Top 11 Benefits of Payments AI

In this rapidly evolving business landscape, staying ahead of the curve is crucial for organizational — and financial — success. As technology continues to transform industries, the payment space is one area experiencing significant innovation. Artificial intelligence (AI) for payments has emerged as a game-changer, offering many benefits that revolutionize how businesses manage their finances. From optimizing working capital to enhancing fraud detection capabilities, payments AI is disrupting traditional automation methods in accounting and finance.

In business-to-business (B2B) payments alone, the impact AI can have on the speed and accuracy of payment processing is substantial. According to Vantage Market Research, the B2B payments market is "projected to grow from $994.20 billion in 2022 to $2146.70 billion by 2030, at a compounded annual growth rate (CAGR) of 10.10% during the forecast period."

What is payments AI?

At its core, payments AI solutions leverage advanced algorithms and machine learning techniques to automate and optimize various aspects of the payment process, including tasks such as invoice processing, fraud detection, and cash flow management. By analyzing vast amounts of historical data and identifying patterns, payments AI technology can make intelligent decisions in real time, improving the efficiency and accuracy of payment processing while reducing manual intervention.

A recent PYMNTS.com article summarized AI's potential impact on the finance function: "Traditionally considered back-office functions, both AR and AP are now evolving into strategic components of business operations — and areas ripe for AI integration."

With time-consuming and monotonous work, the "back office" is evolving into a strategic business function with the help of automation and autonomous solutions led by the AI movement. 

How is payments AI used in B2B specifically?

In the realm of B2B transactions, payments AI offers a myriad of benefits. By automating repetitive tasks and streamlining processes, businesses can reduce operational costs and free up valuable resources to focus on higher-value work. Additionally, payments AI enhances decision-making processes by providing actionable insights and predictive analytics, enabling organizations to make more informed and accurate financial decisions.

In the broader B2B payments ecosystem, nearly every business has various needs that can be addressed with AI solutions. Below, we outline the top 11 benefits of using payments AI in the B2B space:

Top 11 benefits of payments AI:

1. Optimize working capital more efficiently: Efficient working capital management is essential for businesses of all sizes. Organizations can gain greater visibility and control over their cash flow by leveraging AI for payments. This includes managing days payable outstanding (DPO), optimizing inventory levels, and strategically allocating capital to maximize returns. With real-time actionable data provided by AI tools, businesses can make informed decisions regarding when to make payments to ensure cash flow optimization and control over operations.

2. Take advantage of early payment discounts: Early payment discounts offer a valuable opportunity for businesses to reduce costs and improve cash flow. An early payment discount is typically a pre-set discount for paying an invoice within a specific period before the invoice is due. This means a lower payment on an outstanding invoice. However, identifying and capitalizing on these discounts can be challenging, especially for organizations with complex payment processes and potentially thousands of outstanding invoices. Payments AI can detect and surface early payment discount opportunities so payments can be prioritized accordingly. By leveraging advanced algorithms and predictive analytics, AI ensures businesses take advantage of valuable cost-saving opportunities.

3. Leverage more choices in payment types: In today's digital economy, vendors and customers expect a wide range of payment options to suit their preferences and needs. AI solutions for payment processing can surface various payment methods, ranging from traditional bank transfers to digital wallets and cryptocurrency. AI can identify preferred payment methods and tailor payment options by analyzing customer data and transaction history. This enhances customer satisfaction, improves conversion rates, and accelerates the payment process. Digital payment options continue to grow as businesses reduce their use of cash and check payments. In the 2024 B2B Payments Forecast, check and cash payments have fallen from 50% of B2B transactions in 2019 to just 32.1% in 2024. 

4. Improve governance over fraud: Fraudulent activities pose a significant threat to businesses, leading to financial losses and reputational damage. AI helps mitigate this risk by continuously monitoring payment transactions for suspicious behavior and anomalies. By analyzing historical data and identifying patterns, payments AI can detect fraudulent activities in real time and take proactive measures to prevent unauthorized transactions. Additionally, AI enables organizations to develop predictive models and adaptive algorithms that evolve with changing fraud trends, ensuring robust protection against emerging threats.

