How To Use AI To Improve Your Vendor Invoice Management
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There are few areas of any company that haven’t asked themselves the question ‘how can we benefit from Artificial Intelligence?’. The rapid rise of new technology, coupled with high profile public uses of AI like Open AI’s ChatGPT, have added rocket fuel to the demand to use AI across a company’s operations. It’s no different in finance teams, and one area many companies are looking at is AI invoice management. In this guide we’ll break down how AI is helping to improve accounts payable processes and vendor invoice management.
The 7 most important benefits of invoice management
Invoice management is the systematic approach for handling incoming invoices from receipt through to payment. This involves everything from capturing invoice data, validating the information, and approving the invoices to ensuring timely payment. To assure your company a smooth accounts payable process, the best way nowadays is to integrate your invoice management solutions with your (existing) financial systems. Digitalising, automating and optimising these processes bring a lot of benefits:
1. Streamlined workflows
Modern invoice management solutions digitise and automate the entire process, from invoice capture to approval and payment. This transformation eliminates manual data entry, reduces bottlenecks, and accelerates the invoice lifecycle.
Faster processing times: Automation significantly reduces manual tasks, enabling invoices to be processed in real-time. This swift turnaround allows businesses to meet payment deadlines and improve overall operational efficiency.
Consistent workflows: Standardised procedures ensure that every invoice is processed uniformly, minimising variations in handling. This consistency not only enhances productivity but also allows for easier training of new staff and smoother onboarding of systems.
2. Improved cash flow
Effective invoice management directly impacts cash flow by avoiding late payments and optimising working capital.
Predictable cash flow: With real-time visibility into outstanding invoices and payment schedules, finance teams can forecast cash flow more accurately. This insight helps businesses confidently plan their spending and investments, as they know when funds will be available.
Better liquidity management: Accurate forecasting helps maintain healthy cash reserves, enabling organisations to seize opportunities and navigate unexpected challenges without financial strain. It aids in strategic planning for both immediate and long-term goals.
3. Better relationships with suppliers
Prompt and accurate payments foster strong supplier relationships, leading to improved terms, such as early payment discounts and stronger collaboration.
Strengthened trust: Reliable payments build credibility with suppliers, enhancing mutual trust. This relationship can lead to improved service levels and prioritisation during times of high demand or limited supply.
Enhanced negotiation power: Positive relationships can result in more favourable terms and discounts. By demonstrating reliability, businesses may secure better pricing, payment terms, and exclusive offers, contributing to long-term cost savings.
4. Scalability
As your company grows, the volume of invoices naturally increases. Digital invoice management systems are designed to scale effortlessly, accommodating this growth without a decline in efficiency.
Adaptability: These systems handle increased volume and complexity of invoices, accommodating diverse formats and processes. This adaptability ensures that as a business expands, its financial processes remain smooth and efficient.
Future-proof: Scalable solutions enable long-term growth and expansion, letting companies add new features and integrations as needed. This flexibility means organisations can keep improving their operations without having to change their systems completely.
5. Error reduction
Manual invoice processing is inherently error-prone, leading to costly discrepancies. Automation ensures accuracy and consistency, resulting in:
Reduced errors: Automated data capture minimises human errors such as miskeying or misfiling invoices. This accuracy reduces the time spent on corrections and the potential for financial loss due to inaccuracies.
Fewer disputes: Accurate processing lowers the likelihood of invoice disputes and corrections, fostering smoother interactions with suppliers and reducing the administrative burden of resolving conflicts.
6. Better decision-making
Digital solutions provide valuable insights through advanced metrics and reporting tools, enabling finance leaders to make informed decisions.
Data-driven insights: Access to detailed metrics and analytics on spending patterns, supplier performance, and overall financial health equips leaders with the information necessary to make strategic choices. This insight can drive budget adjustments and investment decisions.
Strategic planning: Improved visibility into financial processes helps with long-term planning and strategy development. With access to better data, finance teams can align their efforts with the company’s goals, leading to more effective resource allocation and better risk management.
7. Reduced risks of non-compliance
Reducing the chances of becoming non-compliant with regulatory requirements is critical for organisations. Digital invoice management solutions ensure adherence to laws and standards through:
Automated compliance checks: Built-in features verify regulatory requirements, ensuring that every invoice meets necessary legal standards. This automation reduces the risk of non-compliance, which can lead to penalties and reputational damage.
Audit trails: Keeping thorough records of all transactions creates a clear audit trail, making validation and reviews much simpler. This transparency not only supports compliance efforts but also builds trust with stakeholders about the integrity of financial practices.
AI-powered invoice processing for improved vendor invoice management
When dealing with smart solutions for your invoice management, it is essential to understand what OCR and Robotic Process Automation are and acknowledge that they are not real artificial intelligences. Why? Let us explain!
