Your accounts payable (AP) team strives to maintain positive relationships with suppliers and a healthy cash flow. Achieving both these goals can be tough, particularly if your team uses outdated AP processes such as manual recordkeeping and paper-based invoicing.
But it doesn't have to be this way. Integrating artificial intelligence can streamline your AP workflows, enhancing your organizational efficiency.
Here are some common challenges your team might face if you depend on outdated, manual AP processes.
Your AP team is prone to making errors, especially if your company deals with hundreds or thousands of vendors. Some common errors your team might make include:
Sadly, these errors can result in strained supplier relationships, overpayments, or late fees, negatively impacting your company's bottom line and reputation.
Manually processing invoices can be time-consuming and culminate in slower payments. Failing to pay suppliers on time can lead to issues such as delayed shipments and late-payment penalties.
Companies lose roughly 5% of their annual revenue to financial fraud, with those in the manufacturing and wholesale industries being especially susceptible. AP departments that manually review invoices are more likely to miss discrepancies, making it easier for bogus invoices to slip through undetected.
Your AP team may struggle to comply with financial regulations if your company uses a manual process because there won't be an easy way to monitor and audit your invoice processing activities. Noncompliance can result in hefty fines, legal liabilities, and reputational damage.
From using AI for invoice approvals to machine learning in finance, here are some common use cases for AP automation.
Manually classifying invoices and extracting data can be tedious, especially if you deal with many vendors. By employing AP workflow automation, you won't have to worry about spending too much time classifying invoices or extracting data.
Through machine learning (ML), specifically natural language processing (NLP) for invoice processing, your AP technology can interpret human language and automatically classify invoices based on criteria such as vendor name, amount, and date.
Cash flow is king in business. Unfortunately, nearly eight out of 10 small businesses fail due to cash flow issues.
Cash flow problems often arise due to inefficient AP processes that make it challenging for companies to accurately forecast their upcoming financial obligations. With predictive analytics for AP, you can spot trends and patterns in data from various sources and prevent potential cash flow issues before they arise.
More than 80% of businesses face payment-fraud attempts annually, with many experiencing heavy financial losses due to business email compromise (BEC) scams. Unfortunately, no matter how thorough they are, human reviewers may fail to spot bogus invoices due to fatigue or time constraints.
Using advanced algorithms and computer vision for AP fraud detection, AI can identify anomalies that indicate an invoice may be inauthentic, such as suspicious supplier details, inflated amounts, or duplicate invoices.
Companies that use traditional AP processes may take several days or even weeks to approve invoices.
Sadly, your business may encounter the following challenges if you have a slow invoice approval cycle time:
With AI tools that route invoices based on predefined rules, you can automate approvals and receive real-time workflow updates, improving your invoice cycle times.
McCray Lumber & Millwork relied on manual AP processes to manage more than 5,000 invoices monthly, which led to misplaced documents and tedious filing work. To resolve this challenge, the company partnered with WorldView to transition to a digitized AP workflow.
By implementing a digital system, McCray managed to:
Read the full case study here.
In 2021, about 9% of AP teams used fully automated invoice processing systems, up from just 5% in 2019. As more businesses embrace AI and automated AP workflows, here are some trends to look out for:
Relying on a manual AP process can make noticing errors challenging. It can also slow down your invoice processing times, especially if multiple people across various departments must approve invoices. Worse still, it can put your company at risk of fraud.
Integrating AI into your accounts payable process can help you overcome these issues while gaining valuable insights into your business's financial health.
Ready to automate your workflows and bid farewell to your outdated AP process? Contact us today to learn how we can help you with AP automation and ERP system integration.