Leveraging Machine Learning in Finance Operations

Machine learning is a technology that has quickly becoming a topic of interest across a variety of organizations.  What is machine learning?  What’s so special about it?  What is its implication towards finance?  What are some use cases?  These are the topics we will discuss. 

In the past, decision branching and the processing of data in software were both static instructions “programmed” into the computer.  It was fine for something that never changes, but as we know, there’s no constant in business today.  Everything is either evolving or drastically changing, one can no longer outline and predefine the responses to every possible scenario. 

In this old model, every time there’s a change, the computer will need to be “reprogrammed” by a skilled developer.  Having been the liaison between business and technology for 30 years, I can tell you one constant:  No matter how small a change you consider, the project will never start on the date you want, and it will always take longer to implement than your anticipation.  It is no fault of the IT department, they are constantly overwhelmed and fighting fires.  They rarely share the same priority or timeline with the business organizations due to their workload and constraints, thus the love-hate relationship between the two.  You can fix it by greatly expanding the IT staff, a proposition that is simply impossible given today’s cost pressure.

Along came machine learning, it is a branch of artificial intelligence based on the idea that machines should be able to learn and adapt through experience.  If a machine can learn on its own, as our business evolves, theoretically it can observe these changes and modify its behavior without developers.  Although the concept dated to 1959, it was only within the last few years when we began to see its emergence in business applications.  In areas such as invoice processing automation, it is starting to modernize the way these tedious day-to-day actions are performed and organized.

Invoice processing often involves complex, poorly-defined and circuitous process flow amongst multiple parties, new exceptions and formats are encountered regularly.  Wouldn’t it be nice if a business user can teach it to properly read, route, classify and process the invoice once, and the computer will learn this new pattern and automatically reapply it if this scenario happens again?  That is what machine learning is!  Without involving IT developers, the platform would learn and automatically apply the new rules for similar “out of the box” step, and the OCR engine will always read the new invoice format properly in the future. There is no more change documentation and backlog, you no longer have to repeat the manual override steps until the system is reprogrammed.  It is ready to learn 24×7, including all holidays and Super Bowl weekend.  With machine learning, the learning is instant, the changes immediate.  Think of the time saved throughout the approval process as well as the benefits by having a system that is constantly learning and evolving to your business needs. 

Without having to exhaustively capture all possible scenarios, you can spend less time in front of a whiteboard with process consultants, and your initiatives can enter production and deliver value many months ahead of the traditional approach.  You just eliminated analysis-paralysis, which tends to be root cause for runaway projects. 

In Juno Payments, we are delivering a machine learning-enabled invoice automation solution.  It allows you to see savings in as little as 30 days, and allow the finance department to be self-sufficient in implementing most future changes. 

We hope this article resonates with you.  We would appreciate an opportunity to sharing more on how your business can benefit from machine learning, and design a solution that is right for you. 

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Leveling the Playing Field for SMB Companies

As recent as 2-3 years ago, financial operation automation was a luxury only large corporations could enjoy.  There were few affordable solutions available, most optimization were complex and required application developers and process consultants – both were taboos for most SMB.

Take invoice processing for example, majority of the most efficient, lowest cost organizations are dominated by the Fortune 500 companies.  Their invoice volume is much higher, so the efficiency gain and savings can justify the high expense of the automation platform. 

For many small-and-medium-businesses (SMB) we worked with, although the organizational structure and the challenges are different, as a % of expense, the pain is no less, the impact of missed payments often higher, and such optimization equally as germane.  But the high admission price inhibited their ability to transform.

They often face a distinct set of obstacles.  Due to their size, invoicing processing department is smaller, and some may not have dedicated staff.  IT department also tends to be less sophisticated, with focus on fighting fires rather than innovation and transformation.  Impact due to missed payment is greater due to their smaller leverage, which can negatively affect their payment terms, or it can even cause disruption in daily operation in extreme cases.  They are less prepared to cope with peaks in invoice volume, vacations, and turnover due to limited staff.  Many executives and owners focus more on operation disruption avoidance rather than sophisticated cashflow optimization.

Given what we discussed, should this invoice automation advantage still be exclusive for the Fortune 500 today?  The answer is a resounding no!  So what changed? 

