How AI accelerates invoice processing for accounts payable teams
In recent weeks, we’ve been discussing the use of artificial intelligence (AI) in the accounts payable (AP) function. So far, we’ve explored data analytics and fraud detection and prevention, and now it’s time for one of the most fundamental applications of AI in accounting: invoice automation.
What is AI invoice automation?
“AI can impact [the invoicing] process in three ways: digitizing the underlying documents and producing the invoice, extracting data, and filling in data.”
- Becoming Human: Artificial Intelligence Magazine
Invoice processing is a traditionally manual accounts payable process. In fact, the majority of accounting teams still rely on manual data entry — with 94% of workers claiming they perform repetitive, manual tasks in their day-to-day jobs. This process is time-consuming, error-prone, and highly frustrating for AP accountants — taking their focus away from high-value strategic tasks, such as cost reduction and asset optimisation.
Artificial intelligence and machine learning enable teams to take invoice processing from a manual process to a fully automated one, ensuring a faster and more accurate operation. Here are some of the processes involved:
- Data extraction: AI tools automate the extraction of invoice data, including invoice numbers, dates, amounts, and vendor information — removing a lengthy manual process.
“Manual data entry is time-consuming, costly, and error-prone. AI can automate this process by using optical character recognition (OCR) and natural language processing (NLP) to scan, read, and understand the content of invoices. AI can also learn from feedback and corrections to improve its accuracy and adapt to new formats and layouts.”
- Validation and verification: AI systems check invoice details against predefined rules and existing data to validate accuracy and safeguard against discrepancies.
- Routing & approval workflows: Automated approval workflows automatically route invoices to the correct approvers and notify them to take action, so there’s no more chasing signatures. Any exceptions are identified and flagged for manual review.
- Invoice matching: AI can automate the 3-way matching process to quickly and accurately cross-reference invoices with purchase orders and receipts, and ensure they align with goods and services received.
- Data Integration: And finally, AI invoice capture solutions integrate with a company’s ERP solution to facilitate seamless data transfer — ensuring that financial records are updated in real time.
The benefits of AI invoice automation.
Some of the benefits of AI invoice automation are obvious. It’s clear, for example, that an accurate, automated system will save AP teams a lot of time and energy. However, there are many additional benefits that aren’t as immediately apparent.
- Searchable storage and retrieval: AI invoice capture systems allow invoices to be digitally stored and indexed in a fully-searchable database — making it easy to retrieve them for audits, compliance, or inquiries.
- Detailed analytics and reporting: AI-powered analytics and reporting provides insights into accounts payable processes, such as invoice processing times, early payment discounts, and vendor performance — enabling more effective decision-making and cost management.
“Another considerable benefit of implementing AI and Machine learning in invoice processing automation is, of course, the fact that it helps businesses gain access to better data.”
- Reduced processing costs: Automating repetitive manual tasks and minimising errors can significantly reduce the costs associated with manual invoice processing, too. More on this in a moment.
- Enhanced compliance: AI–based automation can help ensure that invoices adhere to regulatory and internal compliance requirements, reducing the risk of penalties and legal issues.
- Improved vendor relationships: Faster, more accurate invoice processing can lead to improved relationships with suppliers, fewer late payment fees, and access to early payment discounts.
Invoice automation: some headline stats
We’ve seen how AI invoice processing works, and we’ve explored some of the benefits. Now let’s take a look at the numbers behind the claims. What tangible impact can AI invoice automation deliver for your finance team?
- Reduce manual data entry by 83%. We surveyed 331 AP teams to discover the biggest pain points and challenges. Before automation, these teams were spending an average of 55% of their time keying invoices — so minimising the burden of manual data entry is a major benefit.
- Capture invoice header data with 99% accuracy. Manual data entry is error-prone and potentially risky, with 3.6% of manually-processed invoices containing an error. AI-powered invoice automation gives teams far more confidence in their AP data.
- Accelerate invoice processing up to 9x. It takes around half an hour of human effort, on average, to process a single invoice, while the approval process alone can take between 10 and 25 days. Without automation, it stands to reason that late payment is all too common.
- Reduce cost per invoice by ≈£12. The average cost of manually processing an invoice is £15. With AI-powered invoice automation software, that cost falls to <£3 per invoice.
Quadient AP by Beanworks is built on artificial intelligence. Our solution can help you automate your invoice processing, expense claims and more. You can learn more about our AI-powered accounts payable solution here, or read our blog for further information on how AI is used in accounting.