Legacy technologies vs AI at the heart of technology
Optical Character Recognition (OCR) converts various types of documents, such as scanned paper invoices or PDFs, into editable and searchable data. By recognising text within images, OCR helps automate the extraction of invoice data. However, it struggles with variations in invoice formats, handwriting, and poor-quality scans. Its accuracy can be inconsistent, leading to errors that require manual correction.
Robotic Process Automation (RPA) automates repetitive tasks by mimicking human interactions with software applications. In the context of invoice management, RPA can automate processes such as data entry, invoice matching, and approval processes. Despite these capabilities, RPA relies on structured data and predefined rules. It cannot adapt to new or unexpected situations, requiring frequent updates and human intervention to handle exceptions.
While OCR and RPA significantly improved electronic invoice management by reducing manual tasks, they fall short compared to the transformative potential of true AI-powered systems: Leveraging AI with advanced machine learning algorithms and Natural Language Processing (NLP), allows to adapt to various invoice formats and improve accuracy over time. Unlike OCR, AI handles unstructured data and complex scenarios without needing constant reprogramming, addressing the limitations of RPA. Beyond automating repetitive tasks, AI brings cognitive abilities to invoice management, including predictive analytics for cash flow forecasting, fraud detection, and seamless integration with other financial systems.
Improved decision-making with predictive and prescriptive AI
Predictive and prescriptive AI technologies are significant advancements that go beyond what OCR and RPA can offer, providing businesses with powerful tools to improve decision-making and gain a competitive edge. Predictive AI algorithms leverage historical data and machine learning to forecast future outcomes. Recognising patterns and trends enables companies to anticipate changes in the market, understand customer behaviour, and tackle operational challenges. This type of AI can predict cash flow, spot potential fraud, and optimise supply chain processes, allowing businesses to proactively manage issues before they become serious.
On the other hand, prescriptive AI takes it a step further by not just predicting outcomes but also recommending specific actions to achieve desired goals. It assesses data, considers different scenarios, and suggests the best strategies. For instance, prescriptive AI can help determine how to allocate resources effectively, manage inventory levels, and set pricing strategies. Providing actionable insights empowers companies to make informed decisions, enhance efficiency, and stimulate growth.
Streamlining workflows with AI-powered automation
AI can streamline and automate manual tasks and thereby significantly reduce error rates, save time, and cut costs – not only within the AP process. When automating data entry, invoice processing, and approval workflows, AI minimises human errors and accelerates these processes. This not only frees up valuable time for finance and procurement teams but also lowers operational costs by reducing the need for extensive manual intervention. Additionally, AI systems are designed to adhere to regulatory requirements and company policies, automatically checking for compliance and generating audit trails for all transactions. This ensures that organisations maintain high standards of governance and reduces the risk of non-compliance, ultimately contributing to a more efficient, cost-effective, and compliant operational environment.
How Yokoy's AI is revolutionising your invoice management
Yokoy’s AI-driven invoice management system streamlines the capturing, verification, and authorisation of financial documents. Advanced machine learning and automation enhance efficiency and accuracy and reduce risks of non-compliance.
Capture
Yokoy’s AI excels in the initial capture of financial documents by understanding and interpreting data without the need for human input or pre-built templates. After data extraction, the system recognises various data points within an invoice, such as invoice numbers or vendor details, by analysing the context and content. It structures this data intelligently based on previous transactions and observed human behaviour patterns, learning continuously to improve accuracy. Additionally, Yokoy identifies any missing information within a document and fills these gaps by referencing historical transactions, ensuring comprehensive data capture and reducing the need for manual intervention.
Verify
In the verification stage, Yokoy performs real-time checks against predefined company policies and regulatory guidelines set by the finance team. The AI learns from past transactions and human behaviours to accurately process invoices, expenses, and payments, enhancing its verification capabilities over time. Smart coding is employed to automate line item coding, ensuring precise budget tracking and forecasting. This automated verification not only speeds up the process but also significantly reduces the risk of errors, ensuring that all financial documents are processed correctly and compliantly.
Authorise
For authorisation, Yokoy’s AI responds to the context of each document to initiate the appropriate workflow. The system supports an infinite number of possible workflows, allowing for extensive customisation based on the business needs for invoice approval. These workflows can be adjusted and updated in minutes, providing flexibility and responsiveness to changing business requirements. Furthermore, Yokoy’s self-learning system proactively recommends process improvements, continually optimising workflows to enhance efficiency and effectiveness. This dynamic authorisation process ensures that financial documents are handled swiftly and accurately, aligning with organisational goals and compliance requirements.
Next steps
Are you curious how our AI-powered accounts payable automation can transform your finance operations? Dive into Yokoy’s resources to learn more or experience it firsthand by booking a demo. Empower your finance team with Yokoy‘s tools.
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