It is the arrival of purposed-built, cloud-based, automation platform delivering Transaction-as-a-Service (TaaS).  Such automation platform eliminated the hurdle for high initial investment and intense resource requirement.  It transforms invoice processing by leveling the playing field, delivering savings to SMB in the same fashion it does for the Fortune 500 companies.  If one takes the initiative to adopt the technology, one can place their firm within the low cost structure of the top 25% most efficient corporations within 1-3 months. 

Our advice is to start a small production pilot to assess the benefits and savings, which are easy to do within the TaaS model.  By disrupting this old efficiency-of-scale paradigm, you can level the playing field, and focus on what matters – growing your business.

One last thing you should consider is future-proofing your finance organization?  Invoice processing is no longer the static business of the past, there are various emerging technology that could transform the business model in the future.  For SMB, they can’t afford to dedicate resources to study enablers such as shared ledger like BlockChain, cryptocurrencies like Bitcoin, innovations like artificial-intelligence, etc…  With the TaaS model, the burden of innovation is shifted from the business to the TaaS provider, new capabilities can now be added on-the-fly, and the business can stay at the forefront of technology.

In Juno Payments, we specialize in designing and providing just such invoice automation to large corporations and SMB.  Here are some benefit highlights with the true automation unique to our offering:

• MANAGE YOUR SPEND – No up-front expense/resource hurdle.  Use only what you need, and only pay for what you use – you only pay per transaction processed.
• INCREASE EFFICIENCY – Reduces man hours spent on invoice processing by 95%, saving you up to 92% in invoice processing cost.
• IMPROVE CONTROLS – Provides real time visibility and control for your invoice operation and cashflow by enforcing your customized workflow & business rules.  Inject manual checks where you choose or allow invoices to pass straight through to payment on a designated schedule.
• REMOVE DATA ENTRY & PAPER – Reach 100% effectiveness and accuracy on invoice data extraction
• NEVER WRITE ANOTHER CHECK – Electronically pay an unlimited number of invoices from an unlimited number of suppliers, no need for EDI
• QUICK IMPACT:  Provides operational results in 30-90 days

We understand each company’s needs is unique, we offer free consulting to help you chart the optimal adoption strategy and select the right solution.  We look forward to an opportunity to work with you to determine what’s best for your company.

Want to Learn More?

1-888-514-8118

[email protected]

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www.junopayments.com

How the Dunning Process Works and How to Avoid It

Dunning is derived from a 17th century verb (dun) which means demanding payment of a debt, it represents the steps taken to collect overdue balance.  As accounts become more overdue, this process can become increasingly invasive.

The first step is normally a letter that outlines the late payment per the previously agreed upon payment due date.  Some institutions have systems in place that automate certain aspects of the dunning process, they include tracing customers who have pending payments, to notifying and involving collection agencies.

The severity of collective actions is determined by several contributing factors such as how long overdue the payment is, the amount of the payment, and the relationship between the two parties.  Once collection agencies are involved, they will go through internal processes of collection which include everything from simple notices to serious legal actions.

How can this nightmare of a scenario be avoided?  Most would think it is fairly simple, pay your invoices on time.  But as we all know, depending on your internal AP/AR processes, this is not always as simple as it sounds. 

One way is to maintain a trustworthy team managing your internal processes, who would ensure those process continue to evolve and become more efficient. Granted, there will always be anomalies, but hopefully not enough to find yourself fighting your way out of a dunning process.

Keeping healthy business relationships is another way to minimize your dunning risk.  Collection agencies only become involved in the dunning process if the payee requests them to be.  This can often be avoided by keeping positive and respectful working relationships, and by letting them know they are valued.  A business relationship is often more important than a single invoice.

Dunning process damages your credit rating and lowers your ability to obtain favorable payment terms.  If the root cause for missed payment is due to errors and bottlenecks in your AP organization, there is no reason these cannot be eliminated, it makes good business sense. 

The easiest way to avoid late payments and dunning processes is true automation.  Juno Payments offers a solution to fully automate your procure-to-pay and order-to-cash processes.  It removes late/missed payments due to human errors and bottlenecks, your focus can shift from chasing payments to never missing early payment discounts.  

We would appreciate an opportunity to work with you and share how this can be accomplished.

Want to Learn More?

1-888-514-8118

[email protected]

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www.junopayments.com

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