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5. Optimize invoice ingestion and data extraction: Invoices are the lifeblood of business transactions, serving as a formal record of goods and services rendered. However, manually processing invoices can be labor-intensive and prone to errors. AI automatically automates this process by extracting relevant data from invoices and automatically populating the information into financial systems. By leveraging optical character recognition (OCR) technology, natural language processing (NLP), and other proprietary AI algorithms, AI technology can accurately extract invoice numbers, dates, amounts, and vendor details. Invoices can then be routed for autonomous approvals and payments, reducing human intervention on common payment trends. This reduces manual effort and improves accuracy and efficiency in invoice processing and payments. Vic.ai is one autonomous accounting solution that streamlines the entire process, from invoice ingestion to payment.‍

6. Streamline complex PO matching: Purchase order (PO) matching is critical for B2B payment transactions, ensuring that invoices align with agreed-upon terms and conditions. However, manual PO matching can be time-consuming and error-prone, leading to delays and discrepancies. Payments AI automates this process by leveraging advanced algorithms to automatically match invoices with corresponding POs. Some AI solutions handle 2-way, 3-way, and even 4-way matching for the most complex invoice processes. By streamlining PO matching, AI accelerates data extraction, reduces errors, and enables quicker payment processing. ‍

7. More accurate cash flow forecasting: Accurate cash flow forecasting is essential for effective financial planning and decision-making. Payment AI solutions provide businesses with actionable insights and predictive analytics to forecast cash flow accurately. AI can identify patterns and predict future cash flows with greater precision by analyzing historical transaction data, market trends, and macroeconomic indicators. This enables organizations to anticipate cash flow fluctuations, mitigate risks, and optimize capital allocation strategies accordingly.‍

8. Better account reconciliation: Account reconciliation is critical for ensuring accuracy and integrity in financial transactions. However, manual reconciliation of incoming payments with outstanding invoices can be time-consuming and prone to errors, especially for organizations with higher transaction volumes. AI for accounts receivable (AR) automates this process. By leveraging machine learning algorithms and pattern recognition techniques, AI can match payments to invoices accurately and efficiently, reducing discrepancies and improving reconciliation accuracy.‍

9. Improve vendor and customer relationship management: Strong vendor and customer relationships are crucial for business success, fostering trust, loyalty, and mutual collaboration. AI can enhance relationship management by providing personalized and proactive support throughout the payment process. AI-powered chatbots can assist vendors and customers with payment-related inquiries, such as invoice status, payment methods, and account balances. By leveraging machine learning algorithms, these chatbots can analyze historical interactions and customer preferences to provide relevant and timely assistance, enhancing overall satisfaction and loyalty.‍

10. Manage Know Your Customer regulations: Know Your Customer (KYC) regulations require businesses to verify the identity of their customers and assess the risk of potential money laundering or fraud. AI helps streamline KYC management by automating identity verification processes and performing risk assessments in real time. AI can flag suspicious activities and alert compliance teams to potential risks by analyzing customer data and transaction history. Additionally, AI helps maintain updated customer profiles and monitor changes in customer behavior, ensuring compliance with regulatory requirements.‍

11. Impact of AI on cross-border payments: Cross-border payments are vital to global commerce, facilitating trade and investment across borders. However, traditional cross-border payment systems are often slow, expensive, and prone to errors. AI can support cross-border payments by leveraging advanced algorithms and blockchain technology to streamline transactions and reduce costs. By automating currency conversion, compliance checks, and transaction routing, AI accelerates cross-border payments and improves transparency and security. 

Payments AI solutions offer many benefits to empower businesses while streamlining financial processes, mitigating risks, and driving growth. By leveraging AI-first platforms explicitly designed for the accounting and finance function, organizations can optimize working capital, have more visibility and control over the payment process, and improve relationships with vendors and customers. Also critical is that leveraging technology helps reduce manual work and monotonous tasks, reduce employee burnout, and provide an opportunity to redirect time and energy to higher-value work.

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