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9 Spend Duplicates Only AI Can Catch

AI

9 Spend Duplicates Only AI Can Catch

What prevention methods does your company have in place to prevent duplicate spend? Most modern invoice automation systems can look out for two invoices with the same invoice number, or the same amount, and stop a payment that appears to be a duplicate. But this doesn’t find typos in invoice numbers, duplicates across expense and AP systems, or a number of other scenarios you may not even be considered.

AI can help. When it comes to duplicate spend, AI takes an expansive view, looking across all back-office systems, identifying duplicate spend across multiple payments, and more.

By taking advantage of the structured data in your spend systems as well as the unstructured data in your invoices and receipts, you can identify duplicates with ease.

Below are nine types of duplicates that only AI can catch.

1. Manual keying errors

Invoice processes often rely on manual data entry, which is error-prone. An employee might mistype the letter “O” as the number “0”, or “SEPT” as “SEP.” These types of duplicates are preventable and common, but wouldn’t be caught by a traditional invoice system. AI can find manual entry errors in invoice numbers or dates that typically fly under the radar in invoice automation systems and flag them for review.

2. Different supplier divisions

Your company might do business with multiple supplier divisions. These names may be listed separately in your supplier master list, so if you receive the same invoice from these entities, your AP automation system may not detect it. AI can flag duplicate invoices for the same deliverables sent from a supplier’s headquarters and international divisions.

3. Different company divisions

Similar to the example above, your own company’s internal divisions can create confusion. Each division within your company may have its own AP organization and approvals process, and wouldn’t know if an invoice was already received and paid by a separate department. AI can flag duplicate invoices for the same deliverables that are sent to different divisions.

4. Overlapping or cumulative

A supplier may send several invoices and then a quarter-end cumulative invoice, for example, three separate invoices at different amounts (one for $8,500, one for $4,000, and one for $13,200) and then a quarter-end invoice for $25,700. Traditional invoice systems may not catch this, but AI will flag these invoices for review.

5. Line-level

AP automation systems may not extract line details from an invoice. AI will check for duplicates at the line level and discover that, for example, the same services were included in two separate invoices.

6. Different AP systems

Maybe you have several back-office systems because of company mergers. When duplicate invoices hit different systems, your company may never know it. AI integrates with multiple invoice automation systems and flags duplicates regardless of which system they’re in.

7. Duplicate crossover spend

Your company likely doesn’t have visibility across its invoice automation and expense systems, causing you to pay twice for the same service if it’s submitted via T&E reimbursement and again via accounts payable. AI flags this so payments aren’t sent twice.

8. Duplicate expense claim submitted by two different employees

Maybe this is a mistake, or maybe the employees know that expense reports aren’t cross-referenced (especially if they have two different managers, or are in two different departments). Whatever the reason, AI can cross-reference expense reports from any department and flag when the same receipt is found on two different reports.

9. Duplicate expense claim in the same report

After a long business trip, all the receipts may begin to look the same, and an employee might accidentally submit the same expense twice in the same expense report. AI looks at individual line items and flags any duplicates.

How AI can help

Duplicates can take many different forms and can be difficult to find in a manual review process. To gain visibility into their business spend, many companies have embraced AI to achieve 100% visibility into expenses and invoices. Companies that automate their audit process are able to find errors, fraud, and non-compliant spend before payment.

To learn more about how 100% visibility into business spend means to you and gain additional insights on auditing business spend with AI, download our latest research report, The State of Business Spend. The findings focus on the impact of auditing with AI, the risk hiding in expenses and invoices, risky spend, and more.

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Josephine McCann is a Senior Marketing Associate at AppZen, the world’s leading solution for automated expense report audits that leverages artificial intelligence to audit 100% of expense reports, invoices and contacts in seconds.

technology

The Surprisingly Long Life of Wire Technology

Those of us in dynamic, fast-paced industries have gotten used to keeping our eyes trained forward. We’re always exploring innovations—ways to evolve our processes and make them as efficient as possible. Technology grows at such break-neck speed that adults of any age can look back and marvel at the changes they’ve witnessed in their lifetimes. But surprisingly, many of these technologies aren’t actually new. In fact, most of our modern financial workflows have evolved from processes that are older than living memory. Cool, right?

As we ring in the new year, let’s take a step back and reflect on the origins of a very familiar process to many of us: wire payments, and the subsequent introduction of electronic funds transfers.

Humble Beginnings

Wires, direct deposits, and electronic funds transfers (EFT) have roots in the invention of the telegraph; a tool used in the United States from 1844 until 2013 (some areas of the world still communicate by telegram today).

The telegraph is the catalyst for all modern means of communication. It’s arguably one of the most pivotal inventions of Anno Domini, and it forever changed the speed at which critical information could circulate in and among developed countries. Instead of waiting weeks for mail to arrive by ship, train, and pony express, messages would take only hours to arrive. It was as pivotal to its contemporaries as the Internet is to us.

The invention of the telegraph came just after the first Industrial Revolution, in 1844, when Samuel Morse sent the first telegram from Washington, D.C. to his partner, Alfred Vail, in Baltimore, Maryland. The message: “What hath God wrought?”

