Remember the early days of personal digital assistants and cell phones? Before they were “smart”? We were wowed by the first hand-held computers (now long forgotten) like the Palm Pilot and Blackberry, but few among us knew then that that in a few short years, we would become dependent upon them in all aspects of our personal and business lives.
Technology and time march swiftly on, and business moves fast. In this article, we're going to help you understand how today’s emerging innovations in accounting and technology are already impacting business operations, profits, and productivity, and how to adapt or consequently fall behind. Just ask the folks at Blackberry.
How can artificial intelligence transform accounts payable?
If you are a modern finance leader focused on strategic priorities, workflow automation will become even more critical for handling routine accounts payable (AP) tasks such as invoice processing, approval, payments and vendor audits. Embrace these five emerging technologies to scale gracefully and remain competitive.
One: Data and Analytics
Finance leaders are looking at the best strategies for organizing and standardizing their data, which is a top pain point for many organizations, according to industry research. But while getting a better view of internal data is critical, advances in machine learning and unstructured data processing will assist CFOs in becoming more accurate in estimating revenue and profitability, and making smarter business decisions.
For example, data analysis helps a company discover trends and discrepancies within its vendor network, but it still takes humans to act on them. Imagine you’re managing restaurants at dozens of locations. Accountants can analyze what they’re paying for specific food items store by store. They might realize that the same vendor is charging more at some locations. Or the same product might be supplied by two different vendors.
It gives you the timely information to start a conversation with your suppliers to either consolidate with the cheaper provider or to renegotiate payment terms. That kind of dialogue, coupled with more on-time payments, strengthens those valuable relationships.
That is only the first step. Looking ahead, prescriptive data analysis will identify new markets, customers, services, and channels — all leading to profitable growth.
Two: Risk Management
Yooz Chief Innovation Officer and COO, Laurent Charpentier, expresses a frustration shared by many CFOs and risk managers, “Up until now, we had to have a human that could actually decipher the information from risk evaluation, which was a nearly impossible task”. Fortunately, that is changing. Now, AI and more robust data analytics will enable finance teams, including AP departments, to make more informed decisions about cash management, investments, and lending, thus reducing the risk of being caught short of capital to fund mission-critical projects.
Further, Charpentier says, “Future AI tools will have the ability to analyze a lot more data than is currently possible to detect fraud before it gets too far”. And that will allow you to sleep at night!
Three: Robotic Process Automation (RPA)
While today’s “robot” may not wander around your finance offices flailing its arms and shouting, “Danger Will Robinson” (for those of you that admit being old enough to remember the 1960s TV series, Lost in Space), it might be your new favorite co-worker. Adoption of cloud-based AP automation platforms that leverage a form of RPA powered by AI and machine learning is expected to become more widespread, streamlining and improving efficiencies across the entire financial planning and analysis process.
We’re only in the early chapter of a much longer story when it comes to the automation of work done by humans today. Intelligent machines will redefine our jobs as they boost productivity. Rather than taking your job, RPA powered by AI might become your new favorite co-worker.
Cryptocurrencies continue to be a darling or a devil in the finance industry, depending on what day you’re listening to the news. But blockchain is emerging as a potential solution to supply chain payments and other financial transactions. One of the key pain points for accounting leaders is a lack of visibility into the payment process, from both the supplier and vendor side. Blockchain holds the promise of creating a payment ecosystem with valuable partners that provides a fast and secure way to process transactions. It can help finance leaders in a number of other ways as well, including:
- Saving time by streamlining everyday business transactions and eliminating inefficient processes
- Identifying and limiting risk
- Eliminating overhead and multiple intermediaries
- Creating a strong audit trail
- We’re already seeing evidence of how blockchain is being used in many industries already.
Five: Cloud Applications
This day and age of being connected 24/7 and needing real-time information anywhere, any time has sparked an increase of cloud applications, otherwise known as “edge” computing. Business leaders are pushing for faster and more agile applications, and cloud applications perform data processing at the edge of the network, near the source of the data, to provide users with the fast, real-time analysis needed for smart decision-making.
The cloud will become the dominant platform for ERP and CRM applications, providing better visibility into spend. And AI, RPA, and machine learning will be the leading catalysts to drive greater cloud computing adoption in the next two years.
