Accounts payable is changing. AI-powered systems are replacing tedious data entry and paper invoices, with streamlined processes, boosted accuracy, and self-learning. There are many methods by which these enhancements occur, but in the blog, we will be focusing on self-learning through vector databases.
What are Vector Databases?
Unlike traditional databases that store information in text format, vector databases transform invoices into mathematical representations called vectors. Imagine each invoice as a unique fingerprint, capturing its essence in a way that considers both visual layout and semantic content. This allows the system to find similar invoices based on these multi-dimensional representations, not just isolated keywords.
When a new invoice arrives, the system doesn’t just scan for keywords. Instead, it searches the database for vectors most similar to the new one. This allows for a much more nuanced understanding of the invoice, paving the way for the self-learning capabilities that power a smarter AP system.
How Similarities Become Insights
Here’s where the vector database self-learning kicks in. Over time, the system identifies patterns within similar vectors. Invoices from the same vendor will naturally cluster together based on their content and layout.
The system starts to recognize patterns:
- Vendor Identification: Similar vectors often represent invoices from the same vendor. This helps the system automatically identify new vendors.
- Business Unit/Company: Within a vendor, invoices might be further grouped based on the specific department or company they originate from. This allows the system to identify relevant business units with greater accuracy.
- Product/Service Classification: Similar invoices might also reveal patterns related to the types of products or services purchased. This can provide valuable suggestions for initial general ledger (GL) coding.
Streamlined AP Workflows
The insights gleaned from vector similarity become powerful “hints” for the AI, making vector databases very powerful for self-learning. The system uses these hints to:
- Automate Vendor Identification: No more manual lookups! The system can automatically identify recurring vendors based on learned patterns.
- Predict Business Unit/Company: By recognizing department or company-specific patterns, the system can suggest the most likely business unit for the invoice.
- Suggest Initial GL Coding: Based on the identified vendor, product, or service category, the system can propose initial GL codes, saving time and reducing coding errors.
The Future of AP is Intelligent
Vector databases are the cornerstone of self-learning AI in AP systems. By enabling efficient similarity search, they pave the way for a smarter, faster, and more accurate approach to invoice processing. As AI technology continues to evolve, we can expect even greater automation and intelligence in AP, freeing up human resources for more strategic tasks.
Is your AP system stuck in a rut? Embrace the power of AI and vector databases with ICG and enter a new era of intelligent and efficient invoice processing! Contact ICG today to start a conversation on how ICG’s comprehensive AP Automation solutions can deliver immediate value to your accounts payable operation. You can also request a demo of one of our AP solutions. For a quick view of ICG’s solutions view this short video.