The Role of AI in Accounts Payable (AP) Transformation: A Comprehensive Guide

Khaled Nassra , Chief Marketing Officer Feb 28, 2024 AP Best Practice

We’ve observed a notable trend over the past few years: responsibilities within the C-suite have been shifting rapidly, particularly for CFOs. Financial leaders are now required to predict and model organizational behaviour, provide insight into strategic decisions, manage global risks, and empower the rest of the C-suite to deliver results with improved cash flow and flexibility.

This has placed AP at the forefront of growth and strategic initiatives, and significantly raised the function’s importance to long-term plans. Organizations are focusing on streamlining and automating AP processes to gain better visibility and control over critical financial data. The goal is to move faster, reduce errors, and scale quickly by eliminating manual aspects of AP.

The next wave of improvement aims to make AP an autonomous function by leveraging AI technologies. This shift from operational automation to automated decision-making will drive additional tangible and strategic value for organizations.

Evolution of AP Automation

Technologies like robotic process automation (RPA) and optical character recognition (OCR) have been used in AP departments to complement, and at times replace, manual tasks. However, with the changing nature of global businesses, these technologies cannot maintain their position as cutting edge solutions, and innovative CFOs must look beyond them. The next-generation AI aims to deploy cognitive automation to reduce manual intervention and drive continuous process improvement.

Traditional RPA and OCR technologies focus on automating repetitive and labor-intensive tasks to save costs and improve compliance. AI-based automation, on the other hand, aims to make AP autonomous and achieve continuous improvement. AI and Machine Learning models drive AP processes to reduce manual dependence, unlocking additional savings through process improvements and early payment discounts.

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Benefits of AP Automation with AI

Lower overhead and decreased manual effort: Implementing AI-powered AP automation can result in substantial cost savings for organizations. Our client success stories show that businesses can save up to 60-75% by adopting new technologies and processes to support their AP function.

Higher degree of accuracy: AI-powered solutions ensure a high level of accuracy across AP processes. From invoice processing to validation, AI systems can significantly reduce errors, leading to improved data quality and more reliable financial reporting. This enhanced accuracy can also result in cost savings by minimizing the need for manual error correction.

Improved vendor relations: Streamlining and automating AP processes can have a positive impact on vendor relationships. Thanks to the additional automation and decreased overhead AI offers, organizations can improve payment timeliness and accuracy, leading to stronger partnerships and potentially better terms and discounts. This can ultimately reduce costs and improve overall supply chain management.

Compliance and risk reduction: AI systems provide organizations with 100% visibility into spend and can help reduce non-compliance related risks. By automatically flagging any inconsistencies or potential fraudulent activities, AI-powered solutions can help organizations maintain compliance with regulations and internal policies. This can result in reduced financial risks, but should be matched with careful and qualified input from team members to ensure accuracy and manage any risk with rapidly changing technology.

The strategic transformation of AP through AI is enabling organizations to drive value, improve efficiency, and reduce costs. By embracing AI technologies, AP can become an autonomous function, leveraging strategic foresight and actionable insights to generate bottom-line savings. Early adopters are already reaping the benefits of AI-driven AP automation, gaining a competitive edge in today's rapidly evolving business landscape.

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