• Automation

How to Automate Your Bill Payments with Artificial Intelligence

Automatic payments (Autopay) make sense for both personal and business expenses. In fact, an online survey revealed that 88% of respondents enrolled at least some bills in Autopay. [1]

And while Autopay is a great method of payment, the area that businesses continue to struggle with is decreasing the time it takes to process an invoice. 

A bookkeeper sorting through receiptsSource: Pexels

According to the 2022 report by Ardent Partners, it takes an average of ten days to process an invoice. Lengthy approval time is the biggest hurdle for AP departments and the high cost of processing – $9.25 for each invoice. [2] 

A big part of the problem lies in entering data manually. However, introducing AI to the equation changes the business perception of automating invoice processing and payment. 

Why Autopay Is Not Enough

Putting bills on autopilot is convenient and easy to set up. It helps you avoid penalties and late payment fees.

However, a “set it and forget it” mindset is bad for business.

While companies can put expenses like subscription fees on autopay, most expenses require approval before releasing payment.

How Companies Handle Vendor Invoices

The usual accounts payable process for invoices, especially big-ticket items, goes like this:

  • A vendor sends an invoice. 
  • Employees in charge match invoices with the purchase order and other supporting documents and forward them for review and approval.
  • Using the invoice, the employee updates the accounting system using information from the invoice.
  • An approver checks the invoice. If approved, the vendor receives payment for the invoice.

While following this process allows businesses to have more control over expenses, it can be inefficient for companies who are still processing invoice data manually.

As a result, it takes longer to approve invoices and pay vendors.

A man using his mobile to make a payment online

Source: Pexels

Automation is one solution to reduce invoice processing time and cost. AI allows companies to continue paying bills on autopilot without losing control and visibility over costs.

How to Maximize Benefits from Automating Bills Payment

Using AI to automate expense payments trumps Autopay because it has more features that enable cost monitoring.

A study by IBM revealed that as many as four out of five companies plan to use AI. [3] However, using just any tool with AI capability is not enough.

Here’s how your business can gain the most benefit from using AI for payment processing.

  • Reduce Manual Work

Artificial intelligence brings invoice processing to a higher level compared to regular autopay because it can automatically capture data.

Normal autopay transactions still require your accounting team to chase after the invoice paid automatically and enter it into the accounting system. 

Problems also crop up when employees lose paper invoices. Fortunately, modern technology offers a solution as 60% of firms that use automated software reported a decline in missing invoice cases. [4]

An intelligent business payment platform that automates invoice processing for AP teams often includes Optical Character Recognition technology.

OCR improves efficiency by eliminating data entry and automating controls. According to an IBM survey, 65% of companies use AI to reduce manual and repetitive tasks. [3]

Envoice, for instance, provides a mobile app for easier invoice scanning. Data is extracted from the scanned invoice to eliminate manual data entry. AI-based categorization then takes over to choose the appropriate category for the expense based on previous transactions. 

A man in a black sweater holding a FRAUD signSource: Pexels

  • Automate Fraud and Error Detection

Artificial intelligence can also detect anomalies due to fraud or error. AI can automatically match invoice data with information from the purchase order, delivery receipt, and other source documents.

At the same time, it can scan historical data to find unusual patterns. Self-learning algorithms also allow users to customize business rules or tools to add another layer of control.

If business rules limit spending on meals to $500, a $650 expense for meals will be flagged for manual review, while a $150 meal will automatically be approved. With this system, approvers don’t have to go through every invoice.

  • Invest in Upskilling People

As companies embrace automation, the demand for employees who can manage AI tools is increasing. Technology is only one part of the solution and will never replace actual people.

About a third of IT senior decision makers agree that limited expertise, knowledge, and skills in AI hinder successful AI adoption for business. [4]

Resistance to using technology often stems from the fear that bots and AI technology will take over the role of humans in the workplace. Anticipating this fear and giving employees the skills needed for their new job role is critical to successful AI deployment in any process, including bill payment.

