Accounts Payable Process Transformation: The C-Suite’s Guide to AI-driven Automation in AP

Over half of Finance teams are planning to implement, piloting or already using AI.1 In addition, 73% percent of businesses already use or are plan to use AI and GenAI.2

Did reading those stats make you feel guilty and stressed that your company’s lagging behind in AI adoption? Maybe they gave you a twinge of envy that other businesses have already figured out how to incorporate AI into their financial processes.

Don’t fret. Those feelings just mean you understand that AI is the wave of the future and that your company needs to get on the automation train. That’s a good thing. After all, acknowledging you have a problem is the first step towards improvement.

Falling Behind on AI Automation? Read the full blog on 5 Signs CFOs Can’t Afford to Ignore.

And you’re far from alone in feeling this way. A Gartner survey of more than 200 CFOs uncovered a strategic imperative on the minds of many financial leaders: Accelerating AI adoption and cultivating the digital talent needed to generate long-term value from AI investments is essential in the coming years.

The importance of harnessing AI-driven automation’s powerful potential is especially vital as the Office of the CFO is shifting from number crunchers to the central hub for operational strategy and digital transformation. A recent Esker survey found that 76% of CFOs believe utilizing new intelligent technologies (including AI-powered solutions) or improving legacy processes are key ways companies can equip their procurement, accounts payable, accounts receivable and customer service functions to help execute corporate financial strategies.

Which brings us to the topic of today’s blog post — how transforming your AP processes creates a stronger, better informed and more effective Office of the CFO that creates more value, drives more growth and steers the company in financially wise directions.

The modern AP function goes way beyond overseeing data entry and payment processing. As the keepers of cashflow and a company’s real-time financial performance, AP is finally being recognized as a critical component of the wider Office of the CFO.

But are today’s AP departments properly equipped to bolster the Office of the CFO? And are companies (and CFOs) doing enough to empower this essential team? That’s where process transformation comes in.

4 ways AP process transformation strengthens the Office of the CFO

The Hackett Group defines process transformation as “a comprehensive approach to redesigning and optimizing operational processes to improve efficiency, effectiveness and adaptability.” AI-driven automation is one of the engines that powers process transformation. In other words: sensible processes + AI-driven automation = mind-blowing results.

Your AP department is a powerhouse of unrealized potential. Unleashing that potential through process transformation brings both immediate and long-term benefits to your organization.

Cost savings

Is there any company on this planet that doesn’t want to save money? Of course not. In fact, 44% of CFOs say increasing the use of tech to reduce costs is a key funding priority.3 So if spending less on AP is on your wish list, consider process transformation your Santa Claus.

Integrating AI-driven automation into your AP function reduces costs by:

• Enabling faster, more efficient processing through touchless processing and dramatically reduced manual data entry (read how the Boston Red Sox optimized their AP process)
• Decreasing manual errors with automated data entry and 2-way or 3-way matching
• Reducing loss from fraud attempts thanks to built-in controls and digital audit trails that make it harder for fraudulent invoices and duplicate payments to get through
• Ensuring payments are made on time, reducing late payment penalties and lowering DPO via due date reminders and invoice prioritization (read how Yaskawa reduced their past-due invoices by 70%)

Better cashflow & more working capital

Saving money — even making money — in a process where money is leaving your company? Believe it. It’s possible when you view AP not as revenue or a cost center but as a growth lever you can strategically manage. And strategically managing AP is doable when you have an AI-driven, automated process.

Process transformation in AP leads to more cashflow and working capital by helping your team:

• Carefully time payments so your company can hold onto its cash longer, which can then be used to generate revenue or for other investments
• Capture more early payment discounts with help from AI that keeps track of invoices eligible for discounts and alerts your team before the discount window closes
• Negotiate more favorable terms from suppliers by leveraging your team’s history of on-time or early payments and clear communication with suppliers thanks to AI-driven automation tools

Dependable data for decision-making

The AP department is a treasure trove of information — if only it could be organized, analyzed, visualized and put in front of the right people. With a transformed AP process driven by AI and automation, you can thanks to:

• Real-time visibility into AP metrics and performance, enabling better strategic planning, cleaner reporting and more accurate cashflow forecasting (read how Baldwin Supply Company leveraged their AP data)
• Centralized, digitized data and powerful analytics to identify cost-saving opportunities and analyze vendor performance

Increased productivity & scalability

When you let AI and automation take over the mundane, repetitive tasks in your AP process, your human team can focus on more interesting, value-added activities. As a result, morale improves, productivity increases AND you can keep up with growing invoice volumes without needing to add tons of headcount.

AP process transformation brings:

• Consistent rule enforcement for approvals and payments, standardizing your processes while reducing inconsistencies and exceptions
• Enhanced collaboration on a central platform that allows different departments to work together more effectively on invoice information

Want to see even more ways AI makes AP easier? Or curious to see the nuts and bolts of how AI improves specific aspects of the AP process? Check out 9 Accounts Payable Problems Solved with AI.

How to start digitally transforming your AP process with Esker

The two biggest pieces of advice we give any CFO interested in process transformation and AI-driven automation are 1) map out consistent, efficient processes that work for your business BEFORE you start automating, and 2) don’t take a piecemeal approach to automating your AP process.

The first step of any process transformation initiative must be to identify where your current process is failing you and determine how you want to change it. If you jump straight into automating a bad process, you’ll just keep struggling with the same problems you had before you began automating. 

A partner like Esker, with decades of experience helping hundreds of companies around the world transform their financial processes, can help step you through your automation journey.

And regarding our second piece of advice, when your processes are ready for AI-powered automation, a holistic approach is better than a piecemeal one. What does that mean? Automating only one or two specific parts of your AP workflow isn’t nearly as effective as thoughtfully automating your entire process. In fact, automating in dibs and dabs just leads to confusion and delays.

Here again, Esker can help. Our complete AI automation suite for the Office of the CFO:

• Automates all source-to-pay and order-to-cash processes in one, cohesive platform
• Integrates with any existing ERP environment
• Has a simple user interface that’s easy to learn so your team can get up to speed quickly

In other words, our solutions are designed for finance process transformation. To see what that looks like in AP, check out this 3-minute demo. 

Sources

1. 2024 Gartner AI in Finance Survey
2. PwC 2024 U.S. Responsible AI Survey
3. PwC Pulse Survey, June 2024