Artificial Intelligence in Accounts Payable: How AI Manage and Reduce Corporate Spend

Artificial Intelligence or AI is the current buzz in the technology sector. AI is revolutionizing operations and enhancing business efficiency. Many finance folks, in a lot of forums, are curious about how AI can help them become more productive in their day-to-day lives. We have collated a list of some areas where you as an accounting and finance person can benefit greatly from using AI. 

Uses of AI in AP

Invoice processing or data extraction

AI not only helps with data entry but also helps you by extracting real-time data from invoices you receive in electronic form. Invoice data like invoice amount, vendor name, dates and invoice number can be extracted with AI using OCR (Optical Character Recognition) technology. With AI, the AP teams can save time as it takes away the pain of doing mundane data extraction tasks.

Compliance monitoring 

AI helps you stay up-to-date on regulatory requirements, tax codes, and accounting standards. You can even use AI to send reminders of compliance you must adhere to. Thus, you never have to worry about missing the due dates or default in compliance leading to penalties or any other adverse consequences.

Data analysis

The area where you can service the maximum benefit from AI is data analysis. It can provide insights that can help you save money by improving the quality of decision-making which eventually helps in better management and even reduction of corporate spend. AI can help analyze spend and generate insights such as:

Spend trends

AI provides insights into areas where your company is spending the most or where spend is deviating the most from historical trends. It can even perform complex data analysis tasks with maximum accuracy. These insights can help you in efficient decision-making to cut down company spends.

Category analysis 

AI can help analyse spending by category and subcategory, providing insights into where your company is spending the most money. It can identify how much is spent on various expenses, such as office supplies, travel expenses, or IT services. For example - AI can instantly analyse and show you that in 2022, spend on travel expenses increased by 25%, whereas the overall spend was only increased by 7% in your company. 

Vendor analysis 

AI helps to analyse spending by vendor, providing insights on which vendors your company is spending the most money on. It can also identify which vendors provide the most value or have the highest risk. 

Contract compliance 

AI can help analyse spending to ensure compliance with contract terms, identifying any discrepancies or non-compliance issues. This can help prevent overpayments or incorrect invoicing, helping you save money. For example - An invoice for $5,000 was paid even though the agreed amount in the contract was $4,000.

Cost savings opportunities 

AI can help identify cost savings opportunities by analysing spending patterns and identifying areas where your company may be overspending. For example, it can identify opportunities for consolidating vendors or negotiating better terms.

Payment trends

AI can help identify payment trends, including the number of payments made, payment amounts, and payment terms. This can help identify areas where payment processing can be improved or optimized.

Benchmarking 

AI can help benchmark your company’s spending against industry or market standards and provide insights into how it performs relative to its peers.

Conclusion

Though AI eliminates human errors and helps in many ways to reduce company spend by giving various insights and performing complex analysis in minutes, there are also challenges in implementing AI effectively. A few challenges are as follows:

1. The benefit of AI can be reaped only when the data used is clean and orderly. As the saying in the data science field goes, ‘garbage in - garbage out’; if corrupt data or wrong observations are entered into the system, the AI analysis will lead to discrepant results and result in financial losses. 
2. Suitable infrastructure is a must for an efficient AI system. Since AI software processes large amounts of data in minutes, companies cannot have an outdated infrastructure. Thus, you must be prepared to invest in technologically advanced infrastructure, applications and tools for AI implementation into your systems.
3. Just integrating AI into existing systems by investing in appropriate infrastructure and processors is also not enough for it to function properly. Employees must also be trained to use new tools and recognize underperforming AI algorithms.
4. Since the concept of AI is new, there is a lack of AI talent and finding individuals with the right skills and knowledge can be a difficult task. Lack of AI knowledge can be a challenge for companies to implement AI.

So, how to tackle the challenges in AI and make the most use of AI? This is where products like ClearTech come in. ClearTech leverages the power of AI and not only helps Finance and Accounting teams work faster but also smarter and actually save money. ClearTech helps you increase your margins by reducing corporate spend. ClearTech ensures better decision-making by creating a holistic view of your business’s financial health at all times, leading you to improved profitability.