Accounts payable (AP) may not always grab headlines, but its evolution is critical to business success.
However, embracing the digital evolution of back-office cost centers is often easier said than done. Many AP teams, even in the 21st century, still find themselves at a standstill between legacy inefficiencies and innovation.
“As much as we’d like to think we’ve moved past paper, it’s still a major player,” Chris Wyatt, chief strategy officer at Finexio, told PYMNTS, noting that paper invoices and checks not only slow down AP processes but also introduce inefficiencies that ripple throughout the payment cycle.
Compounding this issue is the prevalence of exceptions in AP workflows. According to Wyatt, some companies experience exception rates as high as 30%. These exceptions — caused by mismatched purchase orders, incorrect amounts or incomplete documentation — force accounts payable teams to spend excessive time troubleshooting, further delaying payments. Adding to the complexity is supplier management, as companies juggle diverse formats for invoices and payment methods.
The result? A perfect storm of inefficiency that burdens AP teams.
But it doesn’t have to be that way. Technological advances, powered by automation and artificial intelligence (AI), have increasingly transformed the AP function while allowing finance teams to leapfrog past historic bottlenecks and workflow paper jams.
“A lot of [businesses] think modernization is going to be a huge endeavor, like swapping out an ERP system,” Wyatt said. “But it doesn’t have to be that way. Modernization can be incremental — taking baby steps to reduce inefficiencies.”
Read more: The Strategic Role of AI in Accounts Payable
As businesses confront the inefficiencies of legacy accounts payable systems, AI’s capabilities offer a path to transformation. But to get to those benefits, businesses must first embrace AP modernization.
Research from PYMNTS Intelligence and Finexio underscores the scale of the issue, showing that 36% of businesses have yet to automate any part of their AP processes.
According to Wyatt, many organizations hesitate to upgrade their AP function due to fears about the complexity of implementation. For businesses still reliant on manual processes, he emphasized the tangible costs of doing nothing.
“Each paper check costs close to $10 to process, and with checks comes fraud … Eighty percent of organizations experienced some type of fraud attempt last year,” he said. “That’s a substantial cost.”
These combined expenses underscore the urgency for companies to move away from outdated systems. Incremental modernization offers businesses a practical path forward. For instance, organizations can start by automating specific workflows, such as invoice processing or transitioning from checks to ACH payments. This step-by-step approach reduces the perceived risk and paves the way for more comprehensive automation down the line.
“It’s important to quantify the value [of AI powered AP] — whether it’s reducing payment processing costs, minimizing supplier inquiries, or earning rebates through virtual cards,” Wyatt said.
Read more: AI Makes Impact in Supplier Enablement and Predictive Analytics
AI is no longer just a buzzword in AP; it’s a transformative tool addressing inefficiencies across the source-to-pay cycle. Wyatt pointed out three key areas where AI is making a measurable impact: invoice processing, fraud prevention and enhanced support.
“AI is getting very good at displacing traditional OCR, moving from 80% accuracy to highly accurate data capture,” Wyatt said. This improvement reduces exception rates and accelerates approvals, helping accounts payable teams streamline operations.
With fraud attempts on the rise, AI offers businesses a proactive defense.
“In the past, you might only notice fraud after it happened — like when a check was forged or money was sent to the wrong place,” Wyatt said. “Now, AI tools can prevent fraud before it happens by identifying suspicious activity in real time.”
Wyatt also highlighted advancements in large language models, which enable AP teams to handle supplier inquiries more efficiently.
“If you need an answer, AI can give you a human-like response and link you to relevant articles,” he said. “This makes suppliers happier and frees up AP teams to focus on more important tasks.”
And while change management is a challenge, particularly for AP teams who fear being replaced by automation, Wyatt reframed the narrative: “AI isn’t about taking jobs — it’s about taking over the drudge work. Most employees don’t want to spend their day handling repetitive tasks. AI lets them focus on more strategic activities.”
Looking ahead, Wyatt sees the AP landscape shifting from process automation to predictive systems. Emerging AI “agents” could handle tasks like logging into payment portals and completing transactions autonomously — a far cry from the repetitive macros of the past.
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