Top 9 Use Cases for AI in AP Automation

In today's fast-paced business landscape, finance departments face the constant challenge of managing large volumes of invoices, expense reports, and financial data. The need for efficiency, accuracy, and compliance has never been higher, especially with the uncertainty of economic conditions and market volatility. And, organizations facing AP department consolidation or restructuring post-merger or acquisition have additional layers of automation challenges to deal with.

In the Medius 2022 Financial Professional Census survey of 2,750 senior finance professionals around the world, only 28% of organizations believe they are reaching financial excellence and automated end-to-end processes. And, the survey also found that for AP teams, nearly half (43%) of invoices require manual intervention. Going further, the majority (62%) believe they work with payment software that is outdated.

To address these challenges, CFOs and finance leaders are turning to AP automation and AI solutions to augment their teams and supercharge productivity. According to Deloitte’s CFO Signals survey for Q4 of 2023, “76% of CFOs say digital transformation and technologies will play a greater role in achieving their company’s strategy.” And, according to advisory firm Grant Thornton, 61% of finance executives in the technology sector alone expect their organizations to invest in AI this year. 

Deciding where to pilot AI doesn’t have to be a challenge, too. AI-powered solutions are particularly well-suited for manual, redundant tasks like invoice processing, data entry, PO-matching, and approvals. Here are nine ways CFOs and finance leaders can leverage AI-powered technology to revolutionize invoice processing from ingestion to payment, and boost AP automation:

1) AP AUTOMATION FOR INVOICE PROCESSING: ELIMINATING MANUAL DATA ENTRY

One of the most time-consuming and error-prone tasks in AP is manual data entry from invoices. AI-powered systems are changing the game by intelligently extracting crucial information from invoices, including vendor details, invoice amounts, and due dates. This not only eliminates the need for manual data entry, but also significantly reduces errors associated with human handling. AI ensures that every piece of data is accurately captured, contributing to higher data integrity.

Autonomous AI takes AP automation one step further: while automation reduces invoice processing time and errors, solutions deliver additional ROI in maximizing human potential, and a quick payback on the technology investment. Vic.ai is one company that provides an autonomous platform for AP teams to manage invoice processing end-to-end, without human interaction.

2) AP AUTOMATION FOR INVOICE MATCHING AND EXCEPTION HANDLING: PREVENTING ERRORS

Matching invoices to purchase orders and ensuring accuracy is a critical aspect of AP. Even with some level of AP automation, PO matching is a tedious process, and often requires manually identifying and comparing line-by-line to confirm the automations in place are working correctly.

By leveraging AI-powered technology, invoices to purchase orders can truly be matched automatically while detecting discrepancies and preventing duplicate payments. Even complex documents, such as multi-line invoices and POs, matching multiple invoices to a single PO, or interpreting handwritten receipts can be better managed with AI. This automated matching process helps AP teams maintain compliance with company policies and reduces the risk of financial errors. In cases where mismatches occur, AI systems can initiate exception handling processes, notifying relevant parties and ensuring swift resolution.

AI solutions can learn from historical data, removing the need for templates and manual updates each time a vendor changes an invoice or a new vendor is onboarded - meaning templates and traditional automation capabilities don’t have to be reprogrammed or learned.

3) AP AUTOMATION FOR INVOICE APPROVAL WORKFLOW: STREAMLINING APPROVALS

Managing the approval process for invoices can be a complex and time-consuming task. AI-driven workflows can streamline this process by routing invoices for approval based on predefined rules and criteria. This ensures that invoices move through the approval chain efficiently and minimizes bottlenecks. Finance leaders gain greater visibility into the approval process, allowing them to track invoice progress and make data-driven decisions to optimize cash flow.

And, with autonomous AI solutions, specific invoices can be automatically approved if they meet certain criteria — such as a known vendor and amount, recurring payments, or based on other data or action patterns.