Artificial Intelligence for Account Payable
As a finance leader or accounting professional, you may ask, How do these technologies impact finance functions and workflows? What transformations can be predicted? How will this technology shape tomorrow’s finance department?
A recent report by CFO, an Argyle company, explores the positive implications of AI on finance teams citing that AI and associated natural language interfaces have the potential to change the way that the finance team and other stakeholders interact with data. “As true partners in business development and identifying opportunities for growth and expansion, the CFO plays a key role in bringing emerging technologies such as AI to the business”.
The concept of automating accounts payable processes first surfaced about twenty years ago. While earlier solutions had nothing to do with current approaches, especially in terms of performance and reliability, they did have the same objective: Automate a tedious and repetitive process to make AP personnel lives easier and optimize the efficiency of finance processes.
Partial automation is already changing the game in industries that many believed could never be automated. Intelligent machines are working alongside doctors, lawyers, engineers, stock traders, and military commanders. And it is changing the way finance teams manage their workflows. If partial automation has not yet arrived in the accounts payable department of your organization, it likely won’t be long until it does.
Accounts Payable Before AI
Before Artificial Intelligence, accounting teams manually created and processed invoices, purchase orders, or delivery orders on paper documents. Those documents were then manually entered in computer systems, coded, and finally transmitted to the managers for approval and payment. In fact, manual processes are still prevalent today, even though, thanks to AI, there can be no more manual processes! The AP workflow process is automated by advanced technologies including OCR, smart data extraction, and machine learning powered by AI which analyzes, recognizes, directs, and exports data into a company’s ERP/financial system.
Another of many pain points that comes with manual processes is that suppliers have little to no insight into payment timing details. By automating the AP workflow, you can have full access to this information in real time.
The use of AI in accounts payable solutions makes a significant positive impact on the finance department. Even better news, because of the maturity, reliability and industrialization of today’s intelligent AP automation solutions that are leveraging AI, business models have been created that are now accessible to and affordable for the small and mid-sized markets—exciting, because previously these solutions were only available to enterprise firms on-premise.
- Algorithms have become more and more reliable, flexible, and adaptable, permitting solutions to automatically manage a variety of document types. As a result, data is automatically recognized in an exhaustive and reliable way, with no prior configuration.
- SaaS (software-as-a-service) cloud solutions are available to millions of users, which results in constant technological enhancements. This contrasts to older on-premise solutions that limited usage.
- The self-learning—machine learning—capabilities of cloud-based software solutions are constantly improving. These solutions essentially “learn” from their mistakes and do not make them again once humans correct them.
Here at Yooz, we’re leveraging all of these technological advancements powered by AI. And we’ve made our motto: Easy. Powerful. Smart.
The use of AI in financial and accounting systems is leading to real profits. AI-driven AP automation solutions are able to learn as fast and as accurately as an experienced human to:
- Identify and interact with suppliers.
- Automatically intake, code, process and route invoices, using OCR (optical character recognition).
- Denote payment deadlines, approval workflows, and the approvers.
All leading to dramatic reduction in processing cycle time and a corresponding savings in costs at every level.
PayStream (Levvel)’s, Guide to Payables Automation 2018 illustrates the different thresholds organizations typically reach based on their automation maturity, illustrating that significant improvements in processing times and cost savings follow technology implementation.
|Average processing time from invoice receipt to approval||45 days||23 days||5 days|
|Average processing cost per invoice (combination of paper and electronic)||$15.00||$6.70||$2.36|
|Percentage of invoices received electronically||3%||9%||32%|
|Percentage of invoice terms discounts captured||18%||40%||75%|
“What used to take weeks now only takes about 2 ½ days,” says Bryan Schmidt, controller, UNITE HERE HEALTH and Yooz client and champion. “The improvements are due to capturing, automatically coding and storing invoices instead of handling paper or sending around PDF files. The system observes and learns from clerks’ keystrokes, continuously improves GL coding, and reduces errors.”
Finance teams will notice a positive transition from a task-driven approach to one of empowerment in which systems driven by AI are now in charge of low-value repetitive tasks—data entry, verifications, referrals, and fraud detection—and employees are freed to produce real added value with time for analysis, strategy, creative thinking, and decision-making.
In view of the spectacular progress of AI, this new world will be more familiar to you long before a self-driving mail truck will drop the last paper invoices in your office.
Ready to see the difference artificial intelligence can make on your AP process? Schedule a call with one of our AP automation specialists today!