AI Supercharges Straight-Through Payments Processing

Payments remain a separate and distinct process from most organizations’ business functions. Whether Accounts Payable (AP) or Accounts Receivable (AR), the actual payments occur days or weeks after the transaction. Final funds settlement can also take from a few days to a week or more.

Organizations that send and receive payments may spend a lot of time and effort on these processes. In addition, businesses must also track and record obligations, forecast cash flow, and reconcile banking accounts.

Payment processing is inefficient and costly.

AP is one of the most labor-intensive functions in an organization — which also makes it one of the single largest cost-drivers. AP managers would like to spend less time on manual labor.1

• 41% want to eliminate paperwork and manual tasks.
• 36% want suppliers to be able to submit electronic invoices.
• 30% would like to eliminate paper checks.

Because data is poorly organized and often lacks the necessary security, a single administrator often becomes the inadvertent gatekeeper of key information for the rest of the company. This limits visibility throughout the organization. In addition, poor system integration results in multiple points of friction in the process. Inevitably manual processes lead to gross inefficiency, increased risk, lost opportunity costs and soaring labor expenses.

AR may seem like a simple process. The AR department sends the customer an invoice. The customer pays the invoice. But receiving payments is no easier than billing. “Account receivables groups currently require multiple processes to reconcile payments that come in through various channels. This can be very time consuming and error-prone, causing cash application delays and requiring additional research,” says Tracy Rudolph, Synovus receivables and commercial cash services product group manager.

Straight-through processing (STP) reduces friction and payment delays.

Payment technology, including STP, is rapidly evolving. STP eliminates manual tasks to streamline and accelerate payments. Digital technology enables STP to transmit information electronically through one or more systems. Human intervention is only necessary to address exceptions or entries that fall outside the process.

All straight through processing automation, however, isn’t equal.

Most organizations that have adopted STP strategies use technologies like robotic process automation (RPA), natural language processing and optical character recognition. These rules-based tools are a key element in translating unstructured data, but they are not sufficient to reap the full benefit of STP.

Artificial intelligence (AI) can help "supercharge" an organization's straight-through processing, making it faster and more efficient. The intersection of artificial intelligence and automation is intelligent automation. Intelligent automation combines robotic process automation (automating repetitive tasks) and machine learning for faster and more precise processing.

With intelligent automation, "cognitive bots" reason and make decisions. These bots self-learn and reduce exceptions, addressing them independently without human intervention. STP can be continually optimized with machine learning.

Think of it this way: RPA is the "hand" work of a process, helping automate tasks, moving and checking data, or ensuring a task is completed, while AI is the "head" work needed to optimize the automation. Artificial intelligence makes processes smarter and smarter the more it works. It can identify problems, fix those problems, and even help prevent them from occurring in the future.

AR and AP teams have achieved significant results using AI for payment processing.

“Payment technology advancements offer organizations more options for sending and receiving money than were available even a few years ago. But in most cases, these options have only complicated organizational processes around payments,” says Laura McGortey, Synovus commercial payments and fraud mitigation product group manager.

In AR processing, AI can automatically match open invoice data to payments received, regardless of the payment method. AI can also scan remittance data received through multiple channels, including paper documents and electronic messaging. When paired with machine learning, AI enables the tools to become smarter as they learn the behaviors of the business and customers as more and more payments flow through the solution.

AR teams in a variety of industries have achieved significant results using artificial intelligence for payment processing.

• A national grocery vendor overwhelmed with ACH payments that required multiple, cumbersome manual steps used AI to streamline its accounts receivable activities to 90% straight-through processing.
• An automotive service company engaged AI in its straight-through AR processing and was able to reassign 25% of the team to more critical functions.

AP departments can also benefit from AI processing. When combined with other process automation, AI can recommend methods for each payout instance. For example, an insurance company implemented intelligent automation to efficiently process end-to-end claims. In some cases, bank solutions also offer options to securely maintain payee banking information and preferences, reducing or eliminating the potential for payments fraud.

AI-enabled STP is ideal for businesses with complex ERP and back-office systems.

Due to large economies of scale, middle market and large enterprise businesses with sophisticated payment processes and high transaction volumes are prime candidates for STP with intelligent automation. But any company that wants to replace paper-based or manual operations with digital systems can benefit. Intelligent automation is worth considering in the following instances.

• ERP systems designed for check payments
  Many organizations must add unique procedures — for processing checks, ACH, and credit cards — based on internal systems that are limited to check payments. This introduces unnecessary complexity and inefficiencies to the accounts payable process. The same is true for AR applications. Customers want multiple payment choices, including checks, debit, and credit cards, virtual cards, ACH, wire, PayPal, and crypto currency. AI-enabled STP can provide a single platform for all payment activity, consolidated for integration across all accounting and back-office tasks, regardless of the method of payment.
• Staff spends a lot of time correcting payment errors.
  STP not only eliminates the opportunity for human error but, when paired with AI technology, it can also minimize exceptions that would otherwise require staff intervention and trigger longer payment times.
• The company has a remote workforce.
  As many organizations recently realized, remote work is enhanced with digital processes. It’s simply not feasible to pass paper from desk to desk or to keep files in a single physical location.
• Multiple paper forms are needed for processing.
  Consider all the different paper forms your business generates or receives. Whether the organization is the supplier or the buyer, these forms must be completed, checked, keyed, and reconciled to process. STP replaces physical and paper activities with digital ones.

Integrating STP with AI delivers more value to the business with less effort.

Intelligent automation has a very clear impact on efficiency. Eliminating paper documents and manual processes saves valuable time. In addition, intelligent automation blends the human element with technology for more effective payment processing in several key areas.

• Reduces processing costs.
  Companies that haven’t automated invoice processing spend approximately $9 or more to process just one invoice. By contrast, those who’ve implemented intelligent automation spend just $2.25.2 The overall business savings for intelligent automation? Figure a cost reduction up to 80%.3
• Helps to prevent fraud.
  U.S. businesses lose an average of $300,000 per year to invoice fraud.4 AI applies machine learning to STP to identify patterns, invoice irregularities, and reduce false positives, pinpointing fraud faster and with greater accuracy. Intelligent automation can also be structured to analyze networks, assess threats, and identify and address cybersecurity vulnerabilities.
• Enhances data quality, collection, and reporting.
  One of the greatest but often overlooked advantages of AI-enabled STP is the value of the data that can be extracted. Not only is more data collected and processed, but it’s also gathered and analyzed automatically, making reporting easier. According to a McKinsey report, automated STP can improve data quality by 15%-40%.5

“Over time, we will see more data traveling with payments (e.g., real-time payments), and this will help organizations choose the most effective money movement options. However, even with better transaction data, STP requires technology-supported strategies such as AI and RPA,” says McGortey.

Overall, STP that is powered by AI enables businesses to process payments more quickly and accurately, which directly impacts the bottom line. To learn more about STP, complete a short form and a Synovus Treasury & Payment Solutions Consultant will contact you with more details. You can also stop by one of our local branches.