Why AP automation is now a must-have for Finance professionals
The Accounts Payable (AP) function has long been associated with manual data entry, inefficient processes, low productivity and impact on employee morale. Yet the role it performs is critical to every business, so why have digital transformation efforts largely been focused in other areas?
One reason could be the perceived complexity of transforming the AP function - with its many legacy processes, end-to-end custom workflows, often huge amounts of unstructured data in different document types and the human oversight required to spot inaccuracies and fix mistakes.
Modern technology offers a solution to these complexities and it can be easier than you may think to provide a solid business case for automation that centres on AP KPIs. In this post we’ll show why it makes strong commercial sense to undertake an AP automation project and demonstrate some of the tangible benefits you could soon be realising in your business.
Rising costs and lagging processing times are two significant reasons we hear about frequently, and these are even more compelling in a COVID-19 world. Traditional office-based AP teams have been forced into a new way of working that further highlights the inadequacies of manual processing and the potential for errors and fraudulent activity to go unnoticed. Coupled with a lack of scalability as workloads increase results in rising costs, slow turnaround times and employee and supplier frustrations. Throwing human capital at these challenges is not a sustainable or desirable solution in an increasingly digitised world and so Finance professionals are often caught between a rock and a hard place of wanting to transform and modernise yet being under pressure to manage and reduce costs.
How to address? Help is at hand in the form of modern artificial intelligence (AI) technologies which do the heavy lifting in an AP function by extracting unstructured data from virtually any document type, such as invoices, receipts and POs making it quickly available where it’s needed in downstream systems and flagging any inconsistencies that may require human intervention. Self-learning machine learning (ML) technology easily adapts to new documents and field types which drives improvements in speed and accuracy over time.
Where’s the catch?
A common perception is that these solutions are difficult to implement, they require specialist skills to manage and perhaps won’t align with the existing IT environment. These are all very valid concerns and ones we hear on a regular basis. However, one of the key benefits of an AI/ML solution is the time-to-value it provides. Cloud-based API means that typically, a solution can be integrated into an existing IT environment with very little customisation required. Pre-trained models can get to work immediately, offering accuracy levels over 90% and an extraction time of less than 5 seconds per document. No longer do you need to waste time building new templates or getting new data fields set up, which means no additional implementation time is required to support new document types as the supplier and customer base changes and grows, meaning that staff benefit from minimal disruption whenever changes are introduced.
What does this mean in practical terms?
We have seen customers boost efficiency by over 50%, reduce manual data entry by 90%, and significantly improve their cost-to-pay and time-to-pay ratios - all key performance indicators for Finance professionals. Other associated benefits include improvements in customer satisfaction (both internal and external), and also in brand reputation. When prompt and efficient payment is key to business success, it can become a competitive differentiator for organisations, especially important when customer reviews and complaints are so visible on the internet and via social media. Also important are the improvements in employee productivity that are associated with a reduction in menial, repetitive tasks. As much of the manual data entry and process automation are taken care of, employees can instead focus their efforts on more meaningful, valuable work.
But it’s not just about automation. The good news for Finance Managers and Finance Controllers is that in some cases these solutions also provide insights into suspicious activity that may be taking place within the AP environment. This suspicious activity may take the form, for example, of fraudulent invoices or inconsistencies on invoices or purchase orders over a period of time from certain suppliers that warrant further investigation. These insights help Finance professionals manage the level of risk within their function and enable them to proactively address issues before they become more serious. This offers peace of mind for busy managers who may be struggling to keep up with increasing volumes and increasing expectations of their teams.
Similarly, AP automation solutions also provide scalability as volumes grow and organisations expand. Gone are the days when managers need to feel constrained by outdated licensing and service agreements with their vendor or reseller. Thanks to the AI underpinning them, automation solutions simply adapt and scale with increasing volumes and new document types as required without any human intervention required.
AP automation technologies offer a solution to outdated practices and legacy technology that continue to hinder the performance of AP teams. They remove many of the every-day challenges associated in running an effective AP function and provide a scalable and resilient pathway to supporting future growth and expansion. In addition, customers who have deployed automation solutions in the AP function often use it as a launch pad to assess potential automation and AI-driven projects elsewhere in the organisation. The inherent value in AI-as-a-Service means that other teams can also benefit from the increases in productivity, efficiency and process improvements it provides.