As businesses continue to look for ways to streamline their operations and reduce the risk of errors, many are turning to document AI to automate their accounts payable (AP) and accounts receivable (AR) processes. The use of payment AI and automation, and digitization software can greatly reduce errors and improve the efficiency of financial transactions.
Manual, painstaking processes
According to the Federal Reserve, 75% of bills are manually processed, which is slow, error prone, and leads to frustration from billers and payers. Businesses communicating with other businesses send a lot of PDF documents, however it is difficult to extract and organize important information from PDF documents, especially if they’re not structured in a consistent way. This can lead to delays and errors, which can be costly for the business and frustrating for customers. In key verticals like retail and manufacturing, investing in streamlined financial processes is becoming a top priority to maintain a competitive advantage.
AI and automation benefits
One of the key benefits of using document AI in the AP process is the ability to automatically extract information from invoices and other payment-related documents. This can save time and reduce the risk of errors caused by manual data entry. In addition, document AI can be used to classify and route incoming documents for further processing, which can help to streamline the follow-up process for unpaid invoices and reduce the risk of missed payments.
There are also advantages to using document AI in the AR process, including the ability to automate the handling of incoming documents such as checks. With a third of B2B payments still occurring on paper checks, companies can benefit greatly from digitization and process payments more quickly. By using machine learning algorithms to classify and route documents, businesses can significantly reduce the amount of time and resources spent on manual data entry and document management. This can free up employees to focus on more value-added tasks, such as analyzing data and making strategic decisions.
Another benefit of document AI for companies is improved expense management. By digitizing receipts and other documentation, you can easily categorize and track your business expenses in a spreadsheet or other finance software. Automating the process of tracking and approving employee expenses can also improve the accuracy and compliance of your spend management process. This can help companies get a better understanding of where money is going, identify areas for cost savings, and make more informed financial decisions. Companies can start to see the true benefits of AI and automation.
Start with a plan
For many companies, the benefits of document AI and digitization are clear: reduced internal costs, improved revenue, better financial data. But what’s the best way to start the process? Here are some helpful questions to get things started:
- Understand the cost of your internal processes: how many checks & invoices does your team process each quarter? What is your average DSO (day sales outstanding, or the average number of days it takes for your customers to pay you)?
- What technology is your company already using for AP/AR? How many people conduct manual data entry for AP/AR processes?
- Put together a rough cost analysis of paper-based/manual processes. How much does it cost your company to process a paper check? How much time does it take to reconcile invoices, purchase orders, receipts, etc.?
By answering some of these questions, many companies can understand the financial benefit of streamlining AP/AR processes. The business case extends further, including providing better customer experiences through targeted data and insights. Imagine knowing down to the SKU which products are profit drivers for your business, from product sourcing through collecting payment from the customer.
The future of financial processes
The use of document AI in financial processes can greatly improve the efficiency and accuracy of financial transactions. By automating the handling of paperwork, businesses can save time and resources, and focus on more important tasks. As the adoption of document AI continues to grow, it is likely that we will see even more organizations adopting these technologies to streamline their operations and reduce the risk of errors.