Procurement teams put huge efforts into negotiating the best contract terms and volume discounts with suppliers. But are these savings always realised? Suppliers may ignore negotiated terms when invoicing, and AP teams, faced with a deluge of invoices and limited time to get payments out, can only do limited sampling and basic matching of volume and price. Mismatched invoice and contract terms, unapplied discounts, bogus charges, and other problems can all fall through the cracks.
Optimising your AP process may seem like a big undertaking, but it’s easier than it might seem, and worth the effort. It doesn’t have to mean hiring more people to check every transaction. Technology can provide crucial and cost-effective assistance for overstretched AP teams.
Artificial intelligence (AI) software is becoming more common in business contexts but the idea of actually using AI may still feel a little unrealistic for some. However, if other technologies have already been implemented into the workflow, AI can fit in seamlessly. AI-powered spend automation software integrates with existing expense management, invoice automation, contract management and ERP systems, to augment rather than disrupt the status quo.
Let’s discuss six common, potentially costly, invoice problems that can be avoided with an AI-powered solution:
- Fraudulent invoices
Inflated invoices, made-up charges, shell companies, vendor impersonation – all real issues and, too often, coming from inside. The Association of Certified Fraud Examiners found that fraud committed by employees against employers resulted in more than $7bn in total losses in 2018. AI software with a compliance component can spot risk factors commonly associated with fraud — from odd transaction patterns, to suspicious address changes, to disbarred or government-owned third parties — so invoices can be manually reviewed before payments are made.
- Duplicate invoices
The percentage of duplicates can be small but the figures are far from trivial. Often, duplicate invoices are supplier mistakes, but it’s difficult to catch these double charges, where details can be only slightly different, particularly if someone’s scheming behind the scenes. AI can help spot a wide range of duplicates (there are actually nine types) like similar invoice numbers, itemised vs un-itemised, different divisions invoiced for the same goods and services, different supplier divisions invoicing for the same thing, overlapping or cumulative invoices, and more.
- Missing discounts
AI software has the ability to understand contracts and invoice terms, then match terms from both documents to automatically make sure that agreed discounts are not being missed. It can also provide notification of early payment discounts, so that invoices can be prioritised.
- Mismatched service levels or PO and accounts
You signed up for the standard package, but you’re being charged for the premium offering. The correct AI software solution can compare agreed-upon service levels in contracts with every invoice received. It can also check that invoices are being matched to the correct PO lines and coded to the right accounts.
- Double payments
An invoice gets held for a valid reason, but the employee dealing with the supplier intervenes to push it through as a new, manually-created invoice. Later, the original invoice is also processed and paid when the hold is lifted. AI software is continuously cross-checking invoices and payments and then automatically flagging any duplicate payments before you make them.
- Exorbitant pricing
AI software can regularly compare your current costs to thousands of sources in real time to determine whether your invoices reflect the market rate for the goods or services provided and automatically flag individual invoices where your price exceeds the market rate. This can help negotiations with existing suppliers on pricing, or with new suppliers to achieve cost savings without sacrificing quality.
How AI software can help
Implementing AI software for finance gives your team 24×7 expert resources to scan every line of documentation to understand charges, categorise spend, and in real time automatically check every invoice for risk factors before payment, flagging the highest risk items for the finance team to review. Furthermore, AI software enriches with intelligence the items it reviews, identifying better prices for goods and services.
AppZen, the leader in AI finance software, seamlessly integrates into your existing AP automation system to audit every invoice in real time to spot errors, waste and fraud, helping your team get ahead of problems and potential leakage, rather than try to recover it afterwards.
AI is transforming the way modern finance teams work, giving them real-time visibility into their AP process and cutting the time they need to address the highest risk issues. By implementing a leading AI solution, finance teams can ensure that every invoice complies with its contract terms, and that the organisation receives every savings opportunity it’s entitled to — all while paying the bills on time.
In our first article, which you can read here, we described how AppZen developed the most sophisticated AI platform available to finance teams. Anant Kale will also be speaking live at 2pm on 18th June as part of CFO Agenda, in a session entitled Strengthening the Finance Function against Shock and Uncertainty. Register for CFO Agenda here.