Just over a decade later, preparations began to lay the Transatlantic Telegraph Cable across the seafloor—but the project took several years to complete. The first two attempts failed after the cable—made of copper wire wrapped in tar, hemp, and steel—snapped and was lost irretrievably lost at sea. The third attempt, completed in 1858, finally connected the two continents from Newfoundland, Canada, to Valentia Island in Ireland.

After a test message (“Glory to God in the highest; on earth peace, good-will towards men!”) successfully transmitted between the engineers, Queen Victoria and President Buchanan exchanged lengthy congratulations. The Queen’s message—the less flowery of the two, comprised of 99 words with 509 letters—took an exhausting 17 hours and 40 minutes to transmit by Morse code. This may seem lengthy by today’s standards, but at the time, the fastest means of overseas communication was by ship. Eighteen hours was staggeringly fast.

Success was short-lived. The power used to send the first messages was too much for the cable to withstand, and it corroded and fell silent within the first three months. Intercontinental silence ensued until 1866—two years after the American Civil War ended—when efforts to replace the cable began.

Despite the many initial setbacks, the telegraph became a beacon for human invention. It transformed not only the means but also how we spoke to each other. Telegrams were very expensive and usually reserved for affluent patrons and emergencies. Because of the high cost, telegraph companies encouraged senders to ditch the elaborate salutations of the day for succinct (cheap) messages.

For example:

-Sending a ten-word message in 1860 from New York to New Orleans cost $2.70—about $76 in 2018.

-Sending a ten-word message to England around the opening of the Transatlantic Telegraphic Cable would have cost around $100—just over $2,930 in 2018.

Because the prices were out of reach for most middle- and lower-class families of the day, physical mail remained the primary means of communication. This resonates with today’s concerns about the potential expense of newer technologies. The inventions of the telephone and the radio also likely contributed to the telegraph never becoming a common household item. Even so, it still had more to give to society—businesses found another use for this groundbreaking technology.

Incorporating the Telegraph into Bank Processes

The first funds moved via wire in 1872 when the Western Union opened a system to transfer up to $100 (about $2,120 in 2018) at a time. According to Tom Standage in his book The Victorian Internet: “The system worked by dividing the company’s network into twenty districts […]. A telegram from the sender’s office […] confirmed that the money had been deposited; the superintendent would then send another telegram to the recipient’s office authorizing the payment.”

This was a rudimentary, time-consuming process, but still similar to modern operations. It took a while for the concept of non-physical fund exchanges to catch on. Standage writes: “One [person] went into a telegraph office to wire the sum of $11.76 to someone and then changed the amount to $12 because [they] said [they were] afraid that the loose change ‘might get lost traveling over the wire.’”

Stepping into the Modern Age

The transition from telegraphic methods to EFT is somewhat obscured. The first mentions of direct deposit appeared in 1974, just over 100 years after the first wire payments transmitted via telegraph. Newspaper ads like this one in Florida’s Ocala Star-Banner promoted services for “Direct Deposit for Social Security,” which deposited Social Security checks from the government to individuals.

Even EFT payments initially met with some trepidation. In a 1976 article in the Ocala Star-Banner entitled “Computer Money System… Would You Bank On It?”, Louise Cook writes that the banks favored electronic means in order to limit the expensive manual paperwork they had to maintain.

Sound familiar?

When reading through old articles about initial EFT processes, I was struck by how many of the same arguments exist today against switching entirely to electronic procedures.

In Cook’s article, she broke down the cost for banks to maintain physical processes at the time. Banks were processing around 27 billion checks annually for 32 cents a check ($1.45 in 2019). They stressed that EFT was crucial to sustaining their businesses.

A separate 1977 article by Sylvia Porter in The Southeast Missourian entitled “Checkless society,” discussed her concerns about EFT payments. Some of the concerns are very dated. For example, Porter argued that disputes over electronic transactions at restaurants would require lawsuits to resolve. These days, banks frequently handle disputes on behalf of their clients and refund them up front. Other arguments, such as the value of float for companies, remain valid today and are resolved by fintechs.

Same Song, Different Decade

It’s the 21st century, and electronic payment options are already aging—wire transfers are almost 150 years old! Yet companies still struggle to get fully automated processes off the ground. Where is the disconnect?

There are several possible contributors, which include:

Perceived cost. Sending funds electronically is cheaper than ever, but checks now cost around $3.00 each. This equates to roughly 65 cents in 1976—a 106% increase from the original 32 cents (without even accounting for inflation). Despite the reduced cost of electronic payments, the transition, training, and scaling concerns are enough to make most companies too nervous to act. Payment solution providers ease this concern by offering fast implementation, logical user interfaces, andskilled support teams.

