Editorial note: This blog post was originally published on August 12, 2024, and updated on November 12, 2024, to offer a broader, more up-to-date perspective on how AI is changing accounts payable.
Editorial note: This blog post was originally published on August 12, 2024, and updated on November 12, 2024, to offer a broader, more up-to-date perspective on how AI is changing accounts payable.
November 12, 2024
No finance task is as big a drag on back-office efficiency as accounts payable (AP).
According to the Institute of Finance and Management (IOFM), controllers rank AP as the most paper-intensive, time-consuming, and labor-intensive function in finance and accounting (F&A)—topping notoriously burdensome functions such as accounts receivable (AR), tax and reporting, and payroll.
Jump to:
What is AI in accounts payable?
Benefits of AI in accounts payable
Use cases for AI in accounts payable
How to integrate AI in your accounts payable
Why accounts payable teams still struggle with manual tasks
How conventional approaches to AP automation fall short
How low-code/no-code solutions drive superior AP outcomes
AI is revolutionizing AP by transforming its processes into streamlined, data-driven workflows. By accurately extracting information from even the most complex invoices, AI enables businesses to automate and optimize tasks like reading invoices, checking for errors, and getting them approved for payment. This newfound efficiency not only reduces costs but also empowers AP teams with real-time visibility into financial data. Plus, AI's ability to spot errors and ensure compliance adds an extra layer of protection against fraud and financial risks.
AI is bringing about a paradigm shift in AP. Let’s delve into some key areas of transformation:
AI automation solutions can handle a remarkably wide variety of invoice types. Traditional paper invoices that have been scanned into digital images, handwritten receipts, PDFs, and structured electronic invoices can all be handled automatically. Regardless of the format, advanced technologies like optical character recognition (OCR) and machine learning are used to accurately extract the necessary data.
From invoice capture to payment execution, AI enables touchless processing. That streamlines the AP workflow and eliminates bottlenecks. AI solutions can also scale up easily to handle increasing invoice volumes during peak periods.
AI can spot unusual patterns or inconsistencies in invoices, flagging them for your review so you can catch potential fraud or errors before they become a problem. The technology also helps prevent duplicate payments and safeguards your company’s finances. In addition, AI enhances compliance standards by automatically checking invoices against your internal controls and external regulations.
By automating tasks like manual data entry and invoice matching, AI frees up valuable resources and significantly cuts labor costs for your business. Plus, the speed of AI-powered invoice processing lets you capture early payment discounts to boost your bottom line. AI’s precise data extraction also minimizes errors that lead to costly late fees.
AI can empower you with real-time financial insights: You can track invoice processing times, payment cycles, and outstanding liabilities as they happen. AI can go a step further to analyze your spending patterns, identifying cost-saving opportunities and giving you a leg up in supplier negotiations. It even helps you look to the future by forecasting cash flow needs.
Vendor management becomes proactive and risk-aware with AI. By automating the onboarding process, AI ensures all necessary documentation is collected and validated. AI can also analyze vendor data to assess risk and identify potential issues before they impact operations. To further reduce risk, AI can monitor vendor compliance with contractual terms and industry regulations.
By automating routine processes and providing valuable insights, AI can allow AP professionals to contribute more meaningfully to their organization’s financial health and success. This shift not only enhances job satisfaction but also fosters a culture of innovation and continuous improvement within the AP function.
Seamless integration with existing business systems is a key feature of AI solutions. Your business process management (BPM), enterprise resource planning (ERP), and robotic process automation (RPA) can all work alongside AI tools, eliminating the need for manual data transfer and ensuring data consistency across platforms. AI solutions are also designed to be flexible and adaptable, making them capable of accommodating changes in business processes and evolving technology environments.
Modern AI solutions—particularly those built on low-code/no-code (LCNC) platforms that allow users to create and customize workflows using simple, user-friendly interfaces instead of writing complex code—allow businesses to easily implement powerful tools without requiring advanced technical expertise. AI's ability to handle complex tasks, from detecting fraud to streamlining vendor onboarding, provides enhanced control and transparency in AP processes. Here are some popular real-world applications:
AI solutions automatically capture key data points and line-item details—such as vendor name, invoice number, date, line items, and totals—even from complex, multi-page invoices with varying formats. This eliminates manual data entry, reducing errors and accelerating invoice processing.
