AI in Finance

Stay in the loop of breakthroughs in AI for finance
Stay in the loop of breakthroughs
in AI for finance

Building a business case for AI-driven AP automation

blog1

Sign-up for our newsletter

Keep upto date on new product launches, industry updates and expert opinions on AI in finance.

Please enable JavaScript in your browser to complete this form.

By clicking Sign Up you’re confirming that you agree with our Terms and Conditions.

In today’s rapidly evolving business landscape, efficiency and cost optimization are not just goals but necessities. AI-driven Accounts Payable (AP) automation stands out as a transformative solution, driving significant improvements in financial operations, but how do you build a compelling business case for AI-driven automation? Let’s dive into the data and insights that underscore its value.

The current state of accounts payable

Traditionally, AP processes have been manual, time-consuming, and error-prone. According to a report by the American Productivity & Quality Center (APQC), companies that operate with manual AP processes can see processing costs as high as $10 per invoice. Furthermore, the Institute of Finance and Management (IOFM) states that manual invoice processing can take up to 8.6 days. This inefficiency not only drains resources but also hampers business scalability.

The financial argument for AI-driven AP automation

AI revolutionizes this scenario by digitizing invoices and streamlining approvals. A pivotal study by Ardent Partners found that automated AP solutions can slash invoice processing costs by up to 80%, reducing the expense to as little as $2 per invoice. Additionally, automation can cut processing times to just 3.3 days on average, enhancing operational efficiency.

Cost savings

• Processing cost savings:

Consider the direct cost reductions from AI-driven automated invoice processing. For a business processing 1,000 invoices monthly, transitioning from a manual process costing $10 to an automated process at $2 per invoice saves $8,000 monthly—translating to annual savings of $96,000. 

• Early payment discount opportunity :

AI aggregates and recommends to CFOs/Finance controllers the vendor invoices where it makes economic sense to avail early payment discounts. It is usually done by comparing the annualized discount rate with the cost of capital.
In the above example considering the average invoice value to be $500, there would be a total accounts payable to be $400,000 per month. Let us take a typical case of 25% of vendor payments having an early discount payment term of 2/10 net 30. It means 2% of 25% of $400,000 = $2,000 per month can be saved – translating to annual savings of $24,000.

Efficiency and productivity gains

AI frees staff from manual data entry, allowing them to focus on higher-value tasks. As highlighted above, the AP clerks have been seen processing 300-400 invoices a day as against the 30-40 invoices per day, pre-automation. This efficiency not only accelerates the payment cycle but also improves staff satisfaction and retention.

Enhanced accuracy and compliance

Manual processes are susceptible to human error. AP automation significantly reduces these errors, ensuring data accuracy. Compliance is another critical consideration. Automated systems maintain detailed audit trails, simplifying compliance with regulations and standards, which is a non-negotiable aspect of modern business practices.

Building the business case

When building your business case for AI-led AP automation, consider the following steps:

• Assess current costs: Quantify the current costs of your AP process, including labor, late fees, missed discounts, and error rectification costs.

• Calculate potential savings: Use benchmarks and case studies to estimate the savings AP automation could deliver in terms of reduced processing costs, early payment discounts, and reduced error rates.

• Consider the broader benefits: Include qualitative benefits such as improved vendor relationships, enhanced data analytics capabilities, and stronger financial controls in your business case.

Conclusion

The data is clear: AI-led AP automation offers a path to significant cost savings, efficiency improvements, and enhanced financial controls. By carefully constructing a business case that highlights these benefits, supported by solid statistics and data, you can make a compelling argument for adopting AP automation in your organization.
Embracing AI-led AP automation is not just about keeping pace with technology—it’s about seizing an opportunity to transform your financial operations fundamentally. The time to act is now.

How can Hyprbots help?

Are you ready to explore how AI-led AP automation can benefit your business? Contact us for a personalized assessment and take the first step towards transforming your accounts payable process today.

Sign-up for our newsletter

Keep upto date on new product launches, industry updates and expert opinions on AI in finance.

Please enable JavaScript in your browser to complete this form.

By clicking Sign Up you’re confirming that you agree with our Terms and Conditions.

What to read next

  • All Posts
  • Accounts Payable
  • AI in finance
  • Audit
  • Case studies
  • ERP
  • Industry Knowledge
  • Knowedgebase
  • Product experience
  • Research
  • Security & compliance