A company’s accounts payable tasks may involve dozens, hundreds or even more transactions in a given day, making this task one that is a popular candidate for outsourcing.
As companies choose an outsourcing partner with a core competency in the area of processing accounts payables, they usually place great emphasis on their ability to make accurate, timely payments to creditors, vendors, contractors and others. There are many accounts payable outsourcing partners who can deliver extremely high levels of productivity and efficiency thanks to technology such as machine learning (ML.) So what do these AP specialists know that many accounting divisions still haven’t discovered about automating with machine learning?
Why is Machine Learning Used to Automate Accounts Payable Processes?
In recent years, machine learning technology has emerged as a very popular choice amongst those seeking to automate accounts payable processes and for good reason.
Machine learning is a “smart” technology that falls under the umbrella of artificial intelligence (AI). It is widely favored because this technology learns and improves its own algorithm over time. Trends and patterns are identified as the algorithm runs and subsequently, updates are made to improve efficiency. This means that the more you use machine learning software, the better it performs. That is a major advantage, especially in a space where every penny counts!
The Benefits of Automating AP Tasks Using Machine Learning Technology
There are many accounts payable automation benefits, especially if you are leveraging machine learning to help perform those AP processes. The following are a few of the most significant advantages.
- Speed – Automation using machine learning technology can process invoices at a very rapid pace — far faster than what a human could ever achieve. Additionally, there is no risk of tiring since the software can run on a 24/7 basis. This translates into shorter turnaround times. That’s great news since a happy invoice recipient translates into a happy accounting department.
- Accuracy – By automating accounts payable processes with machine learning technologies, you are largely (or completely) eliminating humans from the equation. That means you are also eliminating the potential for human error, resulting in far greater precision and accuracy. Some of the more sophisticated software platforms can also perform related tasks such as checking for discounts.
- Cost – Machine learning can bring major cost savings by increasing productivity. This translates into long term savings. Beyond this, you can achieve additional savings thanks to the relatively low cost of implementation for this technology. Plus, there is the fact that ML-powered software gradually improves in efficiency over time, which cuts costs even further.
- Greater Control – ML-powered accounting software can collect and generate lots of useful data, centralizing that information in a way that makes it much easier to take in at-a-glance. This means greater control when it comes to cash flow management, among other accounting tasks. Data-driven decision-making is quickly becoming the norm as companies are empowered by new technologies. This means that in addition to greater control, you will also become more competitive as a business since you will be able to leverage your data in more meaningful ways.
Additionally, there is the added benefit of offloading accounts payable tasks from your company’s accounting department. By automating AP tasks, your in-house accounting staff are free to focus on higher-level tasks — tasks that hold the potential to bring a much greater benefit to the organization as a whole.
Using machine learning technology to perform accounts payable processes can even improve morale since your company’s accounting professionals are freed from having to perform repetitive, tedious and time-consuming AP processes.
Automation and the Cost of Processing in Accounts Payable
If you are still on the fence when it comes to using machine learning automation for accounts payable tasks, simply examine the numbers because they truly speak volumes.
The metrics surrounding the actual cost of processing invoices and payments clearly illustrates the ROI potential for automation with technologies such as machine learning. A 2021 report by the Institute of Finance and Management (IOFM) evaluated companies’ per invoice processing cost, including an evaluation of the “maturity” of each company’s accounts payable processes and their level of automation. Here is what they found:
- $6.20 was the average cost per invoice for companies with the poorest level of process maturity and no automation.
- $1.83 was the average cost per invoice for companies with a high level of process maturity and no automation.
- $2.81 was the average cost per invoice for companies with the poorest level of process maturity and 1-2 automated steps.
- $1.64 was the average cost per invoice for companies with a high level of process maturity and 1-2 automated steps.
- $3.03 was the average cost per invoice for companies with the poorest level of process maturity and end-to-end automation.
- $1.45 was the average cost per invoice for companies with a high level of process maturity and end-to-end automation.
This data clearly suggests that the companies with a poor level of process maturity were better suited to partial process automation instead of full automation since the per-invoice cost was slightly higher for those using an end-to-end automation solution. This can likely be attributed to the poor process maturity, which underscores the importance of pairing automation with well-architected accounts payable processes.
This point also suggests that an organization can benefit from working with an experienced service provider who has had an opportunity to refine accounts payable processes alongside automation technology. A company specializing in accounts payable automation is likely to have lots of insights and strategies for streamlining the accompanying AP processes since they’ve had opportunities to observe what has worked efficiently — and what has failed in epic fashion — for the organizations they’ve work with.
If you are ready to use machine learning technology for accounts payable automation, the iTech team can assist. We specialize in helping clients to make the most of their data — and their limited time. Contact iTech today to discuss your accounts payable challenges and how we can help you improve your ROI.