The use of AI-based tools is growing within the finance industry - and for good reason. Weighed down by repetitive and time-consuming manual processes, Accounts Payable (AP) staff have long needed a helping hand. 53% of UK finance leaders stated that wasted time was the biggest problem with utilising manual Accounts Payable processes, with other issues including making errors in invoices (37%), paying suppliers and vendors late, and being too costly (31%).
Removing administrative tasks that don’t directly benefit the bottom line, such as scanning invoices and manually inserting data into spreadsheets, isn’t just so staff can put their feet up. Any company that deploys Accounts Payable automation stands to significantly increase productivity within the finance department, as well as benefit from a faster and more accurate payment cycle. And not only can businesses save a significant sum on the cost-per-invoice processed and improve their ability to battle against inflation and recessionary pressure, but they can also bolster their security by reducing the likelihood of fraud entering the process.
What is machine learning in Accounts Payable?
Stemming from the AI branch of the technology tree, machine learning is the production of algorithms that can learn from data to make intelligent decisions and automate certain tasks. One of the most common uses of machine learning (ML) is Google, where results are predicted even while you’re still typing, to try and give users more targeted search results.
Over time, the system learns from queries you’ve typed in before to make better suggestions in the future. Another day-to-day use of machine learning is predictive text on your smartphone. The more you text, the better the system understands which words you prefer to use over others, making your life that little bit easier.
To combat the challenges and flaws of manual Accounts Payable processes, businesses and finance leaders have been increasingly looking at ways that machine learning intelligence and tools can help them. The Accounts Payable cycle can be a complicated machine with many moving parts, especially for businesses that receive and process a substantial amount of invoices.
| Benefit of Machine Learning in AP | Description | Impact on business |
| Time-Saving | Machine learning automates repetitive tasks like scanning invoices, data entry and three-way matching. | Increases overall productivity and allows staff to focus on more value-added tasks. |
| Error Reduction | Automated checks compare current invoices with historical data, reducing the chance of errors and preventing incorrect payments. | Enhances payment accuracy and minimises costly manual mistakes. |
| Fraud Prevention | Machine learning tools identify fraudulent documents or data by analysing patterns and inconsistencies within invoice processing. | Strengthens financial security and reduces the risk of economic crime within the AP process. |
| Payment Prioritisation | ML algorithms prioritise payments based on predefined rules, ensuring timely payments for smaller businesses, freelancers and contractors. | Improves relationships with vendors and enhances payment cycle efficiency. |
| Invoice Processing with OCR Technology | Integrates Optical Character Recognition (OCR) technology to automatically scan, analyse and record invoices, regardless of format. | Streamlines the processing of diverse invoice formats and reduces manual handling of documents. |
| Employee Satisfaction and Skill Development | By automating mundane tasks, employees can focus on higher-level activities, gain new skills and reduce job dissatisfaction from repetitive tasks. | Leads to a more engaged and skilled workforce, contributing to overall business growth and innovation. |
What else can machine learning do for Accounts Payable?
Instead of having to physically sift through boxes and filing cabinets for paper invoices, Accounts Payable automation solutions allow staff to simply open up the platform, use a search bar for a particular vendor or invoice number and bring up the relevant information within seconds. The machine learning part comes in when invoices are received, with the system able to check information against financial documents received in the past. If the documents don’t match, the payment isn’t approved or sent until the issue is resolved. This process is known as three-way matching and is an essential part in keeping finances secure and businesses out of trouble.
Another example of machine learning being used in the Accounts Payable space is for prioritising payments. For example, as smaller businesses, freelancers and contractors typically don’t have the same cash reserves as large enterprises, they would naturally want to be prioritised earlier in the payment cycle. By setting up specific rules for the process to be followed, you can make sure you pay certain suppliers within the set time period as stated in the terms of payment or earlier depending on what their preference is.
With machine learning, you also never have to worry about what format invoices are received in. Working with Optical Character Recognition (OCR) technology, invoices can be automatically scanned, analysed and recorded in the finance or ERP system. Although you might have to make a few edits for invoices sent in more obscure templates or from new suppliers, the software and technology will automatically record and process those invoices for you in the future.
Why do businesses need machine learning for Accounts Payable?
Despite the cost, time and productivity advantages of deploying machine learning for Accounts Payable, one of the biggest things the system helps solve is fraud. A large and growing issue for finance teams, fraud attacks in the UK show no signs of slowing down.
The UK Treasury reported that since 2019 (the first full year pre-Covid) economic crime has continued on an upward trend, while a Crime Survey for England and Wales (CSEW) shows that there had been a 54% rise in fraud and computer misuse offences since Covid hit. But for businesses that receive a substantial number of invoices, it’s almost impossible to identify a fraudulent document or data while continuing to do their daily tasks.
The other benefit is to do with culture. Performing repetitive tasks doesn't require a level of critical thinking, nor does it do much to add to the core skills of an all-round Accounts Payable professional. Many see this as the worst part of the job and if you add to this the stress of factors such as fraud, security and late payments, it’s no wonder that AP staff are wanting a change in the way they operate.
By employing machine learning to completely take away these tasks, staff are freed up to spend more time on projects that matter or learn skills outside of their core responsibilities that could help them progress in becoming a strong, confident finance leader. Not only do you gain happier employees, but you also benefit from more experienced and skilled staff.
Getting started with AP automation machine learning
It’s no secret that having staff manually enter invoice data into systems and other related tasks is a considerable waste of time for everyone involved. As businesses look to squeeze productivity and efficiency gains from every inch of operations, tools that help Accounts Payable staff perform to their full potential should not be overlooked. There are few solutions that can instantly help to improve AP departments as much as machine learning. Able to increase speed, security and productivity while reducing processing costs, businesses stand to gain a small yet significant competitive edge that can inspire countless benefits.
