An enterprise resource planning (ERP) system is software used by businesses to manage operations such as planning, purchasing inventory, sales, marketing, finance, human resources (HR), and more in one platform. These systems are growing in popularity, with the ERP market estimated to hit $65 billion in 2024 and expected to exceed $103 billion by 2029.

ERP systems have numerous benefits for business. They centralize business data so different departments can access accurate, up-to-date information and work together cohesively. They can automate routine tasks such as data entry and report generation, reducing administrative burden and manual errors. They have data analysis features and advanced reporting capabilities that can help businesses identify trends and make key decisions. ERP systems can grow with the business, accommodating new processes or data as the organization expands, and can provide tools to help businesses monitor and maintain compliance.

ERPs can significantly improve internal operations for businesses, and this is especially true when businesses opt to integrate payments into their ERP. Below, we’ll explain how to integrate payments into your ERP and provide tips and best practices to make the most of this integration.

What’s in this article?

• How do ERPs work?
  
• How ERPs have evolved
  
• Business benefits of ERP software
  
• How to integrate payments with ERPs
  
• Benefits of integrating payments with an ERP
  
• Best ERP systems—and how to pick one
  
• Best practices for integrating payments with ERPs
  

How do ERPs work?

ERP systems use a single main database to house all of the business’s data, connecting the activities of various sections within a business. Here are more details about the key features and attributes of ERPs:

• Central database: At the core of an ERP system is a central database that stores data from various business departments. This centralization gives all departments access to the same information, reducing discrepancies and improving data accuracy.

• Module-based structure: ERP systems are typically modular, meaning they consist of various applications (modules) that support different business functions such as finance, HR, sales, and supply chain management. Businesses can choose the modules they need and create a customized system that fits their requirements.

• Real-time process integration: The modules within an ERP system are interconnected, allowing for data exchange between different business processes. For example, a sales order can automatically update inventory levels and inform the production schedule. These updates occur in real time, providing businesses with up-to-date information for quick and informed decision-making.

• Automation: ERPs automate routine tasks such as data entry, financial calculations, and report generation. This automation saves time and reduces the likelihood of human error.

• Analytics and reporting: ERP systems have comprehensive analytics and reporting tools to analyze performance, identify trends, and inform data-driven decisions.

• User access control: ERP systems have strong access control mechanisms that restrict employee access to only their required information and functions. This feature creates greater security and data integrity.

How ERPs have evolved

The evolution of ERP systems reflects broader trends in technology and business. These systems have moved from function-specific solutions to integrated systems that support agility, data-driven decision-making, and global operations. As businesses continue to evolve, ERP systems are poised to incorporate more advanced technologies such as artificial intelligence (AI).

• 1960s—Inventory management systems: The earliest forms of ERP systems were basic inventory management systems called Material Requirements Planning (MRP) systems. They were designed to help businesses monitor and control stock levels.

• 1970s—MRP systems: In the 1970s, material requirements planning (MRP) systems evolved to be faster and more effective at optimizing manufacturing processes by planning production and purchasing based on inventory levels.

• 1980s—MRP II: Manufacturing resource planning (MRP II) expanded on material requirements planning, incorporating additional aspects such as labor and machine scheduling.

• 1990s—The birth of ERP: The term ERP was coined by the Gartner Group to describe the evolution of MRP and MRP II systems into more integrated solutions that included manufacturing as well as finance, HR, and other core business functions.

• 2000s—Internet and globalization: With the advent of the internet, ERP systems became more interconnected and accessible. These years saw the rise of web-based ERP solutions, allowing for remote access to global operations.

• 2010s—Cloud computing and mobile accessibility: In the 2010s, cloud-based ERP systems emerged with lower up-front costs, more scalability, and mobile access. This period also saw the integration of advanced analytics and real-time data capabilities.

• 2020s and beyond—AI and IoT integration: Modern ERPs are integrating artificial intelligence and the Internet of Things (IoT) for predictive analytics, better automation, and real-time monitoring of devices and processes.

Business benefits of ERP software

ERP software functions as a central hub of business activity, compiling information from different departments so they can more easily share information and collaborate. When you have sales, finance, and operations all accessible in the same database, operations flow more easily. If the sales department closes a big deal, for example, finance knows about it right away, and the warehouse gets a notification to ship products.

Beyond operational efficiency, businesses might see these benefits from using ERP software:

• Accuracy and reliability: With one system holding all the data, you cut down on mistakes and mix-ups and can move confidently when making business decisions.

• Smart decision-making: Real-time data and deep dive analysis help leaders make informed choices, whether they’re responding to market shifts or planning the next big move.

• Better productivity: By taking over routine tasks, ERP systems free up your team to focus on bigger things. Less time spent on manual entry means more time for strategy and innovation.

• Scalability: As your business expands, your ERP system can, too. It’s built to accommodate more data, more users, and more complexity, so you don’t outgrow it.

• Customer relations: Knowing your customers well (such as their purchases and preferences) can make your service more personal and responsive. Happy customers tend to stick around.