Smaller vendors still ask for checks. Checks won’t become obsolete until companies stop requesting them, which is unlikely—at least for now. Many smaller companies typically run their businesses on familiar, outdated processes. Vendors know everyone at their bank, and frequently pay their employees through paper processes. Even so, their business choices don’t need to affect the way your company handles AP. Fintechs like Nvoicepay offer pay file submissions, which enable AP teams to issue payments electronically. Then Nvoicepay disburses the funds in the vendor’s preferred format (credit card, ACH, or print check) without you having to chase down a single check-signer.

Security concerns. Payment fraud instances are more common than ever. Handing some control to a payment partner can be intimidating, especially if you’re not sure that partner is taking fully protective measures for your company. During the research process, be sure to ask prospective payment solution providers whether they will cover you for any issues that occur.

Looking Forward

What can we learn by looking back? Aside from gaining a healthy appreciation for our roots, reflection offers a great perspective on the future of modern AP processes. It highlights the fact that we haven’t changed all that much. Rather than introduce new concepts these past 150 years, we have refined and modernized existing operations.

If you’re researching ways to economize your back-office processes, but all the new-fangled technology sets you on edge, take heart! You may be surprised at how familiar this new technology feels because it isn’t really new at all—it’s evolved.

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 Alyssa Callahan is a Technical Marketing Writer at Nvoicepay. She has four years of experience in the B2B payment industry, specializing in cross-border B2B payment processes.

Accounts

How to Overcome the Struggle of Multiple Account Reconciliations

How does a company end up with dozens, or even hundreds of
bank accounts? It’s not an uncommon situation for a large
enterprise, especially in industries such as hospitality, construction, or healthcare, where there are multiple locations and business entities under one umbrella. Or, maybe the company has grown by acquiring other companies, as is common in high tech, and they centralize accounts payable but retain the separate bank accounts. According to the 2019 AFP Payments Fraud and Control Survey, 83% of companies with over a billion dollars in revenue have more than five payment accounts, and 46% have more than
25 accounts.

No matter what the reason, making payments from multiple bank
accounts creates a lot of complexity in AP. It makes cash management difficult, increases the risk of errors and fraud, and
creates an ongoing nightmare when it comes to reconciliation.
Fortunately, new payments automation technology can help
address the challenges of making payments from multiple
accounts.

Multiplying by Four

Most companies are contending with four different payment
workflows—check, card, ACH and wire, or five if you’re doing
international payments. Basically, you can multiply the number of bank accounts by four or five, and that’s how many processes you
have to manage.

But at least those processes are pretty standard. A check is a
check; a card is a card; NACHA sets the standard for an ACH file;
and a wire is a form fill on a bank portal. With payments
automation technology, you can wrap all of those workflows
together in a single dashboard. Payment is intelligently routed
from each account by the most advantageous means—you no
longer have to care what type of payment the vendor accepts. It’s
all taken care of for you.

Exponentially More Convoluted

The big win though, is on the back end, when it comes time to true
up the payments leaving each account with the general ledger. The
dirty little secret, known only to accounts payable professionals, is
that there is no standard for a reconciliation file—or even a
requirement to send one.

Each bank and card provider can send it in a different format, with
different information, or not at all. That makes reconciling
payments data with the accounting or ERP system—or multiple
accounting or ERP systems—exponentially more convoluted. It’s no longer X number of payment types times Y number of bank
accounts. It’s a different procedure for almost every type of
payment and/or bank or payment provider.

That amount of complexity and manual work inevitably leads to a
higher error rate. And, it opens you up to more instances of fraud.
According to the AFP survey, 72% of organizations with $1 billion or more in revenues and more than 100 payment accounts
experienced attempted or actual payment fraud.

Since daily reconciliation is cited the top defense against fraud at
companies of all sizes, consistently receiving standardized, easy-to-
digest reconciliation reports would help mitigate the fraud risk
associated with multiple payment accounts.

Filling the Data Gaps

Now there’s an opportunity to partner with Fintech companies in
order to help with that transfer of data. Up until recently, the only
way to reconcile multiple accounts was by throwing a lot of people
at the problem, or by bringing in a shared services provider.
Fintech business payments providers are leveraging the cloud,
APIs and online supplier networks to fill the gaps in workflow
automation and data transfer that have been left by banks and
traditional financial services firms.

You can easily make payments—including international
payments—from multiple bank accounts, and push a standardized
reconciliation report back to each, all in one easy process. Some
payment platforms can even push card rebates back into the right
accounts.

This is all possible when your payment provider stores payment,
bank, and vendor data in one cloud platform, and can use
technology to automatically match all the data up, pour it into a
uniform report, and push it back out to the payee. That’s
impossible when you’re working directly with lots of different
banks and payment providers, because no one entity has visibility
into all of the data.

There are a lot of reasons why it makes sense for a company to
have multiple payment accounts, but nobody thinks much about
the pain it’s going to cause in accounts payable. It’s one of those
hidden back office problems banks and traditional financial service
providers have never been able to solve, so accounts payable
professionals have found a way to live with it. Nowadays though,
there are ways to live without it.

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Mike Fortmann is the Vice President of Sales, Southwest Region at
Nvoicepay. He is an accomplished payment industry expert with more than five years experience in delivering scalable payment solutions.