Traditionally, accounts payable (AP) has been a very hands-on operation. From opening envelopes, to paying bills via paper check, to keeping records in the pages of a thick, bound ledger, to storing paper payment receipts in file cabinets, the hands of accounting staff were rarely ever idle. And even after the digital revolution of spreadsheets and email, many AP departments rely on labor-intensive processes, with people spending hours hunched over their keyboards, performing manual labor by another name.
The result is that business professionals spend a lot of time doing manual processes that amount to busy work. In fact, a report from Salesforce found that on average, finance teams spend 23% of their average workdays manually inputting invoice data. Instead of using their critical thinking skills and creativity to tackle higher level business challenges, they are wasting their talents on the rote tasks of invoice processing.
Companies are not only wasting time on manual tasks, they are wasting money. According to a study by CFO, manual invoice processing of paper invoices adds about 62% to a company’s labor costs. And these labor intensive practices are more than just tedious—they are messy and complicated, and hence prone to human error. Management is often left worrying about when, not if, the next error will occur.
But what if accounting could use AI tools to put hands-on AP tasks on autopilot? What if they could go hands-free?
Understanding AI in accounts payable (AP)
Artificial intelligence (AI) in accounts payable (AP) most commonly refers to AP automation and automating other financial processes. This means that AI and machine learning are managing the tasks like an invoice being received, input into the system, matched to a purchase order, and the transaction being categorized.
The software is equipped with algorithms that have been trained on both broad and personalized historical data to replicate the manual tasks of invoice processing a human would normally have to do.
Over time, the system becomes more familiar with the business’s invoice data and processes, becoming optimized for their unique operations.
The purpose of AI in accounts payable isn’t to replace humans, but to help them be more efficient with their time by automating the menial aspects of invoice processing. It speeds up their workflows, cuts down on errors, and can flag inconsistencies that may slip through the cracks.
How AI is used in the accounts payable process
AI systems are leveraged in the accounts payable process in two essential ways.
First, AI is used as an automation tool. As an example, AI in an accounts payable software would scan the invoice to input essential information like the vendor, invoice number, goods or services, amount owed, and due date into the system. That’s time-consuming, manual data entry that’s completely taken off of the plate.
Second, AI uses pattern recognition to inform its output. This pattern recognition based on historical payment data also catches fraud attempts, compliance issues, and anomalous activity.
In addition to these two aspects of the accounts payable process, AI analytics uses predictive analytics to help businesses identify cost savings opportunities, improve spend management, facilitate data-backed cash flow forecasting, and track spending trends over time.
The benefits of using AI in accounts payable
Some of the most common AP problems, including manual data entry, payment errors, and slow and inefficient processing, can be solved with AP automation, powered by artificial intelligence (AI). When surveyed, 53% of CFOs said they believe eliminating human error will be one of the biggest impacts to their business as a result of AI.
Time-saving through automation
Cutting time spent on the manual processes of turning an invoice into data and a payment, while reducing costly human errors, can be a game-changer for small businesses with dozens of priorities.
BILL AI scrapes the relevant data from invoices for automatic input into the system. As soon as an invoice is received, the accounts payable process has already begun with AI ushering it along efficiently.
Improved accuracy
The term “human error” stems from the fact that, no matter how much we try, mistakes are inevitable. While we may catch these mistakes eventually, AI will capture any errors and its output is consistent.
BILL AI helps businesses reduce human error, ensuring higher accuracy of invoice data. Our AI has been trained on millions of invoices, and it will continue to become more intelligent and precise over time. The result is smooth AP automation from Day 1 of adoption. And the more you use it, the more the AI will learn your particular preferences and processes.
Predictive analytics
AI helps businesses understand their future with predictive analytics—forecasts of future activity based on past data. In accounts payable, this informs cash flow management, suggested payment timing, and expense trends.
As an added bonus, predictive analytics and data analysis flags potential fraud to minimize the risk of making a payment for an invalid invoice.
Each of these factors help businesses prepare for future activity and optimize their money management starting with their cash flow trends.