• Lower costs: ERP systems result in fewer errors, less waste, and better planning, all of which contribute to a healthier bottom line.

• Compliance: With rules and regulations always changing, an ERP can help you keep track and stay compliant, which is a big deal for avoiding fines and staying in business.

• Remote access: Cloud-based options mean your team can access the system from anywhere, which is great for remote work or staying connected while on the move.

• Regular updates: With technology always advancing, a good ERP system updates, too, bringing in new features and capabilities so you don’t fall behind.

How to integrate payments with ERPs

Step 1: Assess your payment workflow and needs

• Transaction flow: Examine your payment workflows in detail. Understand every step, from invoice creation to payment reconciliation, and identify where the payment integration should interject to boost efficiency.

• Payment methods: Define the range of payment methods your business will accept (e.g., credit cards, bank transfers, online payments), and ensure the chosen payment processor supports these methods.

• Compliance and security: Assess the compliance requirements specific to your industry such as the Payment Card Industry Data Security Standard (PCI DSS) for credit card processing. Make sure the integration will meet these standards.

Step 2: Evaluate your processor’s technology and support

• API compatibility: Evaluate whether the payment processor’s application programming interface (API) is compatible with your ERP’s architecture. The API should facilitate easy data transfer and real-time transaction updates and data synchronization.

• Features: Beyond basic compatibility, look into the processor’s features, checking for functionalities such as automatic payment reconciliation, multicurrency support, and fraud detection capabilities.

• Integration support: Determine the level of support the payment processor offers for integration. Some might provide extensive documentation, software development kits (SDKs), or dedicated support teams for ERP integrations.

Step 3: Create an integration blueprint and data map

• Integration blueprint: Design a detailed integration blueprint outlining how the ERP system will communicate with the payment processor. Define data endpoints, webhooks for transaction updates, and error handling mechanisms.

• Data mapping: Map out how data will transfer between systems, specifying which ERP fields correspond to payment transaction details.

Step 4: Test functionality

• End-to-end testing: Conduct thorough testing that covers all possible transaction scenarios including successful payments, failures, refunds, and disputed charges. This testing should validate the data integrity and workflow.

• Load testing: Test the integration under various loads to check that it can handle peak transaction volumes without issues.

• Security testing: Perform security assessments including penetration testing and vulnerability scanning. Confirm the payment data remains secure through the integration.

Step 5: Develop staff training and documentation

• Role-specific training: Develop detailed training programs that cater to different roles within your organization, focusing on how the integration affects their workflows.

• Documentation: Create in-depth documentation that covers every aspect of the integration, including technical details and user instructions. This creates a reference for troubleshooting and training.

Step 6: Roll out the integration

• Phased rollout: Roll out the integration in phases, starting with a pilot group to monitor performance and gather feedback in a controlled environment.

• Real-time monitoring: Set up real-time monitoring for the integration, focusing on key metrics such as transaction processing times, failure rates, and data integrity issues.

Step 7: Optimize and scale

• Feedback loop: Establish a feedback loop with users to continually collect insights on the integration’s performance and usability.

• Scalability evaluation: Regularly review the integration’s scalability, ensuring it can adapt to business growth, increased transaction volumes, or expanded global operations.

Benefits of integrating payments with an ERP

Businesses that integrate payments with their ERP can experience a variety of benefits related to efficiency, planning, data accuracy, payment security, and compliance:

• Automated reconciliation: The integration automates the reconciliation process, matching payments with invoices in the ERP for more accurate financial records.

• Real-time financial data: Processed payments are immediately reflected in the ERP. This real-time visibility into the business’s financial status aids in timely and accurate financial reporting and analysis.

• Automated transaction processing: Automating the flow of payment data into the ERP eliminates redundant steps, speeding up transaction processing and reducing the administrative burden on staff.

• Centralized financial management: With payment data integrated into the ERP, finance teams have a centralized platform for managing all financial aspects, including invoicing and cash management.

• Faster payment processing: Integrated payment solutions can accelerate the payment process, reducing the time between invoice issuance and payment receipt.

• Accurate cash flow forecasting: The immediate reflection of payment data in the ERP allows for more accurate and dynamic cash flow forecasting.

• Secure payment processing: Integrating reputable payment solutions with an ERP improves payment security. These solutions use advanced encryption and security protocols to safeguard payment data.

• Payment processing compliance: The integration helps ensure payment processing adheres to industry standards and regulations, reducing the risk of compliance violations.

• Faster billing and payments: Quick and accurate processing of invoices and payments improves relationships with customers and vendors, contributing to better trust and collaboration.

• Transparency in transactions: With all payment data easily accessible within the ERP, businesses can promptly and accurately respond to inquiries from customers and vendors.

• Consolidated financial insights: Integrating payments into the ERP creates a holistic view of financial data, letting leaders make informed decisions based on comprehensive financial insights.

• Payment trend analysis and reporting: Access to detailed payment data within the ERP facilitates advanced trend analysis and detailed financial reporting, which helps with financial planning.

