Prompt-pay discounts of 2% are nice to give out but not to those customers who did not earn them – nearly half of one enterprise’s customer base – making payments as late as 20 days out. That’s a real story, btw and it cost the company almost USD 2M/yr. Can’t really fault the AR clerks entering data manually and matching payments to their corresponding remittance information, for not red flagging all such anomalies.
A.I.tone for the manual mishaps
Accounts Payable (AP) remains a labor-intensive, error-prone process in many organizations. Teams are overwhelmed with paperwork, spending hours reconciling payments, tracking down approvals, and manually flagging discrepancies. Drains productivity and jeopardizes vendor relationships.
AP automation transforms this cumbersome back-office function into a strategic asset. By digitizing and streamlining workflows, automation technologies capture and convert invoice data, route approvals, and flag anomalies with minimal human intervention. The impact? Increased efficiency, lower error rates, improved cash flow management, and enhanced security. When executed thoughtfully, automation repositions AP from a cost center to a key player in your financial strategy.
The catcher in the compliance rye
The complexity of B2B transactions is a major hurdle to the adoption of automation in AP processes. Unlike consumer payments, B2B payments involve high-value, recurring transactions with a web of suppliers, each with their own set of requirements. Managing these relationships, ensuring verification, and preventing fraud add layers of intricacy that automation has to solve for.
Another challenge is the migration away from legacy systems. Building digital connections with a broad supplier base takes time and resources. Although technologies like APIs have simplified integrations creating digital handshakes between the systems at the enterprise and at its vendors, the process still requires careful planning and significant investment. Post-pandemic disruptions in global supply chains have only compounded these complexities, emphasizing the need for a thoughtful, phased approach to digital transformation.
Gone in 60 seconds: The Invoice Processing Edition
The introduction of real-time payment networks that process transactions in seconds revolutionizes AP. Yet, the rapid pace of these transactions brings inherent risks. Fraud detection becomes a high-stakes game, and errors are harder to catch once the money has moved. AI and ML help manage these challenges by analyzing transaction patterns in real time, dynamically adjusting fraud detection algorithms, and minimizing false positives. Enabling AI-driven security measures ensures financial operations stay ahead of emerging threats.
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Read other editions of BFSI Vue
Credit needn’t chase its tail (Oct ‘24)
AI and APIs in insurance land (Aug ‘24)
Intelligent Document Processing in the blink of an AI (Jun ‘24)
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For whom the bill tolls: Automate and pay
Beyond real-time payments, emerging technologies like programmable payments also redefine financial operations. They operate on an “if-this-then-that” logic, automating financial flows based on predefined triggers. For instance, payments could be scheduled to optimize cash flow or respond to shifts in market conditions. With its potential for creating transparent, secure transaction records, the blockchain technology is often integrated with programmable payment methods, facilitating efficient and flexible payment structures.
But these innovations require thoughtful integration. The learning curve for implementing blockchain-based solutions is steep, and programmable payments bring governance and compliance challenges. Leaders must carefully consider how these technologies fit within their organization’s broader financial strategy and whether the benefits justify the complexities.
Takeaways
- Identify and prioritize bottlenecks: Conduct a detailed audit of your AP processes. Pinpoint where inefficiencies are most costly and evaluate which automation solutions can deliver the highest return on investment.
- Invest strategically: Approach automation with a well-defined roadmap. Ensure that the chosen technologies align with your long-term goals and integrate smoothly into your existing systems. Consider the broader impact on your cash flow, risk profile, and supplier relations.
- Fortify security and fraud prevention: Real-time payments bring new challenges. Implement robust AI-driven fraud detection measures and make cybersecurity a pillar of your AP strategy. This investment will pay dividends in protecting your financial assets.
Eat, Pay, Love: Make every payment count
When executed with a strategic mindset, AP automation can elevate financial operations, boost efficiency, and protect against emerging threats. Done right, it positions AP as a value driver, enhancing cash flow, reinforcing supplier trust, and setting the enterprise up for sustained success.
About: Vue.ai is an AI orchestration platform that actively caters to enterprises in BFSI, retail, logistics, healthcare and other domains. In the Accounts Payable space, the platform powers an annual throughput of 10 million invoices for Client A, with a data extraction accuracy of >90%. Details.
While the Intelligent Document Processing feature (Video; 2 mins) is among the strong offerings of the platform, Vue.ai also helps BFSI clients use AI to solve challenges such as credit issues, fraud risk, KYC processing, lead scoring, propensity modeling and more (Video; 45 secs).
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Agents are here → AI’s shaken and stirred (Sep '24)
Lifting the lid on LLMs (Aug '24)
See through Computer Vision (Sep '23)
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His 18+ years of experience in defining quality assurance and engineering practices for leading global financial organizations results in a nuanced appreciation and understanding of your needs and challenges. KYC, lead scoring, propensity modeling—whatever it is you are solving for, Yogeshwar Shivshankar is your Man in Finance.