Less duplicates
Paper or digital, invoices sometimes fall by the wayside making it hard to figure out what has and hasn’t been entered yet. By leveraging AI, concerns about duplicate invoices will be a thing of the past. Our proactive intelligence will detect and flag duplicate invoices so that you don’t run the risk of making multiple unnecessary payments.
Quicker payments
By expediting invoice processing and workflows, your clients will get paid promptly, keeping them happy. And a happy client is a client likely to give you a discount.
With BILL, you can also immediately break down multi-page invoices into individual bills, so you can move quickly from receiving bills to paying them.
Challenges in implementing AI in accounts payable (and how to overcome them)
AI in accounts payable comes with its benefits, but there will be some blockers and challenges to consider when making the switch.
Initial costs and setup
Making a swap in your accounts payable solution comes with costs both financially and in terms of time to transition over. You’ll need to update the new platform with vendor information, payment information, and other key details to get up-to-speed.
Solution: Block off time for both shopping around and implementing the new platform.
Time to personalize and refine
AI is constantly learning and updating based on new information. While many AI and accounts payable automation solutions are “out of the box,” they become truly invaluable when they’re trained on your data. During this period, you may need to keep a keen eye on the outputs to ensure the AI’s work is in line with your specifications.
Solution: Have a regular cadence of checking the work for accuracy in the first 1-2 months of using the AI solution.
Employee resistance
Despite the fact that AI is intended to help your employees, there may be resistance stemming from the belief that it’s there to replace them. To help ease any anxieties, make it clear that this is a tool intended to help with their workflow and what you expect from their newly found free time.
Solution: Clearly define how the accounts payable role shifts given the use of AI, including any new responsibilities or tasks that are expected.
Integrating AI in your accounts payable process
Ready to make the switch to using AI in your accounts payable process? Follow these steps to make the entire process smooth and hit the ground running.
1. Choose your AI accounts payable solution
Get familiar with some of the options on the market including their prices and unique features. It may be worthwhile to have a brainstorming session with your accounts payable team to drill down on what the most important features are.
2. Choose a transition date
Set a day for the business to be completely transitioned over to the new accounts payable platform. This will be the day that the old system will be completely deprecated in favor of the new one.
3. Communicate the decision to stakeholders
Once you’ve decided the platform, communicate it with your accounts payable team and anyone else internally that may be affected by the switch. Cover any details about the transition including the timeline of the switch.
4. Communicate with your vendors
Let your vendors know that you’ll be switching accounts payable platforms as well as any changes they need to make to keep your system running smoothly. It’s important they’re aware of the switch so they can notify you if something isn’t working as intended.
5. Transfer vendor information, integrations, and payment details
Get the new system up-to-date with all necessary information for it to operate smoothly. Import your vendors as well as any payment methods that you use. Lastly, setup integrations with your bank, payment system, bookkeeping, and any other platforms to ensure data is smoothly flowing from one system to the next.
6. Test the system
Before fully transitioning over, test the system by running a test invoice through. This can be done by getting a vendor to send through an invoice early or billing for a small item or portion of an upcoming invoice. Starting with a purchase order will also test the invoice matching part of the invoice processing workflow.
Remember that the payment may take time to process so give it a few days to confirm it’s working properly.
7. Continued use and refinement
Given that AI is constantly learning based on your activity, the system’s invoice processing will only improve over time. For the first 1-2 months, you should review the results of the invoice processing and check in with users to make sure the platform is having its intended effect. But once you’re past this period, simply enjoy the newfound efficiencies.
Get prepared for the future of AI in accounting
The landscape of AI is constantly changing and evolving. If you’re going to invest in using AI in your invoice processing, you’ll want a solution that’s future-proofed and ready to change with your business.
With BILL, we're empowering businesses to go hands-free with their AP. By eliminating manual, error-prone tasks from the bill-pay process, and automating these steps, our AI gives your business complete control end-to-end. It's our way of taking on the tedious tasks on your behalf, so you can spend more time on business priorities, all while saving valuable time and money. Let us (and our AI) focus on automating your payables process, so you can focus on your business.
Contact us today for a free demo and learn how an intelligent business payments platform can transform your business.
