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Travel & Expense Company Culture Artificial Intelligence

3 Processes You Can Transform with Finance Process Automation

on October 03, 2018

The key to making finance process automation successful at your company is not just the analytics but what actions you take based on that analysis. You want to focus on, “What can I do with this? What decisions am I going to make? How can I improve a company process?”

The goal should be to improve an outcome or correct a process flaw, which is where robo-auditing comes into play. Ask yourself, “How can we use automation to support those new processes and make them as efficient as possible?”

Done right, robo-auditing makes you smarter and faster.

Here are three processes where robo-auditing should lead to immediate improvement.

Navigating Government Regulations in Entertainment Expenses

Every business must deal with federal regulations. This is especially true in the pharmaceutical industry, which has strict laws regarding how money is spent when entertaining healthcare professionals. Companies are vigilant about employees following policies on expense reports because there is little room for error.

One global pharmaceutical company had a staff of about 20 people tracking these problems using spreadsheets and business intelligence tools.

However, policy violations continued. The company didn’t catch everything, nor was it changing future employee behavior. The problem wasn’t so much the process, but rather a lack of education on how the employees were violating policy.

This company faced the typical travel and expense issues on top of the additional layer of federal rules on how much they spent entertaining doctors. It was tricky stuff.

Employees might know how much they could spend taking the doctor out to lunch, but how much could they spend to cater a lunch for the doctor’s office? How much of that expense had to be applied to federal limits on spending for that particular doctor?

The company implemented a combined robo-auditing system, which helped them spot the problems, and an automated case management system to help them deal with the findings.

These systems allowed them to point out specific patterns of problems with employees’ expense habits and explain why those were problems. Not only that, the company reduced its compliance team by 80% while increasing compliance by 90%. The AI system saved a whole lot of headache by reducing the risk to the company.

Preventing Duplicate and Improper Payments

Most companies have preventive controls in place to prevent duplicate or improper payments. Purchase orders, receipts, and invoices must match up for payments to be made. That’s how it should work all the time, but as we know, mistakes happen.

A common problem occurs when multiple invoices arrive for large orders and different variations of that invoice numbers get entered into the system.

A human knows that 1234, 1234., and 001234 are the same invoice, but to a robo-auditing system those are different numbers. Usually these duplications are spotted and corrected, but sometimes they’re not caught until after a duplicate payment is made.

Rather than searching for these errors manually, companies figure they can live with a small percentage of errors or they pay an auditor to recover the money.

Now, with sophisticated AI and finance process automation, companies can find these errors before erroneous payments are made. A robo-auditor can determine, “We already paid invoice #001234, so we should not pay invoice #1234 because too many things look similar.”

We worked with a flooring company where someone ordered a boxcar of supplies instead of a box. The AI system flagged it as unusual and the error was corrected before payment was made, saving the company thousands of dollars.

If companies aren’t careful, bureaucracy can make it hard for work to get done in a timely manner.

Too much overhead can result in employees spending more time preventing problems than the problems would have cost in the first place. Companies must balance the cost of prevention with the cost of the problems they’re trying to prevent.

A good robo-auditing system can create advanced detective controls that shift that cost balance in their favor. Companies don’t have to accept the losses from duplicate payments and they can even back off on some preventive controls. It’s a win-win situation.

Finding Inflated Expense Reports

One of the easy ways to pad an expense report is through out-of-pocket expenses like taxi rides or mileage reimbursement. There’s usually a threshold where employees don’t need to provide a receipt, so it’s an easy area to pick up some extra money.

With robo-auditing, you can begin to identify patterns of abuse over time.

An employee’s mileage may consistently seem higher than it should for the number of sales calls made or for the state where the employee is traveling. Their meals, hotels, or taxi rides may cost more compared to employees in similar positions.

A robo-auditor can flag these anomalies and initiate an opportunity to follow up with that employee. HR action might be needed, but the best route is usually to educate the employee and let them know what you found.

Employee behavior can be influenced with this approach, but it requires leaders who are organized and purposeful in how they use the data.

An international beverage company used this technology to reach an important decision. After flagging employees logging extensive mileage, they realized it would be more cost-effective to give some employees company cars.

Another company had a policy that it wouldn’t pay for employees to buy in-room movies in their hotels. But when they used AI to analyze expenses, it found that those who bought movies in their hotel rooms spent significantly less on dinners. The company changed their travel policy and now reimburses employees for in-room movies.

As these examples show, a robo-auditing system works hand-in-hand with human auditors to help improve finance processes overall, while preventing and stopping fraud and erroneous payments.

This is the seventh blog in an ongoing series based on the recently released book, Robo Auditing: Using Artificial Intelligence to Optimize Corporate Finance Processes by Patrick J.D. Taylor, Manish Singh and Nathanael L’Heureux.


Nathanael L’Heureux

Chief Client Officer