Implementing AI-powered solutions in accounts payable (AP) departments can lead to significant cost savings as well as operational and financial efficiencies. The exact savings you can expect depends on factors such as your company size, invoice processing volumes, existing processes, and the specific AI (artificial intelligence) powered AP automation solution you implement. In this blog, we will discuss the power of AI in accounts payable.
Benefits of AI
Labor Cost Reduction
AI can automate labor-intensive tasks such as data entry, invoice processing, and exception handling. This reduces the need for extensive manual labor and can result in significant cost savings by reducing staffing requirements or reallocating resources to higher-value tasks.
Improved Efficiency
AI-powered solutions can streamline AP processes, enabling faster invoice processing, automated workflows, quicker resolution of exceptions, and expedited dispute resolutions. This increased efficiency can also lead to time savings and improved productivity, allowing AP teams to process invoices more rapidly and handle higher volumes without the need for additional resources.
Error Reduction
AI-powered data capture and analysis can enhance accuracy and reduce errors in invoice processing. By automating data extraction and validation, consequently, AI can eliminate mistakes caused by manual data entry, resulting in fewer payment errors, vendor disputes, and reduced costs associated with error correction.
Early Payment Discounts
AI-powered solutions can identify opportunities for early payment discounts by analyzing invoice terms, PO terms, contract terms, and payment schedules. Taking advantage of the most favorable discounts can result in direct and substantial cost savings for your company.
Improved Cash Management
AI analytics can provide insights into cash flow patterns, identify bottlenecks, and optimize payment schedules. This helps organizations make better-informed decisions regarding cash management, optimizing working capital, and potentially reducing borrowing costs or late payment penalties. Additionally, cash analytics can drive a dynamic discounting or supply chain finance program by allocating the optimum amount of cash at the optimum rate to the program. This ensures you receive maximum return from your investment.
Fraud Prevention
AI can help detect and prevent fraudulent activities by identifying suspicious patterns, anomalies, or duplicate invoices. Early detection of fraud can save your company from financial losses, further risk vulnerability, and embarrassment or reputational damage.
While the actual savings will vary depending on your company’s specific circumstances, industry and case studies have reported cost savings ranging from 20% to 50% or more in AP departments implementing AI-powered solutions. It’s important to conduct a thorough analysis, including a cost-benefit assessment specific to your organization, to estimate anticipated savings accurately. The value of the potential savings makes this activity a “no-brainer” for any AP department.
Conclusion
When choosing an AI-assisted AP automation solution and solution provider consider the important elements addressed above. It is also important that the cloud-hosted solution you choose offers robust security and monitoring to ensure your data and your customer and vendor data are protected. ICG utilizes AWS and Sysdig as our partners in security and monitoring to offer our clients the highest level of security with all of our solutions. Start a discussion with ICG about your specific requirements or request a demonstration of ICG’s AP automation solutions. Watch this short video on all of ICG’s financial back-office automation solutions.