A large number of B2B companies attempt to use their accounting system or ERP for accounts receivable management, systems that notoriously lack the depth of functionality, insight, and automation required to properly manage the critical accounts receivable process. So, if these systems are not meant for A/R management, why do so many companies use them to that end, why is this a bad practice, and what are the other options?

Organizations who use their ERP and accounting systems for accounts receivable software do so because a majority of ERP systems offer an accounts receivable module which makes companies think they are getting all that they need it for A/R management. The problem is that those modules are usually ineffective in supporting the quote-to-cash process because they offer minimal functionality, lack automation, and require the use of manual processes and outside systems.

Some of the places where companies will come upon issues and inefficiencies in accounts receivable management with ERP systems include:


Depending on the complexity of a business, there could be many different invoice-related issues that result in disputes. Each of those disputes may then require different processes for resolution and ERP systems are not sophisticated enough to develop workflow around those different resolution paths or support the many situations that affect accounts receivable. In a recent industry report, “Revenue Cycle Management: Increasing Control of the Order-to-Cash Process,” PayStream Advisors agree that ERP systems “lack the narrow focus necessary to address all the variations and unique situations that affect trade receivables management.”


Many ERP systems, while they offer accounts receivable modules, force companies to implement dependent modules in order to gain access to the accounts receivable module. So when you think you need only one A/R module, you might have to activate multiple different dependent modules too. By having to activate the additional modules, you will likely incur added license, service, and support fees, not to mention that the additional modules will prolong and complicate implementation. In many cases, you can find an accounts receivable software solution that can integrate seamlessly with your ERP system that will not only save you those hidden fees but offer you far greater value and functionality than your ERP module.


ERP accounts receivables generally offer very few reports and virtually no flexibility within the reports provided. This means companies cannot pick and choose which data to extract and analyze without building custom reports or using an outside system. Building custom reports will take IT resources away from their more critical tasks, and using outside applications increases workload, the risk of data entry error, and many other issues to be discussed later in this document.


ERP does not allow collectors to view information in a holistic way, they usually have to jump between programs, check spreadsheets, and dig through old emails to see the most recent information pertaining to an account. ERP also lacks the ability to automatically update information, which means collectors must manually enter all account notes, communications, contact information, and other pertinent information. This burden of manual data entry and reentry into other systems makes the entire process much longer, and very overwhelming and opens the door to data entry errors, data silos, miscommunications, and other serious problems that can further delay collection and hinder cash flow.


As mentioned above, ERP systems do not offer the most up-to-date information which requires collectors to use applications like Excel to fill the gaps. This long process drastically increases the overall time it takes for a collector to prepare for a call, communicate with the customer, and update information after the call.

According to a study by the Customer Value Group the average time it takes for a collector to handle a communication with ERP is much longer than if they were using specialized accounts receivable software. With the automated communications features in A/R management software, companies can just about cut the time spent on a single communication in half and increase their productivity by about 50%! Not only will you be able to make more calls, but they will be much more effective and professional when collectors have all of the most recent account information at their fingertips.

The bottom line is this, ERP systems try to do everything, so it is no wonder that many companies believe that they can. But many experts in the field of credit collections are of the same opinion as we are, that ERP systems are unable to support the invoice-to-cash workflow and meet the needs of an accounts receivable professional for fast and effective collections. Industry analysts PayStream Advisors agree that “ERP solutions are woefully inadequate in terms of receivables and collections management (RCM) functionality.”