Once considered a laggard when it came to the latest technology, accounting and finance departments are starting to embrace the transformation of old, manual processes into digitally streamlined ones. While this includes plenty of significant developments taking place in the day-to-day operations of businesses over the past few years, one of the most significant has been the advancement of artificial intelligence (AI) in accounting.
Whereas accounting teams would stereotypically have a calculator in hand while they dived through an Excel spreadsheet on their computer screen, these days AI is handling a lot of the grunt work that is producing brand new efficiencies for accounts payable today.
What is artificial intelligence in accounts payable?
In its simplest form, artificial intelligence uses computers, machines, and algorithms to recreate the decision-making and problem-solving capabilities of a human being. The term has been used ever since the 1950s, but it’s really over the past decade - the past few years mentioned above - that we’ve started to see widespread adoption within businesses.
Although there’s still a lot of debate and contention around artificial intelligence, without question its development is there to make our daily lives much easier: removing the kinds of tasks that only contribute to wasted time, resources, and costs when there are more important jobs to focus on. This doesn't mean that AI technology is replacing humans, rather it is removing tasks that are repetitive in nature and ones that don’t benefit from a human being involved. In accounts payable, this could be anything from manual data entry on a spreadsheet to scanning invoices to make sure they align with purchase orders.
Before AI, accounts payable departments had to rely on predecessors such as Robotic Process Automation (RPA) and Optical Character Recognition (OCR). Although useful in their own right, manual processes and the risk of human error remain if they are used in isolation. Indeed, OCR and RPA are still used today among finance teams, but they rely on artificial intelligence to bring them together to automate the entire accounts payable processes. The integration of AI with automated accounting software has revolutionized these processes, ensuring greater accuracy and efficiency.
How does artificial intelligence in accounts payable work?
The next-generation artificial intelligence has brought the next evolution, aiming to automate accounts payable processes and not just reduce manual intervention, but completely remove it. For example, if a vendor invoice or document is received via email, accounts payable AI can automatically pick this up, scan the information, match it to data on the relevant receipt or purchase order, and schedule payment to be sent on the correct date. If the information doesn’t match up, the software technology will notify relevant staff that payment will not be sent until the issue is resolved.
Other processes in the accounts payable department that could stand to benefit from artificial intelligence include invoice capture, data extraction, invoice workflow and approvals, duplicate payments, and even fraud detection. By eliminating manual tasks and human intervention involved in each of these steps, staff can be freed up to focus on more strategic tasks such as business reporting or supplier relationship management.
There are plenty of other benefits that companies, vendors, and suppliers stand to gain from artificial intelligence in accounts payables. The most obvious one being the time saved from eliminating manual processes, as finance teams stand to reduce the time taken to process invoices and payments by as much as 80% by embracing AI in accounts payable.
In addition, accounts payable processes that utilize artificial intelligence could also see an 80% reduction in their cost-per-invoice compared to manually processes. Important, as even marginal gains made here can make a significant impact on business operations and revenues. Supplier and vendor relationships also stand to gain from the guarantee of being able to always pay on time, and the increase in security gained from a system that is able to identify and prevent fraud is invaluable to businesses that want to protect their financial data from unauthorized users.
Despite the benefits, one of the biggest fears of using AI in accounts payable is that finance managers lose control and visibility over processes that could quickly turn into a much bigger issue. However, this couldn’t be further away from the truth, as decision-makers remain in the driver’s seat by being able to view the status of tasks and progress of payment within the system. All AI does is take away the time-consuming tasks of data entry, validation, and extraction, giving finance managers a bigger picture of the entire process supported by real-time data while drastically reducing the likelihood of mistakes being made along the way.
What do finance managers need to understand before implementing artificial intelligence?
Before adopting AI into the accounts payable process, there are a couple of important things finance managers need to investigate in order to make sure they are using the technology correctly and to get the biggest benefits.
The first is to know exactly what you want to do with AI and what you want the advantages to be. It’s worth starting this journey by mapping out the different manual processes currently in use to figure out the pain points that can benefit from artificial intelligence. Some might not require a fix, but if the feedback from the accounts payable team is that they’re spending too much time validating invoices or entering data into finance systems, then there is potential for AI to be used here.
Research also needs to go into if AI accounts payable can be integrated into the existing ERP and financial systems that you currently use. Rip-and-replace projects can be costly and time-consuming, so it’s worth making sure that the tools will work together in harmony before deciding on any one solution. The collection and use of data is incredibly important as well here, as financial information can be captured in different ways and at different points depending on the needs of the business.
Lastly, if you feel the business is lagging due to inefficiencies in the accounts payable department that could benefit from AI, then the worst thing to do is wait any longer. Reach out to vendors or other businesses or customers who have already adopted AI in the accounts payable process to see how they are finding the technology. The faster the problems are identified and potential solutions are found, the faster the long-term advantages in time, cost, accuracy, and security can be realized.
Is artificial intelligence the future of accounts payable?
Although the changes to the way accounts payable operates remain under discussion, there’s no doubt that accounts payable stands to become one of the biggest beneficiaries of artificial intelligence. Through the continued development of the technology, the advantages of reducing the reliance on manual processes, faster payment and invoice processing times, and lowering costs and the chance of fraud will eventually become impossible to ignore.
Don’t worry, though - eliminating manual tasks doesn’t mean completely eliminating human touch or reducing jobs. In fact, Gartner is already predicting that the technology is creating more jobs than it is removing. What it does mean is that accounts payable departments and businesses can realize new efficiencies while dramatically reducing the strain of manual, repetitive tasks.
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