Successful organisations have always understood the importance of keeping a firm eye on their finances, no matter how well a company or the economy may be doing. But this has been even more true over the last 12 months as the Covid-19 pandemic has put considerable pressure on finance departments across all industries. Ray Welsh, head of product marketing at Fiscal Technologies, writes


 

The additional pressure of Covid-19 has resulted in financial priorities changing, operational challenges becoming more common, and tightened purse strings.

The pandemic has also put further pressure on departments to ensure their controls are as strong as possible during a vulnerable period that has seen existing checks effected by the move to remote working and an increase in fraudulent activity. But even with heightened controls in place, things still slip through the system.

Finance ERP and accounts payable systems, which are often described as the heart and lungs of a company, are known to have vulnerabilities and can be open to risks and fraud. According to fraud experts, each organisation has a one in three chance of experiencing internal fraud each year, with the average losses in the region of $500,000 .

On top of this, some organisations are also having issues with supplier master files and invoice processing, experiencing a range of errors through existing, outdated control processes, which include:

  • Having a significant number of duplicate invoices in their ERP;
  • Having unmanaged master supply files;
  • Accepting retrospective purchase orders and no-PO invoices;
  • Having mediocre invoice image capture.

To overcome these vulnerabilities, companies must begin to ensure they have the correct control systems in place protect their cashflow – but how? Headcount is not increasing, and the checks required are getting more numerous and complex.

AI augmentation

From manufacturing to retail, artificial intelligence plays a significant role across a range of different sectors. For those working in the finance department it provides a necessary function to help support workers with the daily task of checking for exceptions and errors. Having a tool that performs at a consistent rate throughout the day means no matter how complex or repetitive a task may be, it will be completed in time and to a high standard. This allows those working in the finance department to focus on other areas of their role that will generate more value. But it is worth noting that AI should not be heralded as the tool to transform processes – instead, it should be used in conjunction with other tools and control methods in order to get the most out of it. So, when used in this way alongside other tools, how does AI specifically help?

Having an end-to-end risk management solution allows customers to forensically analyse 100% of supplier transactions before payment. This is done by applying hundreds of checks using financial logic and sophisticated algorithms to achieve a complex analysis, with AI playing a significant role in making the process more effective. AI can also be used in conjunction with forensic analysis to help:

  • Improve efficiency. Using AI for testing can speed up control processes from hours to minutes, while also providing detailed insights into anomalies found. This use of AI, to increase speed and accuracy of controls, does not replace those working in the finance department, rather it supports both people and processes by helping prioritise issues for staff members;
  • Protect supply chains. Managing your own liquidity is vital. Supporting that of your suppliers is often overlooked, but is critical if you are to protect against risks of interruption to supply. AI powered analysis uncovers patterns in your payment processing that indicate unnecessarily fast or slow payments to suppliers, deviations from terms and overpayments that place strain on the cashflow of your suppliers. Once aware of the exceptions, your finance team can fine-tune processes to reduce these risks and increase supply chain dependability;
  • Reduce fraud. Adopting an AI based solution can highlight suspicious patterns in supplier transactions that are hidden in vast quantities of data from human eyes. Deploying machine learning and other AI techniques alongside proven statistical models detects the small number of unusual and potentially fraudulent transactions that are passed to the human team for further investigation.

By incorporating AI to help workers uncover complex procure-to-pay and accounts payable exceptions, the company will protect its working capital more effectively and more cost efficiently.

A brighter future with AI

The current environment has heightened financial risks for organisations around the globe. As a result, it is important for organisations to turn their attention to better enabling their staff with AI-powered risk management.

Providing staff with appropriate AI solutions to support their roles will better protect a company’s finances, helping them move forward during these uncertain times with confidence. The role AI plays in detecting risks is undisputed, although AI should not be the centrepiece of your risk management strategy. Instead, AI helps finance teams make focused and well-informed decisions. Protecting working capital, reducing fraud risk, and strengthening supply chains are what your accounts payable team do better when embracing AI as a supportive tool rather than fearing it is going to take their jobs.