AI can automatically classify invoices based on vendor, type, or other criteria, and route them to the appropriate approvers or departments. For example, invoices from a specific vendor might always be routed to a particular manager for approval. Advanced AI solutions even let your AP team easily customize classification rules and routing workflows without technical expertise
By automating tasks like generating payment files from approved invoices and initiating transactions directly through integrated banking systems, AI can simplify payment processes. AI can also catch and flag duplicate invoices to avoid overpayments and assist with reconciliation by matching payment data with invoices. In complex scenarios, AI can analyze multiple data sources such as bank statements and enterprise resource planning (ERP) records to reconcile payments even when there are inconsistencies or missing information.
If a vendor suddenly submits an invoice to your business with a much higher total than in other months, AI can flag this document as suspicious. AI algorithms learn from normal transaction patterns, enabling them to identify irregularities in invoice data, whether that’s unusual vendor activity or inflated prices. Low-code/no-code (LCNC) solutions offer pre-built anomaly detection models, allowing businesses to quickly customize and deploy them without the need for advanced technical skills.
By collecting and validating essential information automatically, AI simplifies vendor onboarding. Businesses can use AI to automatically cross-check tax information, business licenses, or certifications to ensure compliance. Beyond onboarding, AI can connect with your ERP platform to offer a single source of truth for vendor information.
AI can help keep your business compliant by automatically tracking adherence to contractual terms, industry regulations, and internal controls. Plus, by processing electronic, PDF, and paper invoices in a unified workflow, AI seamlessly integrates e-invoices into your accounts payable processes in line with government mandates for electronic invoicing.
The best AI solutions offer pre-built dashboards and reporting tools that deliver real-time insights into key AP metrics, such as invoice processing times, payment cycles, and outstanding liabilities. AI tools can also analyze spending patterns, highlight areas for cost savings, and forecast future cash flow needs based on past data and payment trends.
Start by evaluating pain points and inefficiencies in your current AP workflow, such as slow invoice processing, frequent errors, or compliance challenges. Then, determine where automation can have the most impact. Also, figure out what level of technical expertise your AP team has: This will determine how complex your tool can be. Understanding these needs will help you choose the right AI solution to deliver a greater ROI for your business goals.
Choose a purpose-built AI solution designed specifically for accounts payable automation, ensuring that it aligns with your team’s capabilities. Many AP teams aren't made up of technical experts, so consider low-code/no-code (LCNC) solutions that match their skill level and allow for easy implementation and integration.
Now it’s time to put the tool to work. Today’s advanced AI solutions let businesses hit the ground running, processing complex, multi-format documents straight through, error-free, from day one. Begin using AI to seamlessly handle electronic, PDF, and paper invoices in a unified workflow.
Customize your AI solution to align with your unique requirements. For instance, you may want to detect particular anomalies or set parameters to flag suspicious invoices, helping to prevent fraud and ensure compliance with contractual terms, internal controls, and external regulations. LCNC solutions provide pre-built anomaly detection models that you can customize and deploy without advanced technical skills.
Now everything is fully up and running, and you're ready to keep optimizing from here. Use your AI solution's real-time insights into key AP metrics to monitor processes and spot even more cost-saving opportunities.
Plenty of tools on the market today promise to automate invoice processing. Leading technology brands like Amazon, Google, and Microsoft offer capabilities in this space, while robotic process automation (RPA) vendors such as UiPath and Automation Anywhere include automated document capture in their portfolio. Plus, a wide range of purpose-built accounts payable automation solutions such as Tipalti, NetSuite, SAP Business One, and AvidXchange provide targeted options for AP optimization.
