AI in accounts payable: Impact and proven case studies

Invoices piling up, missed approvals, and manual data entry errors are challenges most companies know all too well. Accounts payable (AP) often feels like a bottleneck, slowing operations and straining supplier relationships. But it doesn’t have to be this way.

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AI solutions are here to help. By automating tedious manual tasks, AI transforms AP workflows into efficient, streamlined processes. In fact, 91% of mid-sized firms currently plan to further automate their AP systems, aiming to improve payment processes, reduce workloads, boost operational efficiency, and combat fraud.

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Let’s explore how AI-powered systems could revolutionize your AP process, including real-life success stories showcasing the powerful impact of accounts payable automation.

What is AI in accounts payable?

AI (artificial intelligence) in accounts payable uses advanced technologies like machine learning (ML) and natural language processing (NLP) to automate tasks including: 

• Processing invoices
• Extracting invoice data from different formats
• Managing payments
• Tracking expenses

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Unlike traditional tools, AI systems learn and improve over time. They optimize decision-making by analyzing large datasets, such as payment cycles and cash flow. The result is a more efficient finance department with greater insight into your operations. 

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AI is changing how businesses handle accounts payable by cutting costs and errors and streamlining processes. It makes operations faster, simpler, and more accurate.

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It captures details like line items from invoices, spots anomalies, and flags duplicate invoices for review. Your business also gains better metrics to monitor your cash flow and prevent late payments, ultimately improving your supplier relationships.

The use of AI in the full accounts payable process

AI plays a role in every step of the accounts payable process, from data capture to AP reporting and analytics. Here’s a closer look at how it works:

1. Invoice capture and data extraction

AI-powered tools can read invoices, whether they arrive as PDFs, emails, or paper scans. They use optical character recognition (OCR) combined with machine learning to extract key details like vendor names, invoice numbers, dates, and amounts. Advanced anomaly detection ensures errors like missing invoice details are flagged early.

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AI improves its accuracy over time by learning from past corrections, significantly reducing errors. These tools also categorize and organize invoices automatically, eliminating the need for manual sorting.

2. Invoice validation 

AI verifies extracted data against purchase orders or contracts in real time. If totals don’t match or essential details are missing, AI flags these discrepancies immediately. Errors are caught early, and there’s less need for frequent human intervention. Validation becomes faster, and the risk of overpayments or duplicate payments drops significantly.

3. Approval workflow 

AI streamlines approvals by routing invoices to the right team members based on predefined rules like payment thresholds or department budgets. It learns patterns in approval delays and sends timely reminders to prevent bottlenecks. AI also provides real-time visibility into where invoices are in the workflow, making it easier to identify and resolve holdups.

4. Payment processing

AI analyzes payment schedules to prioritize cash flow management. For instance, algorithms can analyze payment terms, due dates, and early payment discounts. It optimizes cash flow by prioritizing payments that maximize savings and avoids late fees by ensuring payments are sent on time.

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AI also integrates with payment gateways, automating the entire payment process from initiation to reconciliation.

5. Fraud detection

AI enhances security by analyzing transaction data for unusual patterns or behaviors, such as invoices with inflated amounts or duplicate entries. 

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It cross-checks vendor information against known databases and flags anything suspicious. By constantly monitoring for anomalies, AI helps your business stay a step ahead of potential fraudsters.

6. AP reporting and analytics

AI transforms raw AP data into actionable insights. It generates detailed, real-time reports on spending trends, payment cycles, and vendor performance. Your business can use this data to identify inefficiencies, negotiate better terms with vendors, and forecast future cash flow needs. 

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The best accounting software streamlines these processes and improves long-term decision-making through advanced data analysis. 

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Advanced AI analytics can even predict trends, helping your business make proactive financial decisions. Dashboards provide a visual snapshot, making complex data easy to understand and act on.

The current state of AP automation

A PYMNTS Intelligence study reveals that less than 5% of AP departments are fully automated, highlighting significant room for growth in adoption. 

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Meanwhile, the challenges of manual payments persist. Manual processing costs nearly four times more per invoice than using automated systems, while at the same time increasing the risk of delays and errors.

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By automating repetitive tasks, AI and machine learning can transform how your business manages AP workloads. Beyond efficiency, automation solutions free up payable teams to focus on strategic initiatives, driving value instead of getting bogged down by routine tasks.

The future of AI in AP automation

Going forward, AI in AP will move beyond automation to help your team make data-informed decisions and projections. Future innovations could include advanced cash flow forecasting and enhanced fraud detection using AI-driven insights. Integrations with ERP systems will allow your business to handle complex workflows with ease.

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Real-time analytics may become standard, enabling your business to make smarter, faster decisions. As technology evolves, AI will make AP processes more proactive, cost-effective, and intelligent.

