Transforming the Invoice-to-Pay Function with AI – A New Era for Accounts Payable Professionals

*Article by Marc Divay, CEO & General Manager, originally published in Electronic Payments International on June 10, 2024.

 

Few back-office functions are as time-consuming, labour-intensive, and paper-intensive as processing and paying the invoices submitted by suppliers.  According to benchmarking data from the Institute of Finance and Management (IOFM), 84% of the typical accounts payable (AP) practitioner’s day is wasted manually keying invoice and payment data, shuffling paper and emails, fixing errors and mistakes, chasing down approvals, and responding to telephone calls and emails from suppliers about where things stand in the process.  That leaves little time for fulfilling, higher-order activities such as analysing data, collaborating with stakeholders, and building relationships with suppliers.

 

Benefits of digitising and simplifying the invoice-to-pay process with AI

Artificial intelligence (AI) – machines that are programmed to think and act like humans is changing all that.  By digitising and simplifying the invoice-to-pay process with AI, AP departments can achieve tremendous operational and strategic benefits across the invoice-to-pay lifecycle.

• Faster cycle times. The traditional invoice and payment approval process is often fraught with delays and inefficiencies, leading to late payment penalties, missed early payment discounts, and inaccurate cash forecasting.  AI eliminates the friction that slows invoice-to-pay processes down.  AI systems can quickly and accurately direct invoices to the appropriate approvers based on predefined criteria such as amount, department, and vendor.  By expediting the approval process, organisations can avoid late payment penalties and capture early payment discounts and finance teams can get a more accurate view of cash outflows.
• Streamlined exceptions resolution.  A missing purchase order (PO) number or other exception on an invoice submitted by a supplier can take days or weeks or back-and-forth telephone calls and emails to resolve.  But AI algorithms can analyse invoices, POs, receipt data, and contract information to flag exceptions and propose a solution.  And AI’s ability to process vast amounts of data quickly ensures that exceptions are handled with high accuracy.
• Optimised payments.  While most organisations pay more of their invoices electronically these days, few have optimised the timing and mix of payments to suppliers to maximise their working capital.  AI can analyse historical payment data, current cash flow, supplier terms, and other data to recommend the most advantageous payment schedule.  For example, it can suggest delaying payments to suppliers with more flexible terms while prioritising those with early payment discounts.  AI systems also can facilitate dynamic discounting, where suppliers offer discounts for early payment based on current cash availability and cost of capital.  And AI-driven insights enable organisations to maintain optimal cash levels, improving liquidity management and ensuring that funds are available to cover expenses.
• Payment fraud mitigation.  From phishing schemes and account takeovers to Business Email Compromise (BEC) attacks and phony invoices, bad actors are targeting AP departments.  AI systems help mitigate risk by monitoring transactions in real-time, identifying unusual patterns or anomalies that may indicate fraudulent activity.  This includes detecting duplicate invoices, unusual payment amounts, and vendor inconsistencies.  By analysing data continuously, AI can provide proactive alerts to AP teams, enabling them to investigate and address potential fraud before it causes significant damage.  AI also enhances internal controls by helping to ensure that only legitimate and verified bank account change requests are processed, reducing the likelihood of fraudulent requests slipping through.  And an AI-powered invoice-to-pay solution can learn from fraud attempts and cases, continuously improving their detection capabilities and continuously adapting to new fraud techniques.

 

Driving efficiency, accuracy, and security

The integration of AI into the invoice-to-pay process is transforming accounts payable functions, driving efficiency, accuracy, and security.  By accelerating approval workflows, streamlining the resolution of invoice exceptions, optimising payment strategies, and mitigating the risk of payment fraud, AI enables organisations to achieve unprecedented levels of operational performance.