Processing invoices and managing inventory with artificial intelligence.
In the past few years, the American labor force has been experiencing what the U.S. Chamber of Commerce refers to as "The Great Reshuffle." Since the pandemic, workers have been shifting out of high-stress sectors and into industries that offer more flexibility and work-from-home options. Fortunately, technology has made this shift a bit easier for businesses that have been struggling to fill open jobs. Technology has become available that has helped companies thrive with a reduced workforce. One of the most affected departments has been accounting.
Thanks to innovations such as machine learning and artificial intelligence, many accounts payable (AP) and accounts receivable (AR) jobs can be automated or at least supported by technology. Using technology to automate AP/AR systems not only can accommodate a smaller workforce, but it also allows the company’s remaining workers to move from less satisfying work like heavy amounts of data entry to projects that are more intellectually stimulating. A happier and more fulfilled workforce will likely reduce turnover at a time when overall workforce satisfaction is at a 20-year low, according to a 2022 employee survey by Metlife.
Here are some of the technology innovations that businesses are employing to streamline and drive efficiencies in their AP and AR departments:
Robotic Process Automation
A type of technology that uses bots to emulate human tasks on a computer, robotic process automation (RPA) uses rules—or "if-then" statements—to perform processes. Much like a human, RPA understands what is on the screen, then is able to act on what it is seeing.
In AR and AP departments, RPA is now being used to process and monitor invoices, escalate invoice disputes, manage inventory, and respond to customer emails.
- Invoices. RPA can check invoices against prior orders. Those that have no discrepancies can be approved immediately or sent to a queue to be checked manually by an account manager.
- Escalate disputes. A company’s invoices are less likely to get paid the longer they remain in dispute. RPA can prioritize invoices that need extra attention so that disputes can be addressed quickly and the company can get paid sooner.
- Manage Inventory. RPA bots can perform nearly every aspect of the inventory management process. They can update inventory based on purchase orders, contact suppliers when quantities reach reorder thresholds, notify customers of new products, and signal when quality checks need to be performed.
- Respond to customer emails. If a customer has a question, an RPA bot can email them the status of their order. Though this won’t fully eliminate the need for an employee to monitor the inbox, it could help employees focus on building rapport with key customers.
Automated Month-End Close Systems
Month-end close has traditionally been a workforce-intensive process. Together, the AP and AR teams need to ensure that entries are complete, accruals are made, adjusting entries are booked, accounts are reconciled, and the results are reviewed. Not completing these tasks could cause a business to fail in its reporting and compliance requirements and could mean leadership bases important business decisions on inaccurate data.
Automated accounting workflows help streamline the close process by allowing a computer system to do many of the things that are traditionally performed by an employee. Technology can now easily import data, reconcile accounts, generate reports, and cross-check balances.
Financial technology can automatically generate the documents that the AP and AR teams need. For example, if a company supplier sends paper invoices, optical character recognition (OCR) is being used to recreate the invoice digitally. Once the invoice is digital, RPA can extract the information it needs to move it through the queue.
Document automation can save time, perform an algorithmic check of invoices to see if there are errors or outlier items, and detect fraud by determining if a document has been altered or an invoice duplicated. According to Zapier, an automation firm, accountants can save up to four hours each week with apps for automating workflows.
AR and AP processes are the backbone of any successful business. While automation technologies will not solve every problem in the accounting department, these technological advancements can greatly improve efficiency and reduce the need for staff, allowing companies to meet their accounting requirements while saving time and money.
To learn more about this and other treasury tools, contact your relationship manager, treasury management officer, or find a banker to learn more.