Will AP be replaced by AI?

No, AI won’t replace AP entirely. While AI can handle repetitive tasks and improve efficiency, human intervention remains necessary for complex decision-making. AI acts as a tool to support and enhance AP functions, not a replacement for the expertise your finance team brings.

Benefits of AI in AP

AI offers faster, simpler, and smarter ways to handle repetitive AP tasks. The benefits of using AI don’t stop at saving time—they make the entire process more efficient and reliable. 

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Here are five key reasons why AI is a valuable addition to AP teams:

1. Faster invoice processing: AI speeds up workflows by automating time-consuming tasks like data entry and validation, reducing processing times significantly
2. Improved accuracy: AI minimizes human errors by automatically extracting and validating invoice details with high precision
3. Cost savings: By reducing manual work and errors, AI lowers operational costs and helps your business take advantage of early payment discounts
4. Fraud prevention: AI detects unusual patterns and flags potential fraud, providing your business with an additional layer of security
5. Enhanced reporting and insights: AI generates real-time analytics, offering valuable insights into your cash flow, payment trends, and vendor performance

The impact of AI in AP automation: Ramp’s proven case studies

Adopting AI in accounts payable can feel like a big leap, especially if your business is accustomed to traditional processes. But Ramp’s success stories show how AI can transform your AP system with tangible results.

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Here are three examples of businesses that have seen major improvements with Ramp’s AI-powered solutions:

Quora: Revolutionizing AP in the tech industry

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Quora’s accounts payable system faced significant inefficiencies. The team spent hours manually inputting and verifying invoices and trying to coordinate multiple systems. This manual approach often resulted in delayed payments and errors that damaged vendor relationships. 

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After implementing Ramp’s AI-powered solution, Quora automated key processes like invoice capture and validation. Managing vendors with Ramp has also eliminated their problem of rejected payments every time vendor information changed.

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Benefits Quora has experienced with Ramp include:

• Processing times slashed from 5–8 minutes to 1–2 minutes per invoice
• Number of accounting systems used cut from 3 to 1, immediately reducing Quora’s software spend
• Monthly close for cash and credit cards reduced from 2–3 hours to just 15–20 minutes

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Quora has also been able to get more done without overburdening their lean finance team. Their employees have found more freedom to focus on higher-value projects.

Adrift Hospitality: Streamlining AP for hospitality

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Adrift Hospitality dealt with a complex AP process, juggling invoices from numerous vendors across its locations. Delayed approvals and missed payments were common issues, leading to strained vendor relationships. With Ramp, Adrift centralized its AP system, allowing for real-time tracking and automated approvals. 

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The result? 

• Adrift saves up to 25 hours monthly with Ramp’s automated transaction coding and account reconciliations 
• With Ramp’s insights and analytics, the team can instantly see where they’re at with monthly spend
• Adrift is able to close out their month 5 to 10 days faster with Ramp

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Tracking spending and staying on budget has been dramatically simplified with Ramp. And staff who previously spent hours coding and organizing their transactions now have time to evaluate the nature of the spending and be more strategic about it going forward. 

Precision Neuroscience: Simplifying AP for healthcare innovation

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As a rapidly growing startup, Precision Neuroscience needed an efficient way to handle an increasing volume of invoices without sacrificing accuracy. Their previous system struggled to keep up, leading to delayed approvals and overlooked errors. 

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Here’s a breakdown of some of the benefits Precision Neuroscience experienced when they automated their finance team’s tedious manual tasks with Ramp:

• Time for PO to be sent to vendor slashed by 50%
• Month-end close reduced to 1 to 2 days
• Ramp generated immediate savings on accounting software spend, consolidating the team’s tooling from 4 platforms to 1

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Ramp’s AI tools automated data extraction and streamlined the payment approval workflow, processing invoices quickly and accurately. With improved visibility into cash flow and real-time analytics, Precision Neuroscience can better allocate resources and maintain compliance with industry regulations. 

Take control of your AP workflow with Ramp

Ramp’s AP software is leading the way with AI technology. With Ramp, you can streamline processes, reduce costs, and focus on what matters most––growth. 

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Some of the features you get by automating your AP workflow with Ramp include: 

• Automated invoice processing: Whether you scan or upload invoices, our AI automates the data entry process and takes care of invoice matching and reconciliation 
• Real-time reporting: Access up-to-date insights into your finances, including payment status, expenses, where you are with budgeting, and potential cost-saving opportunities
• Customizable approval workflows: Build smart approval workflows that keep things moving and receive error or overbilling alerts for better cash flow control

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Are you ready to transform your AP workflow? Ramp can make it happen.

Discover how AI is transforming accounts payable with real case studies. Learn how automation improves efficiency, reduces errors, and streamlines AP workflows.