We all know the old saying, “All that glitters is not gold.” Businesses around the world have seen the “glittering” new Artificial Intelligence (AI) solutions that are available today and are scrambling to integrate them throughout their business processes. The underlying assumption is that the newest technologies must be the most advanced and must offer the most value. It’s also the case that the shiniest new startups will make the boldest promises, virtually guaranteeing the fulfillment of every item on a prospective client’s wishlist.
Unfortunately, we have heard many stories about companies that were mesmerized by the glittering AI solutions offered by new AP automation vendors, but later learned that their expensive solution was actually fool’s gold. AI has been integrated into accounts payable (AP) processes for years, and you should be on the lookout for partners that have a proven record of AP AI solutions that can reduce costs, improve accuracy, and optimize workflows. However, not all AI-powered AP automation solutions are created equal. Selecting the right vendor means finding one that uses AI and machine learning (ML) in ways that deliver measurable value – and avoiding vendors that use AI as a buzzword but with no real expertise.
We’ve put together this simple guide to help you understand how the use of AI and ML can drive results for your business, debunk some of the exaggerated claims you may hear about Generative Artificial Intelligence (GenAI), and choose a vendor that uses AI and ML in ways that will maximize your ROI.
Understand How Pre-trained AI and ML Should Be Used in AP Automation
It’s true. AI and ML are game-changers in AP automation– but their value depends on how they’re applied. The best vendors leverage pre-trained AI and ML to enhance efficiency, reduce errors, and deliver accurate results through clearly defined workflows.
How can pre-trained AI and ML help with AP automation?
- Data extraction and classification: ML models excel at extracting data from invoices and classifying it based on pre-defined rules. The more pre-defined rules that have been learned over time, the more efficient extraction and classification can be.
- Matching and validation: AI can automatically match invoices to purchase orders and validate them against predefined criteria. Matching and verification also increase in accuracy and efficiency over time, so you’ll want a vendor with pre-trained AI algorithms.
- Continuous improvement: ML and AI algorithms improve over time as they process more data, so if you find a vendor with over 15 years of algorithm training (like DataServ), they are able to offer you immediate benefits versus waiting years for a new algorithm to train on your data.
And don’t mistake ML for GenAI (flashy buzzwords sometimes get confusing). Vendors that claim to use GenAI for tasks like sorting invoices may be misleading. Sorting invoices is not a creative process; it’s about accuracy, compliance, and following rules. A vendor who confuses GenAI with ML doesn’t have a deep understanding of AI’s capabilities—or your AP needs.
Evaluate the Vendor’s AI Expertise and Transparency
Choosing a vendor with a genuine understanding of AI and ML is critical to getting the most value from your investment. Transparency about their technology and how it works is a good indicator of their expertise.
When interviewing a potential AP automation partner, you should ask the following questions:
- How long does it take to get results? How long for time to value?
- How does your AI handle common AP tasks, such as data extraction, validation, and routing?
- How long have you been incorporating AI? How long has your algorithm been training?
In short, look for vendors who can explain their AI capabilities clearly and provide evidence of success, such as case studies or performance metrics. If you are looking for more guidance on how to determine the validity of a vendor’s claims of AI performance, check out Chapter 3 of our Buyer’s Guide to AP Automation Technology.
Choose Vendors That Prioritize Workflow Automation Over Buzzwords
GenAI is one of the trendiest buzzwords, and vendors may try to sell you on some impressive applications of this hot new technology. But heed our warning: vendors who emphasize GenAI for non-creative tasks do not understand your needs or their own product’s limitations.
Do you really have a need for GenAI, which, by definition, creates new content and predictions based upon old data and patterns? Sorting invoices, managing approvals, and handling exceptions are precise tasks that require automation rooted in well-designed workflows, not GenAI. The best vendors focus on creating tools that optimize these processes rather than relying on popular terminology to sell their product.
We understand that handling invoices is a critical function (they are legally binding contracts of financial obligation, after all), but your employees have many other important tasks to complete every day. You need a partner you can trust to handle the oversight of your workflow. The vendor you choose should have a proven record of success and accuracy using AI and ML for your most important AP processes. AI solutions for AP automation should be designed to handle large volumes of invoices with minimal errors, ensuring compliance and reducing manual intervention.
