A significant shift is underway in the accounts payable (AP) function.
The challenging labor market, growing economic uncertainty, emergence of artificial intelligence (AI)-powered systems, and increasingly sophisticated payment fraud threats have forced AP departments to rethink the way they operate. Experts predict these factors will shape the year ahead, transforming the AP function’s focus from tactical actions to strategic thinking.
The Role of AP Professionals Will Evolve
Imagine this: you spend your days completing monotonous work and your job is perceived as both a cost center and a drain on company resources.
Unfortunately, most AP professionals don’t have to use their imaginations – that’s their reality.
According to the Institute of Finance and Management (IOFM), the average AP practitioner spends 84% of their day on manual, repetitive tasks, such as keying data, chasing down invoice and payment approvals, fixing errors, printing checks and stuffing them into envelopes, and responding to calls and emails from suppliers about their invoice and payment statuses. The same study also found that AP managers spend more time each day processing transactions than on the managerial tasks they were hired to perform.
Fortunately, AP professionals will likely see their roles change in a big way in 2024.
More accounts payable departments will modernize their systems and processes to free staff to focus more time on higher-order activities, such as analyzing data and collaborating with stakeholders. In fact, Gartner estimates 40% of finance roles will be new or reshaped through 2025 due to technology adoption.
Elevating the AP role will help mitigate burnout, increase employee satisfaction, and make it easier for businesses to attract and retain talent in a tight labor market. With one-third of finance and accounting hiring managers currently looking to fill vacated positions, this is a benefit you shouldn’t ignore this coming year.
More AP Departments Will Embrace Artificial Intelligence
Few technologies have generated as much excitement – and fear – among AP professionals as artificial intelligence.
The technology analyzes large volumes of data to recognize patterns, make decisions, solve problems, and perform other tasks that previously required human intervention. AI can learn from a user’s actions and deliver continuous, consistent performance improvements as a result. For instance, AI-powered systems automatically record human corrections to captured data, resulting in higher recognition rates over time. AI systems also learn how invoices are routed for approval so they can start handling the task automatically. And – to add to the benefits – AI’s auto-learning process occurs in the background, completely transparent to users.
AI is a game changer for back-office functions that are overrun with manual tasks. That’s why 24% of AP departments have already deployed AI, according to the experts who spoke at the IOFM’s August 2023 Virtual Town Hall Meeting. That’s also why more AP departments will deploy AI-powered solutions for a host of invoice-to-pay use cases in 2024.
Here are some of the ways AP departments will use AI-powered invoice processing automation systems:
- Data capture: Combining AI with optical character recognition (OCR) improves the accuracy of data extracted from invoices. Through contextual analysis and other techniques, typos and transposed numbers are less likely to slip through the cracks. AI can also learn how invoices are coded in the general ledger to reduce the need for keying.
- Validation: AI can automatically detect duplicate invoices, perform predictive coding of non-PO invoices, check invoice data against master records, improve two- and three-way matching, and verify invoice balances. By analyzing historical data, AI systems can help spot line-item errors and reduce overpayments.
- Routing: Artificial intelligence can learn business rules and register past actions taken on invoices to accurately predict how specific ones should be routed for approval in the future.
- Payments: AI can analyze a buyer’s historical payment data and databases of suppliers that accept digital payments to determine the optimal method for paying a supplier.
- Fraud detection: AI-powered systems can analyze historical payment data and inspect invoices for anomalies to identify fake invoices, duplicate payments, or unusual vendor behavior.
While 23% of AP professionals admit they don’t know much about AI and 36% say they are still learning about the technology, the prospect of eliminating manual, repetitive tasks and improving decision-making will be too much for AP departments to pass up in 2024. AI will free front-line employees from the drudgery of manual tasks, allowing them to focus on fulfilling activities that will elevate their careers and their departments.
To uncover the other trends AP teams should watch in the new year, download the full guide to accounts payable in 2024. To speak to an accounts payable automation expert and learn how the right solution can help you effectively prepare for what’s to come, contact us today.