Companies are increasingly focusing on refining their accounts payable (AP) processes with the introduction of artificial intelligence and managed services. This shift is aimed at enhancing supplier trust and ensuring cash protection. AP has long been considered a back-office chore, rarely highlighted by chief financial officers (CFOs) during earnings calls. However, modernizing this function is now seen as critical to improving cash flow management and decision-making.
The integration of AI and automation in invoice processing represents a significant shift from prior strategies that relied heavily on manual tasks. In recent years, large corporations have swiftly implemented AP automation to mitigate operational risks, while mid-sized firms have lagged due to challenges in adapting to cultural and technical changes. Manual processing, despite being cumbersome, remains prevalent yet increasingly untenable as it is linked to strategic inefficiencies.
How is AP Automation Impacting Companies?
The impact of AP automation varies across companies.
“AP is really one of the few levers that companies can use to protect cash and reduce risk,”
said Ernest Rolfson, CEO of Finexio, highlighting the significance of AP evolution in enhancing liquidity management. Companies that embrace this technological move can achieve faster and more dependable payment mechanisms, fostering stronger supplier relationships and safeguarding themselves against fraud risks.
Is Manual Processing Losing Its Hold?
Manifested by friction in supplier relationships and the reluctance to change, manual processing still dominates the AP landscape, with 68% of invoices being handled manually. Rolfson emphasized the challenge of convincing both internal teams and external partners of the advantages of transitioning to more secure and profitable systems.
“Manual AP survives because the execution of it is messy and fragmented,”
Rolfson noted, advocating for a cultural shift to support efficiency.
CFOs must realize that modernizing AP systems involves both behavioral and technological shifts. The emphasis should be on relieving staff from manual tasks and leveraging managed services as an efficient transitional tool. Managed services enable companies to embrace change without overwhelming existing resources and provide measurable advantages like reduced overhead costs.
Finexio suggests that the first bottleneck to alleviate in the modernization journey is the manual labor involved in AP processes. Removing this hurdle allows companies to address unnecessary delays in payments that otherwise strain supplier relationships. Transitioning from paper checks to cards further helps reduce costs, fostering a more efficient payments ecosystem.
Automation, particularly when paired with AI, transforms AP from a cost center to a growth platform. AI’s predictive capabilities are critical in anticipating supplier adoption of digital payment methods, mitigating risks, and ensuring seamless transitions to electronic systems.
Utilizing AI allows supply chains to operate with less human intervention, facilitating a comprehensive strategy that aligns with a company’s scaling needs. It’s essential to view AP not just as a process but as a critical component that can drive overall business growth. The advances in AP technology continue to evolve, promising further efficiencies and reductions in fraud risk for businesses willing to embrace them.