• Payment technology readiness: Staying current with the latest in payment technologies is simpler with an integrated system, keeping your business at the forefront of payment processing trends and innovations.

Best ERP systems—and how to pick one

Choosing the right ERP system is a major business decision. The “best” ERP system varies depending on a business’s size, industry, and requirements. Choosing an ERP system involves thoroughly evaluating your business needs and specifications and the potential system’s features and capabilities, including how well it can integrate with your other systems.

Popular ERP systems

• SAP ERP: SAP ERP is known for its comprehensive capabilities, including extensive customization options. It’s a preferred choice for large enterprises with complex processes.

• Oracle NetSuite: Ideal for businesses of all sizes, Oracle NetSuite is praised for its cloud-based solutions with real-time data access, scalability, and diverse industry-specific features.

• Microsoft Dynamics 365: Known for its integration with other Microsoft products, Dynamics 365 is versatile and caters to midsized businesses and large enterprises.

• Infor ERP: Infor ERP comes with industry-specific solutions that help businesses in sectors such as manufacturing, healthcare, and retail tackle common challenges.

• Epicor ERP: Epicor is a flexible system that helps businesses fine-tune their operations and supply chain. It’s especially well-suited for manufacturing and distribution businesses.

How to pick the right ERP system

• Assess your business needs: Identify your key business processes, challenges, and areas in need of improvement. Determine whether you need an industry-specific solution or a more generalized ERP system.

• Consider scalability: Choose an ERP system that can grow with your business. It should be able to handle increased transactions, additional users, and more complex operations without major overhauls.

• Evaluate integration capabilities: The ERP should easily integrate with your other systems and software. This helps maintain data consistency and smooth operations.

• Check for customization options: A customizable ERP can adapt to your unique business processes, but it can also come with additional complexity and maintenance needs. Find a balance that suits your needs.

• Understand the total cost of ownership: Look beyond the initial purchase price or subscription fees and consider the costs of implementation, training, customization, and ongoing support, too.

• Prioritize user-friendliness: An intuitive, user-friendly interface promotes higher adoption by your team, reducing training time and resistance to change.

• Look into vendor support and community: Evaluate the ERP’s vendor support and user community. These features can provide valuable resources and reassurance throughout the ERP’s life cycle.

• Request demonstrations and trials: Before deciding, request demos and, if possible, a trial period to test the ERP system in your environment.

• Read reviews and case studies: Learning from the experiences of similar businesses can provide insights into the system’s real-world application and potential pitfalls to avoid.

• Consider future tech trends: Ensure the ERP vendor is committed to innovation, regularly updating the system with new features and technologies to keep your business ahead of the competition.

Best practices for integrating payments with ERPs

Payment process

• Customize payment gateways: Tailor the integration to support specific payment gateways and methods used by your business. Consider customer preferences and global market trends.

• Adopt a global payment framework: If your business operates internationally, ensure the payment integration can handle multiple currencies, tax regimes, and compliance requirements, providing a flexible framework for global expansion.

• Integrate directly with banks: Establish direct integration with banks for real-time payment processing and financial reporting to help with liquidity management and financial forecasting.

• Monitor payments in real time: Develop real-time monitoring dashboards within the ERP to track payment processes, identify any delays or issues, and provide actionable insights for quick resolution.

Security

• Use end-to-end encryption: Implement advanced encryption protocols for data in transit and at rest, keeping payment information secure through every stage of the process.

• Use AI for fraud detection: Implement AI-based tools within the ERP to detect and prevent patterns and anomalies in transactions that might indicate payment fraud.

• Automate compliance: Use ERP features or third-party tools to automate compliance with financial regulations. This could involve generating reports for audits, automating data handling processes to meet industry standards, and more.

Technology

• Automate payment reconciliation: Develop custom automation scripts or use advanced ERP modules to automatically match every payment transaction with the corresponding invoices, reducing manual reconciliation efforts.

• Collaborate with ERP-fintech: Work closely with fintech solutions that have specialized payment functionalities. Integrate them with your ERP for advanced features such as dynamic discounting or supply chain financing.

• Set up for modular expansion: Design the integration to be modular, letting you add payment methods, gateways, or functionalities as your business evolves or as new technologies emerge.

• Regularly adopt new technology: Stay engaged with emerging payment technologies and fintech trends so your ERP payment integration remains at the forefront of innovation.

User experience

• Create role-specific interfaces: Customize the ERP payment interfaces for different user roles so each user has access to the necessary tools and data without being overwhelmed by irrelevant information.

• Employ simulation-based training: Go beyond traditional training methods. Use simulations and real-world scenarios to help users understand the payment integration’s impact on their workflows.

• Establish a feedback loop: Establish a systematic feedback loop within the ERP to collect user input and experiences with the payment integration. Use this feedback for continual improvement.

Planning

• Use data-driven payment strategies: Use the ERP’s data analytics capabilities to develop specialized payment approaches, such as optimizing payment terms based on supplier performance or customer creditworthiness.

• Use predictive analytics: Use ERP-integrated predictive analytics to forecast payment trends, cash flow scenarios, and potential bottlenecks.