AI-powered accounts payable draws on early accounting principles

For the 500-year-old practice of accounting in the era of artificial intelligence (AI), nothing has changed, and everything has changed.

Travel back in time to 1494 where, in an Italian village 150 miles north of Rome, a Franciscan friar named Luca Pacioli first documented the accounting methods still in use today. Pacioli, who would become known as the “Father of Accounting,” emphasized the need for accuracy, consistency, and ethical considerations in financial records.

Flash forward to modern day where major enterprises and small-to-mid-sized businesses alike are applying AI-powered accounting solutions in pursuit of the same fundamental principles—accuracy, consistency, and ethical considerations.

AI does not disrupt the accounting industry. It enhances it. It automates highly manual tasks that accounts payables professionals have been bogged down with for ages. This frees them to spend more time focused on strategic initiatives like optimizing vendor interactions, improving supply chain planning, and enhancing cash flow utilization. AI also increases human output since it can process far more data in a short period of time than humans. Suddenly, every member of the team is operating like a manager–reviewing, adjusting, and packaging the information AI has prepared. All of this is possible at unprecedented rates of efficiency and scalability.

Let’s explore the connection to learn how AI supports the needs of today’s accounting professionals while holding true to traditional accounting values.

Automated workflows increase efficiency and reduce costs

Efficient management of financial records has been a key concern since the dawn of accounting, as it directly impacts a business’s bottom line. Even the most experienced accounting professionals can only process five invoices per hour, costing businesses an average of $15 to $40 to process a single invoice. Now, AI can automate the tedious and time-consuming aspects of invoice processing and drive greater efficiency.

With AI to handle data capture of all kinds—both structured and unstructured data, digital and paper inputs—businesses can process invoices faster and at a lower cost. Companies that have adopted AI in accounting have seen an average increase in revenue growth of 15% from 2019 to 2023. An AI solution that can automate workflows and integrate with procurement systems will add to the efficiency gains, reducing error-prone manual labor and other costs.

Analytics and insights for better decision-making

Accounting data is often locked away in paper documents and dispersed among siloed accounting software platforms, leaving accounting professionals with only a part of the complete financial picture. An AI-powered solution can help organize and centralize all accounting-related data. Powerful analytics provide accurate insights into real-time business performance that can help employees make better strategic decisions.

Accounting professionals can leverage invoice cycle data to increase transparency across all client-vendor interactions and improve relationships with suppliers. AI-powered insights can help drive prioritization of the team’s tasks to maximize supplier discounts and avoid late payment penalties. Leaders can make data-informed changes like identifying and adjusting recurring issues that create process bottlenecks. Improved processes and on-time payments enable favorable payment term negotiations with suppliers well into the future.

Double-entry bookkeeping and data accuracy

Manual data entry takes up so much valuable time. But the data is important, and it must be accurate. Solutions that leverage AI can automatically extract and index invoice data from paper and digital records, reducing the need for manual data entry.

By correctly capturing invoice information and integrating it into existing systems, AI-powered solutions help uphold the vital principles of accuracy and consistency. Automation driven by AI machine learning can also prevent common errors like duplicate payments or overpayments.

Ledger management and centralized data

For hundreds of years, accounting professionals have maintained organized ledgers, tracking all financial transactions systematically. AI has made it easier for accounting teams to record transactions and ensure accurate coding. Automated account coding uses historic data to train an AI model on proper invoice codes and organizational structure. When a new invoice is received, the system can automatically code and file that invoice on behalf of the team, without human intervention.

With AI-powered solutions, they can centralize invoice management across physical and digital formats, providing a single repository for all invoice records. This centralization is akin to maintaining well-organized ledgers, but much faster. It ensures all financial data is stored, managed, and accessible from one place. This not only simplifies the management of financial records but also allows for easier reconciliation.

Responding to vendor inquiries

Another aspect of AP professionals’ jobs that hasn’t changed in 500 years is the need to maintain open communication with vendors. Today, responding to vendor emails can interrupt an employee’s flow of work multiple times every single day. According to a 2022 State of AP survey, 43% of AP teams spend six or more hours each month responding to inquiries from vendors.

An automated account payable workflow can greatly reduce the time team members spend responding to vendor inquiries. Once an invoice is processed into the AP system, an AI application monitors an employee’s email inbox. It identifies emails from vendors and is programmed to respond to specific invoice-related questions by going into the system, finding the invoice being inquired about, and identifying the information the vendor was asking for. It then generates an email response, freeing up valuable time for AP teams.

The right DXP can transform accounts payable operations

An AI-powered digital experience platform (DXP) can help accounting teams uphold the cornerstones of accounting: accuracy, consistency, and ethical standards. It does this through its ability to unify and process exponential amounts of data and automate existing workflows, freeing teams to focus on strategic initiatives and make better decisions that benefit the business. A DXP can:

• Make invoice processing more transparent with secure, centralized physical and digital invoice file management.
• Increase accuracy by automatically extracting invoice information and feeding it into pre-built, customizable workflows to avoid errors resulting from manual data entry.
• Increase efficiency and reduce costs with digitization and workflow automation, so invoices can be sorted and organized with a few keystrokes.

Here are 5 ways a DXP can help you overcome your biggest invoicing challenges, and how you can optimize your digital future with a unified asset strategy.