You’ve Digitized Your Accounting Processes But Are You More Efficient?

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Alexander Hagerup, Co-Founder and CEO of Vic.ai, is a serial tech entrepreneur with a strong passion for artificial intelligence.

It’s a truth as old as the abacus: Inefficient accounting plagues operations in all kinds of businesses, from mom-and-pop shops to the largest enterprises. Bad accounting processes are a waste of time and effort, pulling valuable resources away from finance professionals who could instead be concentrating on future plans and strategies. What’s more, inaccurate and disorganized financial data can lead to errors, oversights, compliance issues and misinformed decision making.

In the face of these challenges, businesses have worked for centuries to implement solutions to better automate their accounting workloads. Over time, leather-bound ledgers and mechanical calculators have given way to computerized spreadsheets. Today, a wide variety of digital accounting solutions exist on the market, all of them promising to save companies precious time and money.

However, it’s become clear that not all of these solutions are created equal. Although automation might mean a company’s accounting practices are no longer 100% manual, that doesn’t necessarily mean they’re more accurate or efficient.

The Unmet Promises Of Automation

Automation is a broad term that translates into all kinds of applications within finance and accounting departments, from document recognition to payment transfers. However, it’s unclear whether this automation is translating into actual efficiencies.

For example, according to the results of an Institute of Financial Operations & Leadership (IFOL) survey on automation trends, 25% of respondents say they’ve automated invoice management, but 68% of accounts payable (AP) teams say they manually type invoices into their enterprise resource planning (ERP) systems. Some tools only pull invoice header information, leaving AP teams the time-consuming task of coding the expenses to their general ledger (GL) accounts. Similarly, some technology providers automate half of the process and rely on inexpensive offshore accounting clerks to finish whatever work their software couldn’t handle.

Rigidity also plagues many accounting solutions. Rules-based automation tools are inflexible and, when bent too far, will break. Invoice dates and numbers must be in the exact right place, or the system won’t recognize them, completely ignoring the reality that invoices come in all types and formats, including handwritten notes. In a world where some enterprises handle 10,000 invoices per month, this type of “solution” just isn’t cutting it.

And the cracks are starting to show: 41% of surveyed businesses were planning to change their AP automation solution in 2021, “indicating a potential desire for solutions with more leading-edge features and capabilities.”

Artificial Intelligence As A Solution

Understandably, businesses don’t want to take on a new vendor without knowing whether they’ll actually gain any efficiencies. But there’s one factor that’s likely to make a significant difference in terms of both efficiency and accuracy: artificial intelligence (AI).

AI is the essential ingredient to true autonomy—the tipping point between digitization and efficient, accurate automation without human intervention. AI algorithms continually learn and self-correct, creating a positive feedback loop that makes the system smarter and more accurate over time. Rather than building rigid rules from generalized data, AI solutions allow for business-specific precision. AI can pull directly from a company’s invoice data to continuously learn from costs and accounting behavior. With a centralized platform and multi-language recognition, AI also has the power to see and learn from global finance teams.

These tiny nuggets of data—added together and continually built upon—can result in the significant preservation of human resources that can be put to better, “smarter” use. In fact, today’s AI can cut costs and errors in invoice processing by up to 85%. The result? It’s possible to gain improved productivity, optimized resources, accelerated growth, enhanced financial agility and increased financial control.

Now that accounting firms and enterprise businesses are beginning to recognize that automation doesn’t always equal efficiency, what should they be looking for in a new technology solution?

• Artificial Intelligence: First, true automation can’t be achieved without the continuous learning at the root of AI.

• Use Of Historical Data: A strong solution should have the ability to immediately integrate a company’s historical data to begin building intelligence and accuracy from the get-go.

• Process Times: A solution should tell users how long it takes to process each invoice—demonstrating continual improvement due to AI.

• Automation Percentages: Likewise, a solution should tell users what share of invoices are being handled without being touched by a single person up until the point of approval and payment. Here again, AI means these percentages should continue to improve the longer the tool is in use.

• Invoice Storage: To help companies execute on these efficiency gains, smart solutions should include the storage of all past invoices for easy reference and tracking—assisting with pattern spotting, predictions, approvals and future planning.

• Approval Workflows: A good solution should include a standardized, easy-to-read approval workflow. You can say goodbye to the days of managing approvals via Excel or email, not to mention clerks chasing down approval signatures.

• Digital Audit Trails: A solution should ease the auditing process by acting as an online repository for all vendor invoices, keeping track of the full audit log and recording the approval history.

As technology continues to improve, the promise of AI goes far beyond resource efficiency. In the near future, AI may help companies derive valuable insights from their accounting data and use that to make strategic decisions that can benefit their growth and sustainability. For now, businesses should consider deploying AI to its fullest extent, capturing true autonomy in their AP processes and helping to save precious time and resources.


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