Imagine your AP staff needing to manually encode data from invoices even if you have OCR tools. 

The scenario above is likely to happen when employees fear that extracted data may be inaccurate and the system may automatically approve invoices with incorrect amounts. While employees have ample reason to doubt the tool’s reliability, intervening with the workflow undercuts the software’s value. 

Take the time to let your employees understand how the system works. Involve your team in the pilot testing to make them familiar with the process and solicit their opinion on how to verify the accuracy of information processed with AI.

Directly involving your team in the development phase allows them to own the process, trust the system better, and reduce resistance to using AI technology. 

  • Create a Single Source Of Truth

One way to make automation even more effective is to create a single source of truth within your organization. Having all invoices in one location creates a better audit trail and reduces the need for back-and-forth communication across different departments.

Woman Talking on the Phone and Looking at a Laptop

Source: Pexels

One way to achieve this is to have all supporting invoices attached to digital records.

Envoice, for instance, collects all bills in a single system by using a dedicated inbox for receipts. At the same time, the app containing invoice information includes all communication related to the invoice as it goes through the approval process. 

Having all information in one place instead of keeping them in several locations – like a chat app, an email, or the invoice management tool – reduces time spent digging for details.

Anyone who needs to review the expense will also have access to all supplemental information without having to send an email or call another person.

  • View Invoice Processing Automation from an End-to-End Perspective

Coordinating digitization strategies is crucial for AP automation. Companies should look at AI investments holistically across the organization, and achieving this requires an overarching strategy.

Implementing an isolated solution for each department may lead to unnecessary investments and duplicative work.

For instance, the Accounts Payable department uses OCR for data capture and enters information into a purchasing system. Unaware of this technology, the accounting team invests in another tool with similar capabilities to enter the information into the accounting software.

Had the business used a coordinated strategy, the accounts payable team could have chosen a tool that allows integration with the existing accounting software. 

A coordinated strategy makes the workflow more efficient. AI investments will also have a higher ROI since the two departments use the same tool. Using data from the AP team, the company can also run analytics reports to identify trends.

Artificial Intelligence In Action

Adopting automated solutions allows businesses to gain a competitive advantage while increasing invoice processing speed.

With a streamlined process, accounting teams spend less time processing invoices without worrying about payment delays since an intelligent virtual assistant is in charge of repetitive tasks.

An accounting team in front of a laptop

Source: Pexels

Let’s see a real-world example of how AI transforms the AP process. 

An accounting company, Klaar.me, introduced Envoice, an expense management tool for automating invoice processing, to one of its clients. [5]

After setting up Envoice, the accounting firm’s client only had to take photos of receipts using the app or redirect invoice emails to a dedicated inbox to create an invoice.

The new process was more efficient as the company didn’t have to collect documents from several mailboxes before sending them to the accountant at the end of the month.

Envoice worked like an effective accounting assistant as the software can extract data automatically from supplier invoices and input data from each bill into the system. 

With approval workflows in place, as long as an expense falls within the expected range, it will be automatically approved.

Take rental payments, for instance. 

If the system detects an invoice for rent of $1,200 and the normal range is $1100-$1300, the rent will be approved without having any human employee confirm the amount. Once approved, the company can pay the expense right away.

Take Back Control of Expenses With AI

With AI helping you manage expenses, you can spend more time looking into potential ways to keep costs down. New technologies drastically reduce hours spent processing invoices so you can focus on other business priorities. 

Explore how an Intelligent virtual assistant saves your back office staff from spending long hours on non-value-adding tasks.

Get in touch with the Envoice team today and experience managing business payments the modern way.

 

Article Sources:

[1] https://invoicecloud.net

[2] https://www.pymnts.com

[3] https://www.ibm.com/watson

[4] https://www.tungsten-network.com

[5] https://klaar.me/