Assess AI’s Role in Reducing Errors and Fraud
One of the biggest advantages of AI and ML in AP automation is their ability to minimize errors and detect potential fraud. Vendors should highlight how their technology addresses these issues effectively. For example, your potential AP partner may use AI to identify duplicate invoices or payments, saving your company money. Fraud prevention is another feature you should be asking for. By analyzing patterns and anomalies, ML can flag suspicious invoices or transactions for further review. AP automation can also drastically reduce human errors in data entry and reduce the need for manual corrections. That means fewer hours your FTEs will spend on finding and correcting costly mistakes.
Ensure the AI Solution Is Designed for Continuous Improvement and Oversight
One of the hallmarks of ML is its ability to improve over time. The more data the system processes, the smarter it becomes. You should definitely be on the lookout for vendors whose AI solutions demonstrate continuous learning and adaptation.
Why is continuous improvement so valuable? For starters, ML models can refine their understanding of invoice formats, reducing errors. If your AI solution will have better accuracy over time, it basically guarantees savings in the future. Continuous improvement also enhances scalability. As your business grows, the AI should handle increased invoice volumes seamlessly. Finally, a system that is continuously improving should stay up-to-date with changes in regulations, supplier formats, or internal processes. This adaptability is important for reducing headaches and saving your employees time.
Any partner you choose should also take responsibility for actively governing the learning of the system. Without oversight, no ML model will perform with 100% accuracy. The role of the partner is to test the ML regularly in order to catch any errors and ensure that mistakes don’t accumulate. DataServ takes this role seriously, and we often challenge the ML with human oversight, ensuring that the algorithm is performing at the highest level possible.
Focus on ROI Delivered by AI and ML
AI and ML should deliver measurable value to your AP process, and the vendor should be able to articulate this clearly. You need to ask for specific examples of how their solution has delivered ROI for businesses that are similar to yours.
What are some ways in which you can evaluate ROI? One important metric is time saved. Automation should reduce the time spent on manual tasks, such as data entry, approval chasing, or vendor verification. Now your workforce will have more time to perform higher-value tasks. Another way to evaluate ROI is error reduction. If your AI or ML solution offers more accurate processing, that means fewer costly mistakes. Fewer errors, faster approvals, and reduced manual effort translate into significant cost savings. Dollars saved is our favorite ROI metric, and it’s probably yours, too.
Evaluate AI Integration with Existing Systems
This one is a no-brainer: your AI solution should be already integrated into your AP software. A vendor’s ability to ensure smooth integration is critical to maximizing the solution’s value. This is another reason why it is important to invest in an established, proven AI solution and a vendor that has a long history of success. Partners without a track record of using AI solutions are a risky investment, and we don’t recommend taking risks with your AP workflow. Find a partner that can offer seamless integration with your ERP and other financial systems so that you don’t waste valuable time and resources.
Longevity and Reputation of the Vendor
In the rapidly evolving AI landscape, it’s tempting to consider flashy new startups. However, longevity and a proven track record often correlate with reliability and expertise.
Partnering with an established vendor has numerous benefits, including:
- Proven success: Years of experience and a strong client base indicate that the vendor knows how to deliver results.
- Stability: Established vendors are less likely to disappear or fail to support their product in the long term.
- Refined technology: Time in the market allows for continuous improvement and refinement of their AI systems.
Invest in Expertise, Not Just Technology
Choosing the right AI-powered AP automation vendor means prioritizing accuracy, workflow optimization, and measurable ROI over flashy buzzwords. You have to ask the right questions in order to figure out who is using AI technology in ways that will give you the best ROI.
Hopefully this guide gives you the basic level of knowledge you need to determine which AI tools are worth their weight in gold, and which tools are trendy but worthless. For example, just because the tech world is currently infatuated with GenAI doesn’t mean it’s going to be a good investment for you. Understanding the differences between GenAI and AI/ML is crucial. While ML is perfect for processing invoices with speed and accuracy, GenAI simply isn’t built for these types of tasks. Don’t let a salesman sell you on tools you don’t need just because they sound fancy.
Select a vendor who demonstrates a deep understanding of your needs and provides clear evidence of how their solution works. By focusing on vendors who leverage AI and ML effectively, you can transform your AP processes and achieve meaningful, long-term value.
