How To Upgrade Your Accounts Payable Function With AI
CEO of Kanverse, a cognitive automation company
Accounts payable (AP) is one of those functions that can be easy to avoid thinking about until you must. It’s also a function that can benefit from the application of automation in some of the most significant ways, ultimately saving on costs and time, which can have a major impact on your business’s bottom line. The field of AP is ripe for transformation.
Manual work can hinder progress.
A significant amount of the AP department’s time and resources are taken up by manual data entry. Typical AP processes involve a human agent, manually entering invoice details, getting approval and initiating payments. This method can increase the possibility of data entry errors, incorrect calculations or incorrect payments, and these can hamper productivity and create a significant negative impact on your business.
It’s also expensive. Companies that use little to no automation when processing invoices typically spend more than $10 per invoice, while companies that have few to no manual steps in their AP process spend $2 or less per invoice, according to data from the American Productivity & Quality Center.
A 2020 report by researchers at Business Insider Intelligence found that 44% of businesses (paywall) were looking to add automation to their payables processes. But at the time, 47% were still relying on manual processes for approval. As the CEO of a company that offers AI-driven automation services, I’ve observed that manual data entry can be reduced by as much as 70% by introducing new data capture technologies.
Automation is a game-changer.
Taking an automation-first approach to AP minimizes manual touchpoints. Allowing AI-powered automation to prevail over human intervention can help eliminate error-prone tasks. This is done through AP invoice automation software, which integrates with online business networks without disrupting the current flow and connects multiple stakeholders digitally.
Three major use cases for AI-driven automation within AP include:
• Invoice automation: Create an automated workflow to extract and validate the header amount and line-item data from supplier invoices, and then match it with existing purchase order data residing in the ERP system. This can exponentially speed processing time while reducing costs.
• Quotation processing automation: Turn quote requests into standardized, structured electronic quotes in the ERP system. Process the requests in minutes, and respond immediately to quotes by automating manual touchpoints, which can also reduce the response and processing time.
• Purchase order (PO) processing automation: Automate the extraction of order data from physical, scanned and faxed POs. Extracted data can be automatically matched and validated against existing catalog databases. Sales orders are triggered post-approval through automated workflows.
There is business value in improving AP function.
Automation can revolutionize your AP function by reducing manual processing touchpoints and eliminating the need for the physical storage of records. This in turn can reduce labor, storage and printing costs, helping business leaders looking to optimize their resources.
Automation also enables faster invoice approval, resulting in a reduction of invoice processing cycle time. Ultimately, this can help improve vendor relations and save money. Automating AP can also increase employee engagement, as almost no one likes spending their days on repetitive, manual tasks when they could be engaging in more fulfilling work.
Another point in automation’s favor is increased visibility. Finance leaders can easily track all documents in transit within the organization’s AP process. It also acts as a single source of truth for outstanding liabilities and facilitates easy auditing of the entire AP process in real-time.
Understand the challenges of using AI-driven automation.
Although automation offers a lot of benefits, that doesn’t mean there aren’t a few “gotchas” to be aware of. One of the biggest challenges when it comes to automation in AP is also one of the biggest challenges for automation overall, and that’s making the cultural shift. A change management strategy is a must-have. For many organizations, especially legacy organizations, making the shift to more automation can be intimidating. It can be hard to move away from the status quo even when the status quo no longer serves your company best, simply because of inertia. And there’s still a lot of fear that adding automation to a function will replace employees and make their jobs redundant. While this isn’t the case, overcoming that mental and organizational hurdle can be a challenge. This is where having buy-in from the top-down is key.
Another challenge is a lack of proper planning, and this is one of the primary reasons automation implementations fail. You can’t just decide to implement automation overnight and expect a radical transformation that fits your needs. There needs to be concerted thought and planning beforehand with careful consideration of what the organizational goals for automation are. This includes identifying which tasks or processes should be automated first, and I’ve noticed that users tend to appreciate when the most tedious and time-consuming tasks take precedence. Not doing this due diligence will set you up for failure when implementing automation. This is where the crawl, walk, run approach will serve you best.
The third leg of this stool is proper training. You need to ensure your employees are fully trained on new automation systems. I’ve observed that one of the most common problems that arises when it comes to automating AP is plain old user error. Coupled with this is broader education on AI and helping debunk some of the persistent myths many employees have.
Is it time for a change?
The AP function is one example of an operation that can benefit from the application of automation and AI. It’s a function that’s long been mired in paperwork, red tape, invoices and myriad other disparate pieces of information, often in physical form. For some, it’s often an issue of inertia because they’ve always done it one way or fear that AI and automation will be too expensive and complex.
However, solutions and tools exist today that streamline the paperwork process while saving money, along with other value-added benefits. It’s time to take AP to the next level.