it’s by credit card, ACH, wire transfer, check, or any other method that suits your needs.

“It makes my job so much easier.”

ERPs like SAP are notorious for their overcomplicated and dense information management, Stampli customers cheer, “I love how Stampli keeps everything organized,” going on to list Stampli’s advantages: “Stampli Direct Pay has made working remotely so smooth. I like the Vendor Portal feature where vendors can input their payment details and track the status of their invoices. Customer Service is very helpful whenever I need help.

Stampli really helps streamline my Accounts Payable tasks.”

Experience Stampli today. Contact our team to schedule a free demo.