Yet despite the wide range of solutions available, 84% of a typical AP practitioner’s workday is still spent on manual tasks like keying invoice data, shuffling paper and emails, fixing mistakes, and responding to calls and emails from suppliers about the status of invoices and payments, according to the IOFM. The institute also reports that AP managers find themselves spending more time on transaction processing than on higher-level responsibilities like staff recruitment, data analysis, collaboration with fellow stakeholders, and other core managerial duties.
It’s tempting to blame the lack of automation for the manual tasks slowing down AP teams. However, nearly half (48.9%) of AP departments already use automated invoice processing solutions. Among those, a quarter have automated their end-to-end procure-to-pay (P2P) process.
So, why do so many AP departments still process such a large volume of invoices manually?
Many AP departments have invested in automation tools that are incomplete or only address part of the process. For starters, only 61.7% of AP departments with automated invoice processing technology have actually only automated the capture of key details like invoice numbers, due dates, amounts, and other header and line-item information. Likewise, less than two-thirds of departments have automated the process of matching invoices with purchase orders (POs) and delivery receipts stored in their ERP systems. This means many AP departments still rely on manual, error-prone data entry for these crucial details, despite having adopted accounts payable automation to some degree.
To be fair, some individual functions have been automated across most of the industry. An impressive 68.8% of departments have automated approvals, for example. Yet because most AP departments have taken a piecemeal approach to automation, many gaps in the invoice processing cycle remain, contributing to higher costs, more errors, and less visibility.
The biggest reason that most finance departments fail to unlock the full benefits of AP automation is that their current solutions rely on outdated methods for capturing invoice data and matching it to purchase orders (POs). Consider the typical approach to invoice capture. Over half of AP departments that have automated their invoice data capture (55.3%) rely on optical character recognition (OCR). Yet while OCR helps AP departments reduce the need to manually key invoice data, traditional OCR systems:
Given these constraints, it’s no wonder that 59.5% of AP leaders believe that human intervention will remain a key part of invoice processing, even as the process gets more automated.
So, how can AP teams move beyond fragmented efforts and make automation truly transformative? Fortunately, a new wave of AI-driven solutions using LCNC tools is helping AP departments overcome the barriers to touchless invoice processing.
LCNC solutions enable finance teams to start processing invoices in minutes with a high degree of accuracy and without any coding or in-house development expertise. These tools use drag-and-drop, pre-trained models—also known as document processing skills—designed for AP tasks. Out of the box, the solutions can recognize document types and recommend a corresponding AP model for extracting relevant data.
These models work for a variety of documents, including invoices, POs, receipts, W-2 forms, utility bills, and healthcare claims. Users can choose from pre-built, ready-to-use skills, search for a skill they need in a marketplace, or design and publish custom skills to a shared catalog and make them available for any process automation platform or workflow.
LCNC IDP solutions with AI and machine learning can efficiently process documents of any kind, including structured, semi-structured, or unstructured documents, and all types of documents, whether they are barcodes or machine- or hand-printed forms. They can handle even the most complex invoices, including those with hundreds of pages and multiple languages. And they can efficiently extract data such as invoice header and line-item details for downstream processes, all without the need to build templates for invoices from new suppliers.
AI-powered accounts payable solutions can integrate with BPM applications, ERP and accounting software packages, chatbots, mobile platforms, and more. Hyperautomation simplifies coordinating processes between multiple technologies by using AI to capture and verify invoice data, while RPA handles tasks like automating data entry and look-ups in ERP or accounting software packages. This synergy optimizes workflow efficiency across platforms, reducing manual intervention.
LCNC solutions help ensure that finance departments realize the full potential of AP automation, including the power of AI and ML. This is especially important given that only 27.4% of AP departments currently use AI with machine learning. Many AP leaders are not yet fully familiar with these technologies: 22.5% of AP leaders admit that they “don’t know much about AI,” while 35.5% describe themselves as “still learning about the technology.” Less than 4% of leaders consider themselves AI pros.
For AP departments, LCNC solutions represent a big step forward. They empower finance teams with minimal coding experience to create their own business applications, reducing development time by up to 90%. This allows teams to respond more quickly to business needs and achieve results faster.
