Dan Drees, Chief Growth Officer, AvidXchange
Optimizing operational efficiencies is top of mind for all companies. Who isn’t looking for ways to cut costs while saving time and increasing job satisfaction, especially during these uncertain economic times?
Technology can play an important role in creating time and cost-cutting efficiencies in nearly every function of business. In fact, a survey Atlantic IT found that workers spend an average of 520 hours a year on repetitive tasks that could easily be automated. This echoes a similar recent finding that 67% of workers feel they are constantly repeating the same tasks—and that the average worker feels they spend four and a half hours a week on such mundane activities.
One area of business that is especially ripe for digital transformation is the finance department. Many key aspects of accounting and finance—including invoicing and payments—are intrinsically tied to old ways of doing business. Paper-based and cumbersome manual processes tie up and expend precious time and resources, disrupting efficiencies of accounts receivable (AR) and accounts payable (AP). As a result, talented pros are pulled away from more value-adding, strategic work they could be doing for their companies.
Advanced technologies, especially application programming interfaces (APIs), machine learning and robotic process automation (RPA), are becoming widely used in automating accounting processes. All of these solutions play a major part in making the lives of finance professionals easier. As a disclosure, my company AvidXchange is a provider of all three of these solutions.
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Here’s a look at the roles these three technologies will play in the future of accounting—and how finance teams can start leveraging them today to begin reaping their benefits.
1. Enabling Technology Communication Through APIs
APIs are a type of software enabling computer programs to communicate with one another. They are considered perhaps one of the most important technologies in finance today because, without them, other technologies can’t live up to their full potential.
In finance and accounting, APIs unlock data within software-based computer applications. They then facilitate transfers between software, applications and computer systems. For example, in AP automation, APIs are able to unlock payment and invoice data and allow AP software, accounting software and enterprise resource planning (ERP) software to exchange this information quickly and without user intervention.
APIs assist in unlocking operational efficiencies by turning an accounting software system into a higher-performing financial management platform. This platform can help teams generate more business while also improving productivity and customer experiences.
They make data exchange and functions, such as payment and invoice transfers between businesses, easier, faster and more reliable. As more API integrations are established, finance departments are provided with greater versatility to perform financial transactions efficiently and at affordable costs, making the overall business more attractive to prospective clients.
2. Taking Data To The Next Level With Machine Learning
Data is a powerful asset, and finance departments have a lot of it, including payments, invoices, cash flow and customer data. As companies are realizing the value of their data, they’re looking to find new ways to utilize it in order to generate more value for their customers.
When harnessed, data can generate valuable insights that can be used to guide important decision making and better serve customers through more personalized services and faster payments.
Machine learning, one type of artificial intelligence (AI), can take such insights to the next value. By analyzing historical data, machine learning is able to not only detect behavioral patterns in supplier payments and invoices but also predict the likelihood of those behaviors continuing.
In AP automation, machine learning can be leveraged to make predictions on market as well as vendor payment risks. It can also be used to detect potential future spending increases or decreases as well as the statistical probability of such occurrences as invoice anomalies or fraudulent checks.
3. Reducing Manual Tasks With RPA
Finally, RPA is a software tool for automating repetitive work processes that cost businesses time and money—think about those tasks that require the input of raw data, over and over again. RPA essentially enables computers to take over such repetitive, high-volume tasks so that your team isn’t constantly distracted by them.
But RPA goes beyond the elimination of repetitive tasks. With the time gained, members are able to put their full concentration on more value-adding responsibilities. They are able to think strategically, identifying new opportunities to forge change and strengthen and grow their organizations.
As one example, the task of matching invoices to purchase orders or receipts is one of the most time-consuming, frustrating components of accounting work for many finance professionals. In utilizing a three-way matching system within an automated AP solution, employees are able to easily confirm that the information on the PO, invoice and receipt all line up.
Three-way matching doesn’t just have the power to save your professionals some time and convenience. It’s also good for business, as it’s able to significantly reduce the potential for human error in such situations, which can damage relationships over time, and allow for easier audits. This solution also provides protection from overpayments, duplicate payments and fraudulent invoices.
Leveraging Technology To Enhance Operational Efficiencies
Even more important than understanding these revolutionizing accounting tools is realizing how they can benefit an organization. To reach this level of awareness, finance departments should first start by considering what’s eating into their time and budget. In doing so, teams can identify where the pain points are and identify the proper tech solutions to address, streamline or even eliminate recurrent challenges for employees
By modernizing the accounting department through tools like AP automation, APIs, three-way matching and RPAs, organizations can reduce costs, save time and alleviate workloads for staff so that they can perform at their best, providing a newfound competitive advantage that’s especially powerful in trying times like these.