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5 ways to stop accounts payable leakage at scale with AI

by Chih-Hsuan Wu April 14, 2020

The Accounts Payable (AP) team has several responsibilities; not only are they the gatekeeper of an organization’s precious funds, but they are also the last line of defense against fraud or risk exposure.

Imagine on a daily basis thousands of invoices flooding in as requests for payments which require a plethora of checks to be performed. Without a large enough team to read through each request thoroughly, how can an organization run efficiently enough to keep vendors happy without conceding the deep analysis needed for financial control?

Due to limited resources, teams are forced to compromise by randomly selecting a small set of invoices for manual review while letting the majority of invoices pass through. Some teams may be lucky enough to have the aid of automation tools, but without incorporating the proper context from contracts or other sources, the team is left with the same problem.

The AP must hope for few enough invoices to be able to manage the annual audit process. But by that point, the payments have already been made.

There must be a better way to do this, right?

This is the perfect dilemma for which Artificial Intelligence (AI) is equipped to tackle at scale. Not only does AI have the capability to interpret large datasets and process decisions quickly, but also AI has the ability to identify anomalies from past trends.

That is why we designed AppZen for Accounts Payable audit. We enable AP teams to audit 100% of spend to identify errors, waste, fraud, and non-compliance prior to payment and without any compromises.

Verify every transaction against policy

Does your organization have a spend limit policy based on the requestor level? What about the amount a requestor is allowed to request during a set period of time or the type of allowable purchase based on the requestor’s job function? These are common examples of policies auditors need to manually check. With AppZen, every transaction gets automatically audited against all spend policies in the same manner a human auditor functions. Moreover, AppZen approves low risk items so auditors can focus on studying the problems and not spend significant time in problem discovery.

Check duplicate invoices

By examining 100% of the invoices, expense reports, and corporate card transactions, AppZen’s AI can quickly flag suspicious transactions. AppZen also derives contextual information directly from documents by reviewing manually entered information in comparison with information on vendor, purchase date, and total receipt amount. If any criteria matches previously submitted invoices, AppZen marks the invoice as high-risk, whether the duplicate is the same vendor or lists a different name.

Validate payment terms and discounts

Sometimes, inadvertently, there are payment terms and discount discrepancies between what was contractually negotiated and what is invoiced. Unless every invoice gets evaluated side-by-side against the contract, this leakage is usually overlooked. With AppZen, every invoice’s payment term and promised discounts are verified against its contract. In addition, AppZen interprets complex pricing tables, discount structures, and labor rates to eliminate the need for refund requests from vendors.

Stop paying the wrong vendor

In addition to the plethora of ways an outsider can attempt to commit fraud, payments can inadvertently be made to the wrong vendor due to a simple manual entry error. AppZen developed audit models to help drive down spend leakage before the payments are made. By learning the payment types and payment patterns, AI can detect if there’s a spike in the spend amount, an anomaly in items purchased, or a change in bank details, without side-by-side manual comparison.

Reduce risk exposure

The Accounts Payable team can be the last line of defense against risk. When a mistake happens, it may be more costly than just the single erroneous payment. In addition to the internal audit and potential legal costs, immeasurable damages might be caused to the business’s reputation. For example, with respect to compliance to the Foreign Corrupt Practices Act (FCPA) or identifying politically exposed person (PEP), how can an auditor remember all of the names of the heads of state and the businesses they are associated with? AppZen can assist the AP department in avoiding costly mistakes. AppZen aggregates and analyzes spend for every individual and vendor in comparison with external databases and sources so that businesses get the coverage they need to ensure adherence to proper governing laws. Our Artificial Intelligence can identify expired agreements and missing provisions (i.e. anti-bribery corruption provisions for high-risk vendors) as an extra layer of protection.

Want to learn more about how AI can help your finance team? Click here for a demo.

Chih-Hsuan Wu

Chih-Hsuan is a Product Marketing Manager at AppZen, where he tells interesting stories of how AI changes the world around him.