# How AI is shaping AP automation
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-09-22
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: The Impact of AI on Financial Digital Transformation
Meta Description: Transform business practices with AP automation to streamline processes, increase efficiency, and improve cash flow visibility. Stay ahead of the curve.
URL: https://financedigest.com/how-ai-is-shaping-ap-automationhtml

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_By **Shannon Kreps,** Vice President Product Marketing at Medius_

The impact of the pandemic has driven many organisations to accelerate their digital strategies to transform business practices and remain viable. To mitigate fiscal risks, business leaders are increasingly focusing their attention on financial digital transformation, exploring technology such as machine learning and artificial intelligence (AI) to automate workflows, increase efficiency and improve cash flow visibility. Yet, when it comes to accounts payable (AP), finance professionals are still relying on manual processes to handle supplier invoices, with less than a third of companies employing AP automation and just 11% using AI. In an era where digital is synonymous with survival, this is [leaving businesses open](https://www.financedigest.com/more-than-half-of-workers-are-open-to-leaving-their-current-employers.html "MORE THAN HALF OF WORKERS ARE OPEN TO LEAVING THEIR CURRENT EMPLOYERS") to unnecessary risk.

**Behind the curve**

For organisations who have not implemented AP [automation solutions to handle](https://www.financedigest.com/automated-intralogistics-material-handling-solutions-market-estimates-the-market-to-expand-at-14-cagr-through-2031.html "Automated Intralogistics Material Handling Solutions Market Estimates The Market to Expand at 14% CAGR through 2031") tasks such as invoice data capture, matching and coding, AP clerks often find themselves spending valuable time on labour intensive work. Aside from entering important [information into the system](https://www.financedigest.com/the-radiology-information-systems-market-shall-be-growing-unabatedly-in-the-future.html "The Radiology Information Systems Market shall be growing unabatedly in the future"), resources are often wasted locating misplaced invoices or wading through heaps of paperwork. And that’s not all. According to the [Accounts Payable Association](https://www.ap-association.com/facts-statistics/), this is having a ripple effect on the entire organisation with 56% experiencing issues with cash flow forecasting and over three quarters of businesses admitting to paying their suppliers late.

With manual tasks [causing many headaches](https://www.financedigest.com/five-common-it-headaches-caused-by-long-term-working-from-home.html "Five common IT headaches caused by long-term working from home ") for finance, it comes as no surprise that this is negatively influencing employee morale and productivity. Labour-intensive, repetitive tasks can make AP clerks more prone to mistakes, and common errors such as incorrect PO numbers, line items not matching POs, missing VAT numbers and invoices that have been addressed to the wrong department occur all too frequently.

[**Learning from mistakes**](https://www.financedigest.com/tripling-the-size-of-my-business-in-the-pandemic-the-mistakes-made-and-lessons-learned.html "Tripling the Size of my Business in the Pandemic — The Mistakes Made and Lessons Learned")

[Deploying AP automation](https://www.financedigest.com/mercedez-benz-to-deploy-advanced-automated-driving-system-in-nevada.html "Mercedez-Benz to deploy advanced automated driving system in Nevada") enables both small and large companies to digitise and streamline the process, reducing the amount of tedious, manual tasks carried out by employees and supporting organisational growth. Automation will help AP teams take ownership of the process, stay on [top of invoices](https://www.financedigest.com/should-your-business-reconsider-invoice-financing-top-tips-on-why-reappraising-this-method-liberates-business-cash-flow.html "Should your business reconsider invoice financing? Top tips on why reappraising this method liberates business cash flow"), and facilitate approvals when required.  With processes and tools in place to control spend and eliminate errors such as duplicate payments, [finance will have more oversight ensuring](https://www.financedigest.com/finance-firms-must-ensure-they-fix-data-fundamentals.html "Finance firms must ensure they fix data fundamentals") suppliers are paid on time. However, automation is just the first [step towards](https://www.financedigest.com/steps-toward-fostering-a-security-first-culture.html "Steps Toward Fostering a Security-First Culture") AP efficiency.

With technology constantly evolving, going forwards there will be [changes to the way](https://www.financedigest.com/10-ways-automation-has-changed-the-role-of-the-cfo.html "10 ways automation has changed the role of the CFO") AP operates and a solution that can accommodate AI and machine learning will be highly advantageous. [Machine learning](https://emerj.com/ai-glossary-terms/what-is-machine-learning/), for example, is ‘the science of getting computers to learn and act like humans do and improve their learning overtime in an autonomous fashion’. This is achieved by feeding [machines data and information from observations](https://www.financedigest.com/increasing-demand-for-extruders-and-compounding-machines-to-be-observed-in-speciality-plastics-and-master-batch-production-applications.html "Increasing Demand for Extruders and Compounding Machines to be Observed in Speciality Plastics and Master Batch Production Applications") and real-world interactions. Essentially, this means that the historic [data entered into the system](https://www.financedigest.com/interoperability-of-data-to-accelerate-the-ventilator-test-systems-market.html "Interoperability of data to accelerate the Ventilator Test Systems Market") can then be used by the machine and learnt from, offering predictions and insights at a rapid rate. To avoid masses of information that is limited in value, [organisations can manipulate the system by setting rules in order to receive relevant data](https://www.financedigest.com/tackling-the-complexity-of-data-within-financial-organisations.html "Tackling the complexity of data within financial organisations") outputs. AP software with machine learning [capabilities will use a combination of data](https://www.financedigest.com/optable-announces-new-data-clean-room-capabilities.html "Optable Announces New Data Clean Room Capabilities") and rules to adapt, improving in efficiency as it learns what the user wants.

