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7 ways AI can help you comply with policy and regulations

by Josephine McCann August 12, 2019

For a business, the consequences of non-compliance can be disastrous — including fines, lawsuits, and debarment. But it can be hard for busy finance teams to ensure every expense report, invoice, and contract not only adheres to internal corporate policies, but also complies with laws and regulations. 

Our new ebook, Artificial Intelligence in Spend Auditing For Dummies, explains how artificial intelligence can help by reviewing every invoice and report that comes in and checking against relevant company policies, contracts, and regulations. 

Here are seven examples of policy violations and potential liabilities AppZen’s AI-powered spend audit platform has helped our customers catch. 

1. Exorbitant expenses 

AI makes it easy to automatically notify your team whenever an expense report or invoice above a set limit is filed, so that major costs can undergo manual review. You can also set different limits for certain types of expenses, so that you’re alerted if there’s an exorbitant charge for a particular category (e.g., $2,000 might be reasonable for a transpacific flight, but not so much for a weekday client dinner). In addition, with AI, you can set an alert whenever expenses of any amount are filed for questionable merchants like strip clubs, spas, golf courses, etc. 

2. Expense reports that don’t match receipts

Unfortunately, it’s not unheard of for employees to submit inflated expense reports. They assume that auditors just don’t have the bandwidth to cross-check receipts against the reports and figure they might be able to skim a little bit off the surface. In a manual audit process, they’re probably right — but AI instantly checks every expense against each receipt in amount, date, merchant name, and currency. Plus, it isn’t just fraud AI can suss out: it’ll also look for any mistakes employees have made adding up line items or inputting amounts from receipts. 

3. Duplicate expenses 

Duplicate expenses are difficult to catch in a manual audit process — for example, two employees might submit the same car rental receipt, or one employee might submit the same dinner receipt in May and June. AI automatically scans every receipt and report for duplicates to make sure your business isn’t throwing money away. 

4. Payment terms mismatch 

We’ve found that a whopping four out of five invoices don’t align with their agreed-upon contract. Usually, what’s incorrect is the payment terms. The contract may list payment terms as net 60, while the invoice specifies net 30 or even net 15. While this may sound like a relatively small difference, longer payment terms actually make a big difference for your company’s cash flow. An additional 30 or 45 days of having money on your ledger allows your company to maximize profits via interest, external investments, and/or internal re-investments. And with thousands of invoices coming in each month, the consequences compound quickly. With AI, you can make sure that every invoice received matches its payment terms before it’s paid out. 

5. Insurance liabilities 

Insurance coverage for service providers is easy to overlook — the terms are probably buried deep in your contract, and no one thinks about it until something goes wrong. AI can review detailed contract conditions such as insurance requirements and expirations to make sure that service providers and consultants are fully insured before they perform any services on-site, preventing costly mishaps

6. Violations of anti-bribery and corruption laws 

The tricky thing about anti-bribery and corruption laws is that they don’t just prohibit companies from paying foreign officials directly, they also prohibit companies from offering “anything of value.” In addition, it isn’t always apparent who qualifies as a “foreign official” in the eyes of the law: a low-level staffer at a government agency might qualify, as might as an employee of a partially state-owned energy company. Companies who aren’t paying enough attention to compliance can quickly find themselves in hot water. 

AI makes the difficult job of compliance easier by cross-checking the names of individuals and entities against multiple lists of individuals who might be subject to anti-bribery and corruption laws, and by automatically flagging any documents (contracts, invoices, receipts, expense reports) that contain names on those lists. 

7. Violations of healthcare transparency legislation 

As an industry, healthcare is traditionally opaque, but lately there has been a concerted effort to increase transparency, particularly around the financial relationships between physicians, hospitals, and drug companies. Laws like the Physician Payments Sunshine Act in the U.S. make it crucial for organizations to track payments, stock, gifts, and business meals with anybody in the healthcare industry to make sure they are reported properly. AI can help by automatically identifying medical professionals and entities on contracts, invoices, and expense reports so that you can double-check that your organization is in compliance. 

Read more about how AI can help your organization comply with policy in Artificial Intelligence in Spend Auditing for Dummies

Josephine McCann

Josephine is a Product Marketing Manager at AppZen, where she loves crafting content and telling interesting stories.