Today, LCNC tools are quickly gaining traction in the AP industry: A Gartner report predicts that by 2025, 70% of new applications created by businesses will rely on LCNC technologies. Currently, 11.8% of AP departments are deploying an invoice processing solution , with another 11.8% evaluating one. In fact, 65% of AP departments plan to automate in the next year. For many, automating the capture and validation of invoice data is top of mind. Nearly one-third of finance leaders report that their department plans to automate the capture of invoice headers and line-item details, and more than one-quarter of AP leaders (26.3%) plan to automate the way their department matches invoices with POs and delivery receipts within the next year.
Through the use of AI tools like ML and neural networks, a type of AI that mimics how the human brain learns and processes information, finance organizations are poised to reduce the need for human intervention, accelerate end-to-end invoice processing, lower overall operational and transaction costs, improve cash flow visibility, and enable more strategic allocation of working capital—all while boosting employee satisfaction and unlocking new levels of efficiency, agility, and productivity.
In the coming years, AP processes are set to undergo a major transformation. Manual tasks like invoice processing, data entry, and reconciliation will diminish as teams increasingly adopt LCNC tools. Instead of completing manual tasks, teams will become more adept at working with these user-friendly platforms to speed processes and improve accuracy.
At the same time, machine learning models will continue to refine their ability to detect errors, flag inconsistencies, and predict potential bottlenecks in payment workflows. AI integration with RPA and IDP will likely deepen significantly, leading to widespread hyperautomation, where multiple technologies work together to automate entire processes. AI is also expected to make big advancements in fraud detection, further improving its ability to spot irregular patterns and anomalies.
As these technologies become more accessible, AP departments are likely to evolve to not only operate faster but also more strategically. Their focus will begin to shift to more value-added activities, with deeper insights into cash flow management, working capital optimization, and supplier relationships—reshaping the way business is conducted.
ABBYY puts your information to work. We combine innovation with deep industry experience to transform data from business-critical documents into intelligent actionable outcomes in real time. We support over 200 languages and enable more than 10,000 companies around the world, including many of the Fortune 500, to drive significant impact where it matters most: customer experience, operational excellence, and competitive advantage.
These business outcomes are powered by ABBYY’s advanced AI-based intelligent document processing (IDP) solutions, which use NLP, ML, and advanced recognition capabilities—all within a low-code/no-code environment designed for business users.
Recognized as an intelligent document processing leader by 10 analyst firms in just the past year, ABBYY processes 1.5 billion invoices annually for the world’s leading enterprises. Our leadership translates into impressive results: a 91% reduction in invoice processing transaction costs, 90% time savings in invoice processing cycles, 99.5% accuracy, and 95% straight-through processing.
For a more detailed analysis of ABBYY's leadership in intelligent document processing solutions, check out Everest Group’s Intelligent Document Processing Products PEAK Matrix® 2024. To learn more about what ABBYY’s AP automation solutions can do for your business, get in touch with our team.
Andrew Pery
Digital transformation expert and AI Ethics Evangelist for ABBYY
Andrew Pery is an AI Ethics Evangelist at intelligent automation company ABBYY. His expertise is in artificial intelligence (AI) technologies, application software, data privacy and AI ethics. He has written and presented several papers on the ethical use of AI and is currently co-authoring a book for the American Bar Association. He holds a Masters of Law degree with Distinction from Northwestern University Pritzker School of Law and is a Certified Information Privacy Professional (CIPP/C), (CIPP/E) and a Certified Information Professional (CIP/AIIM).
Connect with Andrew on LinkedIn.
Mark Brousseau
President of Brousseau & Associates
Mark Brousseau is president of Brousseau & Associates.
Over the past 29 years, Mark Brousseau has established himself as a thought leader on accounts payable, accounts receivable, payments, and document automation. A popular speaker at industry conferences and on webinars and podcasts, Brousseau advises prominent end-users and solutions and services providers on how to use automation to improve document- and payments-driven business processes. Brousseau has chaired numerous educational conferences and has served on several industry committees and boards. He resides in Center City Philadelphia with his wife and three sons.
Connect with Mark on X-formerly-Twitter and LinkedIn.