Demystifying Intelligent Automation in Accounts Payable
January 25, 2021
Last year, businesses were contending with market uncertainty. That’s given way. Now, businesses are in a position of making crucial decisions around performance and growth to keep up with market demands as well as their own needs. A major component of that is making sure business leaders and employees have the tools and insights needed to be responsive and strategic, especially with extended remote working conditions. And many are making that investment.
In fact, in a recent HFS study, automation and smart analytics emerged as the second and third top spending priorities for businesses, close behind cybersecurity. Two-thirds said spending will increase in automation and roughly the same said that for smart analytics. It’s clear that the time for investing in core business priorities is now and that these technologies are not simply a need, but a necessity.
But even though it’s a clear priority, what’s often unclear is what intelligent automation looks like and what it means for your business.
Intelligent automation is the foundation on which we’ve built our solutions.
But what does that mean for your business?
Intelligent Automation Solutions: An Overview
At the broadest level, intelligent automation refers to the combination of artificial intelligence (AI), machine learning, and process automation to create smart business processes and workflows. When it comes to accounts payable (AP) automation, we get into the specific processes and tasks that are streamlined and automated to provide better visibility and control over financial data.
A legacy AP workflow is heavy and riddled with manual processes. It often looks something like this. First, the invoice is received via email, mail, fax, inter-office deliveries or in-person delivery. Next, it’s manually processed with approvals happening either electronically through email or with a written approval paper trail. Then, payment processing can begin either manually or via a payment authorization system. Finally, there are the manual steps of actual fulfillment (check printing, envelopes, and postage, etc.) as well as filing and invoice management. That’s facilitating payment for a single invoice!
With intelligent automation, the approach to accounts payable is a modern and streamlined workflow. Here is the difference. Using a data capture engine, invoices are converted digitally and stored in a central repository. Business rules allow smart workflows so invoices can be routed to the correct individuals or flagged as an exception. Once approved, it can move through the normal AP workflow with ease. Plus, with data integrations, invoice processing and payment can happen without any human intervention.
Let’s take a closer look at the ‘intelligent’ part of intelligent automation. That’s where neural networks, as well as artificial intelligence (AI) and machine learning, come in. Without diving into the intricate technicalities, neural networks can handle tasks that have a deep level of complexity. When applied to accounts payable, that means greater customization of data capture where ultimately mapping and routing of invoices is based on a business’ customized data plus invoice data. Additionally, artificial intelligence and machine learning allow workflows to be optimized as well as help find efficiencies in the accounts payable process. It can also recognize duplicated invoices or other potential signs of fraud, a big win in an area that’s unfortunately likely to see it.
With AI, finance leaders can leverage the rich data they have for visibility and insights around expense management. They can get real-time reporting with information pulled from across their database to identify trends in spend and proactively spot issues.
The Levels of Intelligent Automation and Why They Matter
There are varying degrees to which automation can be applied to business processes. Here’s how that breaks down:
By now, you may be thinking, “I get it, business process automation is good for business.” But here’s the thing: the level of automation matters, too. It has a direct impact on costs to the business as well as growth potential.
Manual or low-level automation means not only significant time spent on processing work, but also costs incurred. Though, as automation increases, that cost goes down. The Institute of Financial Management (IOFM) shows that at the lowest level of automation the cost per invoice is nearly nine dollars. As automation rises that cost decreases to below two dollars at the highest level of automation in place. That means the costs are five times higher to process invoices in an organization with limited automation.
If that’s not enough, the level of automation also makes a marked difference in how well businesses can scale. Simply put, with greater automation, teams can process a greater number of invoices. The IOFM shows the precise numbers. At the low end of the spectrum with limited automation, the annual number of invoices processed per full-time employee sits at 1,350. With significant automation, that number can reach 23,000.
And in many cases where businesses are willing to put more weight on the automation side of the scale, the rewards can be even greater. We’ve seen instances of the number of invoices processed per employee reach upwards of 30,000.
To be clear, automation does not translate to elimination. Rather, it means that your team can scale more quickly as your business grows or free them to engage in value-added, operational objectives.
The Benefits of Intelligent Automation
Of course, automation equals efficiency, but it also goes well beyond that.
What was once a manual process filled with inconsistencies, complicated approval routing, and data entry is now a streamlined, automated process. The result is a significant reduction in errors. More than that, you no longer have to worry about late payment fees or the implications on vendor relationships. You can focus on greater business benefits.
One of those benefits being improved productivity. To be clear, automation does not translate to elimination. Rather, it means that your team can scale more quickly as your business grows or free them to engage in value-added, operational objectives.
Arguably one of the greatest benefits to intelligent accounts payable automation is improved profitability. That includes the expected savings from process automation and avoiding duplicate or erroneous payments. It also extends to being able to optimize your vendor portfolio, acting on the data you have around vendor spend and activity to focus on the relationships that are beneficial to your business. What’s more, you can take advantage of early payment discounts with potential to save your business hundreds of thousands of dollars.
Wherever you are in your automation journey, there is still more to gain in understanding how intelligent AP automation can turn accounts payable into a strategic and scalable resource.
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