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4) AP AUTOMATION FOR SUPPLIER RELATIONSHIP MANAGEMENT: ENHANCING VENDOR PARTNERSHIPS

Maintaining healthy supplier relationships is crucial for any organization. AI can assist in evaluating supplier performance by analyzing historical data. This analysis helps identify reliable vendors, negotiate favorable terms, and ensure timely payments. With AI's insights, finance leaders can make informed decisions that strengthen their supplier partnerships and contribute to a more sustainable supply chain.

AI also provides an additional, crucial benefit for supplier relationship management: time. With less time spent on manual, mundane and repetitive tasks, the AP team can dedicate more time and resources to strategic planning and maintaining critical vendor relationships — a healthy supply chain is imperative to an organization’s success.

5) AP AUTOMATION FOR EXPENSE REPORT PROCESSING: SIMPLIFYING EMPLOYEE EXPENSES

Employee expense reports are another area where AI can make a significant impact. AI-powered tools can streamline the processing of these reports by automatically verifying receipts, categorizing expenses, and ensuring compliance with company policies. This not only reduces the administrative burden on AP teams but also empowers employees to submit accurate and compliant expense reports. The result is a more efficient and transparent expense management process.

Spend management and corporate cards are another area where AI is starting to make a significant impact. Jamie Anderson, chief revenue officer at Emburse told PYMNTS.com that “AI and machine learning [ML] are the next frontier of [spend management] — whether it’s about helping companies build policies, or just getting the insight to make predictions on future spend or savings.”

‍6) AP AUTOMATION FOR FRAUD DETECTION: PROACTIVE SECURITY MEASURES

Detecting fraudulent invoices is a constant concern for finance departments. AI systems can identify potentially fraudulent invoices by analyzing patterns and flagging irregularities. This proactive approach enhances security and prevents financial losses. AP teams receive alerts about suspicious activities, allowing them to investigate and take corrective actions promptly.

‍7) AP AUTOMATION FOR CASH FLOW FORECASTING: INFORMED FINANCIAL DECISIONS

Accurate cash flow forecasting is essential for effective financial management. AI can provide precise cash flow forecasts by analyzing historical payment data and supplier behavior. This enables organizations to optimize their working capital, make informed financial decisions, and plan for any potential cash flow challenges. With AI's predictive capabilities, finance leaders can steer their organizations toward financial stability and growth.

Some AP platforms, like Vic.ai, can surface early payment discount opportunities within invoice management. Being able to control and leverage potential discounts for paying invoices early provides more control over working capital management.

8) AP AUTOMATION FOR PREDICTIVE ANALYTICS: OPTIMIZING CASH FLOW MANAGEMENT

Leveraging AI and machine learning, AP departments can harness the power of predictive analytics. These capabilities enable teams to predict payment trends, identify potential late payments, and strategize accordingly. This proactive approach to cash flow management ensures that finance leaders have the insights needed to make strategic decisions that optimize working capital.

‍9) AP AUTOMATION FOR AUDIT PREPARATION: EFFICIENCY AND COMPLIANCE

Preparing for audits can be a time-consuming and stressful process. AI can assist in this regard by organizing and retrieving necessary documents, ensuring compliance with financial regulations, and providing detailed reports on financial transactions. This not only streamlines the audit process but also enhances transparency and accountability within the finance department.

Overall, AI-powered systems are providing transformative AP automation for finance teams. When leveraged strategically, AI tools can shape roles and empower finance teams to focus on higher-value work and more strategic activities such as data analysis, supplier negotiations, and decision-making. This results in boosted efficiency, increased accuracy, cost reduction, and stronger supplier relationships. bAs finance departments continue to evolve, embracing AI-driven solutions is becoming an imperative for staying competitive and agile in the modern business landscape.

Autonomous Accounting with Vic.ai

For finance leaders looking to optimize their AP team efficiency and departmental ROI, Vic.ai provides a single, autonomous AP platform to streamline workflows from invoice ingestion to payments. Using Vic.ai’s proprietary AI, finance departments can reduce their invoice processing time by 80% while maintaining 97-99% accuracy rates. With PO matching and payments, they can reduce fraud and optimize their cash flow and treasury with a few clicks of a button. They can also monitor performance with Vic.ai Intelligence.

This article originally published November 2023, and was updated April 2024.

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