**AI in practice**

When it comes to applying AI and machine [learning to accounts](https://www.financedigest.com/what-can-accountants-learn-from-great-britains-olympic-team.html "What can accountants learn from Great Britain’s Olympic team?") payable, there are two prominent areas where it can make a significant difference – invoice data capturing and coding invoices.

Invoice data capturing is the entry of the invoice [details into the system](https://www.financedigest.com/all-natural-flavors-system-market-overview-with-details-analysis-competitive-landscapes-forecast-to-2022-2029.html "All-Natural Flavors System Market Overview With Details Analysis, Competitive Landscapes, Forecast To 2022-2029"). The [early stages](https://www.financedigest.com/valuing-your-early-stage-startup.html "Valuing your Early Stage Startup") of the capture process involve using learning templates to obtain information, yet this only worked for structured documents and did not accommodate for changes to invoice layout. This later developed to extraction based on titles, logos, positions and formats, enabling for [data to be captured from unstructured](https://www.financedigest.com/your-real-risk-appetite-could-be-hidden-in-your-unstructured-data.html "Your real risk appetite could be hidden in your unstructured data") documents, with the automated tool capable of detecting moves and shifts to the invoice. Now, with the introduction of AI, everything is out of the box. [Machine learning has the capabilities to read the invoice and make intelligent](https://www.financedigest.com/transforming-insurance-through-artificial-intelligence-and-machine-learning.html "Transforming Insurance Through Artificial Intelligence and Machine Learning") decisions based on data it has seen before. For example, if a new supplier is onboarded, it can autonomously process invoices with limited human intervention. This not only helps [save on costs](https://www.financedigest.com/saving-on-water-bills-more-than-just-a-drop-in-the-ocean-for-businesses-facing-the-cost-of-living-crisis.html "Saving on water bills: More than just a drop in the ocean for businesses facing the cost-of-living crisis") due to reductions in the manual workload, but it also increases turnaround times allowing employees to focus on more value-added work. Additionally, with an built-in validation system, the [risks of invoice processing errors are minimised](https://www.financedigest.com/legal-entity-identifiers-leis-how-can-banks-minimise-risks.html "Legal Entity Identifiers (LEIs): how can banks minimise risks?").

Automatic invoice coding is also a process ripe for AI. With invoices arriving in many different forms such as email, mail or fax, AP teams without an automated tool can spend countless hours on making sure invoice data is correctly coded; [keying information into the accounting](https://www.financedigest.com/b2b-specialist-pr-agency-the-digital-voice-announces-three-key-account-wins.html "B2B Specialist PR Agency The Digital Voice Announces Three Key Account Wins") systems; and collecting approvals from heads of departments. While automation has helped streamline the process by using templates with default codes to match invoices, machine learning can go one [step further by learning from historic data](https://www.financedigest.com/10-steps-to-stop-lateral-movement-in-data-breaches.html "10 Steps to Stop Lateral Movement in Data Breaches") to figure out which code should be on a specific invoice. Using its learning capabilities, it can also notice relationships and patterns between different items similar to how a [person in the system](https://www.financedigest.com/the-personal-emergency-response-systems-market-to-satiate-amidst-innovation.html "The Personal Emergency Response Systems Market to satiate amidst innovation") can make a connection. For example, it can detect and group items such as office suppliers, [property purchase](https://www.financedigest.com/questions-to-ask-yourself-before-purchasing-an-investment-property.html "Questions To Ask Yourself Before Purchasing An Investment Property") tax, audit fees etc. To provide reassurance, the AP team will still have the ability to accept or reject an invoice code. Again, as the [system continues to learn from the changes made](https://www.financedigest.com/money-laundering-made-easy-by-uk-financial-system.html "Money laundering made easy by UK financial system"), it will adapt and increase in accuracy.

Just like any other automated process, there is still work to be done for AP to trust the [data that is being managed](https://www.financedigest.com/allianz-benelux-taps-into-modern-data-management-to-combat-fraud-and-foster-a-positive-customer-experience.html "Allianz Benelux Taps into Modern Data Management to Combat Fraud and Foster a Positive Customer Experience") within the system. The next step in AP is for machine learning to encourage more confidence in ‘touchless’ data capturing and invoice coding, making daily life easier, [saving time and improving](https://www.financedigest.com/improve-your-business-while-saving-the-planet-and-your-back-with-easycat.html "Improve your business while saving the planet and your back with EasyCat") efficiencies for the organisation.


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