AI in Accounts Payable: The What, How, and Why
Published on:12 November 2024
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It seems that AI is on everyone’s lips these days. And with good reason. It’s a powerful way for business professionals to work smarter and be more efficient. Especially in the finance department.
AI in accounts payable is more than basic automation. It empowers AP teams to streamline workflows, detect fraud, and make data-driven decisions—all with minimal human intervention.
In this article, we’ll dive into what AI in AP is, how it works, and why it’s here to stay.
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What is AI in Accounts Payable?
AI automates and enhances accounts payable using advanced technologies, such as machine learning, Natural Language Processing (NLP), and Optical Character Recognition (OCR).
AI systems go beyond traditional automation, which only follows set rules. In contrast, AI systems learn and adapt over time, meaning they get “smarter” as they process more data.
AI can handle complex tasks, like:
- Interpreting diverse invoice formats.
- Flagging potential fraud.
- Forecasting cash flows.
In short, AI is transforming accounts payable a manual, error-prone process into a highly efficient and strategic function.
How Can AI Be Used in Accounts Payable?
Organizations can apply AI in several ways to transform AP operations. Here’s a look at five key use cases:
1. Automated Data Capture
Manually keying in invoice details, like amounts and supplier info, is tedious and error-prone.
In fact, invoice data entry is the task that AP professionals would most like to eliminate from the workday.
AI-powered solutions can capture both header and line-item data from invoices faster than manual entry or traditional OCR. And more accurately too.
The strength of AI lies in its ability to recognize patterns and constantly learn and adapt to different formats. This means that AP departments don’t need to set up rules and templates for every type of invoice they receive.
And unlike humans, AI doesn’t get tired or bored with repetitive tasks. The more documents it processes, the faster and more accurate it becomes.
The benefits of using AI for automated data capture include:
- Faster AP cycles
- Reduced errors
- Enables teams to focus on strategic tasks like optimizing spending and strengthening supplier relationships
2. General Ledger Coding
Tracking expenses across checking accounts, credit cards, and lines of credit is crucial for any business.
But manually coding invoices to the general ledger (GL) is incredibly time-consuming and prone to errors.
A single typo can throw off the GL, delay the monthly financial close, and make it difficult to spot any mistakes on a bank statement.
AI-driven solutions with machine learning automate GL coding by learning how invoices are typically organized. When an invoice from a familiar vendor appears, the system auto-fills GL fields, suggests coding, and even distributes percentages automatically.
AI in GL coding helps businesses maintain a clear and reliable financial record by:
- Reducing errors
- Speeding up processing times.
- Improving accuracy in financial reporting
3. Financial planning
Traditional finance methods often leave organizations lacking timely, organized, and accurate data for effective decision-making.
AI-driven solutions are changing this by collecting data from multiple systems, such as ERP and CRM. They analyze trends and provide actionable insights.
Some AI tools even suggest actions and monitor performance, alerting finance leaders to changes in real-time.
Unlike humans, AI offers unbiased insights based on large amounts of data quickly. It gives finance leaders confidence when interacting with management, without having to challenge loosely based assumptions.
4. Predictive Analytics
What if your finance department could accurately predict trends?
AI is making that vision a reality.
Predictive analytics focuses on analyzing data to make predictions about future events. The technology combines advanced algorithms and machine learning to analyze data and deliver accurate, timely forecasts.
The predictive analytics delivered by AI-based AP solutions help finance departments:
- Avoid cash flow shortfalls
- Improve budget performance
- Reduce operations costs
By turning invoice data into actionable insights, AI flags potential events and minimizes data distortion from outliers. Over time, these insights allow finance teams to manage resources more effectively and respond confidently to future challenges.
5. Payment Fraud Detection and Prevention
If it feels like your finance department’s risk of payment fraud is higher these days, you’re not alone. 25% of AP leaders say that the increased risk of payment fraud is the biggest challenge their department faces in today’s remote work environment.
40% of finance departments experienced multiple cases of attempted or successful fraud attacks in 2022. And worldwide losses from card fraud have nearly doubled in 10 years.
How so? The shift to remote working and the growth of electronic payment methods has made more businesses vulnerable to:
- Business Email Compromise (BEC)
- Phishing scheme
- Account takeovers
- Vendor impersonation
The large amount of data that finance departments manually manage across different platforms makes it harder to prevent fraud. And the longer payment fraud goes undetected, the larger the financial losses to a business are likely to be.
AI-powered solutions with machine learning can help stop fraudsters by:
- Analyzing transaction data
- Recognizing suspicious patterns
- Flagging anomalies in real-time
Data monitoring and analytics accelerate fraud detection by 58% and reduce losses by 52%. Using AI to automate fraud detection helps AP teams respond more quickly. This reduces financial losses and lets staff focus on important cases.
Why AI in Accounts Payable Is Here to Stay
Think of AI in accounts payable as an extra set of hands for your team. It takes over the repetitive, time-consuming work of processing invoices, coding, and data entry, so your people can focus on more valuable tasks.
It also catches errors and flags potential fraud—things that can slip through the cracks manually.
As your business grows, AI can handle the increased workload without missing a beat, keeping everything accurate and efficient. It strengthens your AP function and supports better financial management across the board.
Summing It Up
AI is not just a trend in accounts payable. It transforms AP into a reliable, agile, and proactive function within finance.
Companies investing in AI tools, like Rillion AI, today will enjoy the benefits tomorrow.
So the question is.
Can you afford to wait?
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