Why AR and AP teams can’t do without generative AI

Blog | October 19, 2023

Reading time: 4 min

Unlock the future of AR and AP with generative AI. Learn how this groundbreaking technology is creating efficiencies, streamlining processes, and saving time and money for accounting departments worldwide.

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Generative AI (artificial intelligence) is all the buzz. Not a day goes by when it doesn’t make headlines, provoking interest among CFOs, finance VPs, and heads of accounts receivable (AR) and accounts payable (AP) departments.

Why wouldn't it? The technology is ideal for streamlining processes, creating efficiencies, and saving time and money. Generative AI is quickly becoming the one thing accounting departments can't do without.

Three-quarters of executives (77%) surveyed by KPMG in May 2023 cited generative AI as “by far the most impactful technology they will use,” with 71% planning “to implement their first generative AI solution within two years.”

And they are not alone in recognizing its value. Accenture Tech Vision 2023 found that 97% of global executives agreed that AI will “enable connections across data types, revolutionizing where and how AI is used.”

Generative AI streamlines AR tasks

This plays out in AR departments across several industries, with promising results and growing use cases. If you're looking for a way to minimize manual tasks, create efficiencies, and gain financial insights to help chart the course ahead, generative AI may be the solution.

Take, for example, ChatGPT. The Open AI platform is a big hit with businesses of all sizes for personalizing the customer experience.

"By leveraging its natural processing capabilities, ChatGPT can generate personalized content for customers that considers their preferences, past behavior, and demographics," says AIMultiple, a research and analysis company focused on enabling data-driven decision-making. "This enables businesses to create targeted content that connects with their audience on a more personalized level, resulting in higher engagement and conversion rates."

For an AR use case, ChatGPT could generate automated dunning messages that pull in customer data and tone-of-voice guidelines to reduce staff time spent on these messages.

Other use cases include:

  • Automating redundant, manual tasks: Generative AI makes it possible to reduce and, in some cases, eliminate manual data entry, which is prone to errors. Best of all, AI can process more data quicker with higher accuracy rates. Automating tasks for greater efficiency and accuracy frees staff to focus on customer-centric jobs and strategic growth.
  • Monitoring accounts in real-time: In today's 24/7/365 wired world, generative AI can support businesses by monitoring accounts in near real-time and providing current information on invoice status, payments made, and outstanding balances. AI's attention to detail and 24/7 availability translate to increased customer trust and loyalty.
  • Gaining financial insights: In AR, generative AI can help companies identify trends and track financial data, allowing executives to make more informed, data-driven decisions. With this information, executive staff and decision-makers can focus on new revenue-generating opportunities, remain agile in a fluctuating market, and focus on short- and long-term planning.

Let's face it: All AR teams want better controls over spending and a faster path to profit, and they can expect AI developments to deliver exactly that. Businesses can leverage AI to recognize customer payment activity patterns, make in-depth payment behavior predictions, and use that data to help predict cash flow. Because AI wants adopters, solution providers are already working to satisfy AR leaders' specific needs.

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Generative AI lessens the burden on AP teams

Generative AI for AR is making great strides, and AI for AP isn’t far behind.

  • Detecting fraud: Fraud is at an all-time high, and you will absolutely be using AI to find and combat fraud now or soon. In the not-too-distant future, AP teams will use AI to detect unusual payment terms and amounts and flag anomalies, allowing staff to review these and other requests for payment more closely to validate their authenticity.
  • Extracting and processing data from invoices: Invoices are a challenge for many reasons, but top of mind is the time it takes staff to manually remove and process the data included on invoices, a tedious and often error-prone task. By using generative AI to automate the workload, companies can save time and money and free up staff to strengthen customer relations, increase product sales, and devote more time to other high-value tasks.
  • Enabling data-driven decision-making: AI excels at synthesizing large amounts of data and compiling reports, contextualizing the information for specific audiences and teams. This AI superpower allows staff to make data-driven decisions and improves their ability to act before it's too late.

3 risks of generative AI in accounts receivable

With no shortage of use cases, generative AI can help AR and AP departments reclaim time and money. But generative AI solutions aren't perfect. A too-small dataset can skew output, underscoring the need for a review by a knowledgeable individual.

Second, the output can reflect biases. But remember, the quality of your data can go a long way in reducing this risk. AI companies are aware of generative AI’s potential biases and are working to combat them. Think of this as a today problem that will only make for a better tomorrow.

Finally, a common misconception exists that generative AI will replace employees. It’s far more useful to think of AI as an assistant to your existing team, making some positions twice as effective without the added headcount.

While generative AI isn't the perfect solution—at least not yet—its benefits to finance teams are indisputable.