Artificial intelligence (AI) is rapidly reshaping the landscape of finance departments, especially in the realm of accounts payable (AP).
Traditionally, AP teams have relied on Optical Character Recognition (OCR) coupled with machine learning or template-based techniques to extract critical information from invoices, such as invoice numbers, amounts, and due dates. The latest advancements in generative AI, powered by large language models, offer improved accuracy and flexibility.
This technology has greatly sped up the invoice approval process and reduced human errors. However, the capabilities of AI extend far beyond data extraction. AI is taking AP to the next level with predictive analytics, utilizing historical data to discern patterns, foresee payment cycles, and optimize cash flow.
In this blog, we delve into the leading AI use cases for AP teams. You will discover how AI is not just a tool for automation, but a transformative force that can simplify and strategize your payables. Keep reading to learn more about harnessing the power of AI in your AP processes.
Common Challenges with Accounts Payable
Finance teams encounter several key challenges when managing payables. These most often include:
- Manual data entry. Inputting invoice data manually is not only time-consuming but also prone to errors. It can lead to discrepancies, payment delays, and strained relationships with suppliers.
- Time constraints. The sheer volume of invoices, coupled with verification and approval processes, often overwhelms AP teams. As a result, you can miss time-sensitive early payment discounts and get hit with late payment fees.
- Resource constraints. Short-staffed teams or those with a limited tech stack have fewer resources to manage their payables.
While automation helps optimize your workflows to minimize these issues, AI is another powerful tool that can further ease these pain points.
Top AI Use Cases in Accounts Payable
AI is transforming accounts payable with new ways to revamp work and improve accuracy and efficiency. Some use cases of AI in accounts payable today include:
Use Case #1: Extracting Invoice Data with OCR and AI
AP automation providers today help finance teams eliminate manual tasks and streamline processes. When it comes to simplifying invoice processing, AP automation providers rely on optical character recognition (OCR) and AI to extract invoice data. While OCR is effective at converting images into machine-readable text, it lacks the contextual understanding for complex invoice data extraction. This is where AI comes into play.
Traditional OCR systems, which rely on pattern recognition, are good at extracting data from invoices with consistent layouts and formatting. However, they struggle with variations in layout, handwriting, and non-standard invoices.
Some AP automation providers, including Centime, have added AI to their invoice capture to address these limitations. For example, Centime trains its AP automation solution so that it can adapt to variations in invoice formats, layouts, and fonts, making them more versatile. AI/OCR systems like this can then handle semi-structured and even some unstructured invoices.
Use Case #2: Automating Invoice Coding
Automated invoice coding, facilitated by AI, assigns account codes or categories to line items on invoices. Unlike manual coding, AI can analyze your previous invoices to look for coding patterns and trends. Over time, it uses this context to predict how you will code incoming invoices. This simplifies the accounts payable workflow, reduces manual effort, and ensures consistency in your coding practices.
Use Case #3: Monitoring Transactions and Preventing Payment Fraud
AI systems can analyze historical data to find patterns and flag unusual activities. By automating these checks, AI can reduce the risk of fraud while also increasing efficiency in the AP process.
For example, Centime can detect duplicate payments, unusual invoice amounts, and payments to new or unverified vendors. We monitor outgoing payments from the Centime platform and use AI to add an extra layer of protection. It can flag any suspicious or mistaken payments, including duplicate payments, etc.
Best Practices for Implementing AI in Your Accounts Payable Workflow
Implementing AI technology within your accounts payable team can significantly enhance your financial operations, but it's essential to approach this transition with careful planning and execution.
Consider the following guidelines in order to ensure a successful AI integration. By heeding these suggestions, you can successfully incorporate AI into your finance team’s toolkit, tapping into the vast benefits of automation.
Select Suitable AI Tools and Partners
When it comes to selecting AI tools, it’s important to adopt a problem-centric mindset instead of jumping straight to potential solutions. Start by identifying the specific challenges your business faces and the value you aim to unlock. Once you have a clear understanding of your needs, you can then assess various AI tools and partners.
This method ensures that you invest in technology that addresses your true pain points, rather than being persuaded to purchase the latest, most expensive system that might not meet your requirements.
Educate Staff and Embrace New Processes
Education is key when adopting new technology. Don’t forget to train your staff on any new platforms and teach them how AI models make predictions. This knowledge will help them recognize the strengths and limitations of AI.
For instance, an AI system may not initially code a novel type of invoice correctly. It requires time and relevant data to learn how to process complex invoices accurately. Understanding these nuances is crucial for your staff, enabling them to leverage AI effectively.
Conclusion
Integrating AI into accounts payable significantly elevates the capabilities of finance teams. It notably boosts accuracy by minimizing human errors in data entry and invoice processing, thanks to technologies like OCR and AI.
Efficiency is another key gain; AI-driven processes automate and hasten data extraction from invoices, streamlining approval workflows and reducing manual efforts. This automation leads to more efficient, cost-effective operations, freeing up teams to focus on strategic initiatives.
Want to learn more about an AI-powered AP workflow? Take a free tour of Centime’s platform. It offers real-time financial insights, moving you away from manual, error-prone invoice coding towards a more efficient, accurate AP automation system.
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