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Artificial Intelligence, Blockchain and Cognitive Agents for Real-Time Accounting

by Ulrich Tröller
Artificial Intelligence, Blockchain and Cognitive Agents for Real-Time Accounting

There is a new tech wave in finance and accounting: Blockchain, Artificial Intelligence (AI) and Cognitive Agents enable real time accounting. This changes dramatically workflows and processes in the accounting and finance industry. Here we take a look, which new technologies occurred during the last years and how something quite new and special was born.

The role of the finance department in companies is evolving for some time now. From an administrative function, finance expands to an executive advisory role. Accounting plays a major role in this and many CFOs spend “less time on recording and verifying the numbers, and more time making the data connections and explaining the number implications to the business.” – Source

Prerequisites for Real-Time Accounting

For the transformed finance, you need accounting data in real-time. But how to achieve this?

There are three prerequisites:

  1. Automated processing
    Processes accounts payable, accounts receivables in real-time, without human interactions.
  1. Automated compliance checks
    Ensure company compliance guide lines in real-time – without human audits.
  1. Human-like interfaces
    Enable that all employees can access the data in real-time.

Real-time accounting is around the corner. But what are the drivers? Here, we explore the three key technologies that drive real-time accounting today.

Artificial Intelligence for Real-Time Accounting

In the past accounting was a slow and labor-intensive job. Today, artificial intelligence automates accounts payable (see also our article on automation of invoice processing. Accounts receivables are automated by artificial intelligence chasing technologies as collectAI. AI automates reconciliation in general ledger accounting. The combination of self-learning software applications deliver accounting information in real-time. Businesses benefit from:

· Reduced manual effort

· Increased quality

· Consistent results

· Faster turnarounds and almost real-time results

· Standardized inputs for business intelligence systems

Blockchain for Real-Time Accounting

Accounting departments ensure compliance with local and global regulative frameworks. Nowadays companies receive and issue invoices in reference to contracts. Then you need to make sure the invoices comply with the contracts and its underlying regulative frameworks. This process is time intensive, prone to errors, could lead to manipulation and there is always a certain level of unambiguousness. However, smart companies create “smart contracts” in the blockchain. Smart contracts are trackable and irreversible. In smart contracts, rules and regulations are defined and transparent for both business partners. Blockchain facilitates the execution of the contract as the regular invoice management for suppliers and customers. People create smart contracts, but the Blockchain controls and executes.

Blockchain has the power to change the contract management and execution, but it also ensures the data integrity of accounting records. There are many business cases out there, depend on which stakeholder you are looking: Government, investors, banks, insurance companies, customers, vendors, suppliers etc. The overlapping topic is that all of them rely on accounting data to run their business and take informed decisions.

Cognitive Agents for Real-Time Accounting

Today, you interact with accounting systems through software with graphical user interfaces. Buttons, lists, filters enable you to interact with software. It is often challenging and time intensive to find the right information by navigating through increasingly complex buttons and filters. Soon, AI will make your live easier by offering completely new ways to interact with accounting software.

Cognitive Agents for business applications will soon enable a quick and easy access to complex accounting functions: “What are my earnings today?” Information that will be available soon within seconds based on cognitive interfaces that interact with AI powered software. But you will not only use cognitive agents for an intuitive access to data. Cognitive agents will tell you what to do next in your accounting workflows, identify risks and set alerts to ensure compliance. Cognitive Agents interact with people and facilitates your daily work.

Cognitive Agents interact with people and facilitates your daily work. Cognitive agents are already available for consumer applications and now entering the business world. The race has started.

Summary for Real-Time Accounting

Artificial Intelligence, Blockchain and Cognitive Agents turn accounting in a real-time management. Artificial Intelligence is the data generator for business information. Artificial Intelligence enables the real-time data generation for inbound and outbound documents. The Blockchain technology allows distributing information instead of copying, a new type of internet application. Smart Contracts are defined and stored in the Blockchain and Cognitive Agents carry out repetitive action turning accounting in a real-time data generator for business information. A new real-time source for business intelligence.

Artificial Intelligence for Invoice Processing

by Christoph Prieler
Artificial Intelligence for Invoice Processing

Everywhere you turn, someone talks about Artificial Intelligence (AI) and machine learning. AI driven software is already changing business processes in small and large enterprises. Artificial Intelligence revolutionizes “manual” software workflows and leads to new customer experiences. In this article, we explore the use of AI for document processing based on the example invoice processing.

Invoice processing

All companies around the world must process invoices. Invoices are what make the business world go round. Every year, companies issue over 18 billion invoices in Europe and America.

Today, invoice handling processes are time consuming and cumbersome. The European Commission estimates, that 80% to 90% of invoices (2017) are paper-based. In charge of the invoice processing are accounting departments and accounting service providers. And invoice processing is done manually or semiautomatically.

Let’s see how artificial intelligence is revolutionizing this last, non-digitalized industry.

AI for Invoice Processing

Business software vendors use Artificial Intelligence for invoice processing in several ways. AI based software supports:

  • Invoice Separation
  • Data Extraction
  • Eata Completion

AI for Invoice Separation

For paper invoices, digitalization starts with scanning. As a result, the scanner produces one document (most likely a pdf or TIFF). This document contains hundreds of pages and invoices. For further processing, users must seperate the documents manually for each individual invoice. This is time-consuming work and errors during the separation cause disruption within the proceeding process steps.

The self-learning software Abacus Intelligence® receives one file with hundreds pages and invoices. Based on historical data, the AI relizes the start and the end of an invoice and creates for each invoice a separate file. There is no need to use barcode stickers or separate it manually.

Speaking in AI terms, the separation of invoices is a “classification” issue. You receive a document containing of multiple of invoices. You have to recognize where one invoice starts and ends. Abacus Intelligence® solves this problem the same way as human do. Abacus Intelligence® recognizes attributes at headerlevel at the first and on footerlevel on the last page for every document (supplier). This information is used to separate the scanned document in individual invoices and files.

AI for Invoice Data Extraction

For scanned paper invoices and for low value E-invoices data extraction is necessary. Old-fashioned OCR software extracts invoice information in an inefficient manner. Before you process an invoice for the first time, you must create a template manually. A template tells the software “where” to extract “what” data. You need to do this for every supplier and invoice layout. If a supplier changes the layout, you need to redo the template. OCR templating software is complex: Only well-trained employees can create good templates and template creation can be complex: The duration for the creation of a single templates varies from 10 Minutes to 1 hour. In sharp contrast, AI based software extracts information without the creation of templates. Abacus Intelligence® receives the OCR data and extracts the relevant invoice information:

  • Invoice number
  • Gross amount
  • Net amount
  • Tax percentage
  • Purchase order number

For each supplier invoice, the self-learning software creates a template-model automatically. This substitutes the manual model creation. Employees do not set up or optimize templates, the software does it in one second. With Abacus Intelligence®, you save template set-up time and maintenance costs.

Optical Character Recognition (OCR) creates for each invoice a document. Within a OCR document, it is hard to find the location, where the relevant data stored. To achieve this, training data for each individual invoice (suppliers) is required. Abacus Intelligence® connects to any accounting system and runs a reverse engineering. AI uses historical data such as company, chart of accounts, supplier and invoice layout to create a specific AI-model. There is no need for manual interaction, the model creation and adaption process is initiated automatically.

AI for Data Completion

The ultimate goal of digitalization is to automate the full invoice processing workflow. Seperation and data extraction are the first and second step. Even if you receive an E-invoice, consiting all invoice data in the XML-structure, every company needs to “complete” the invoice with the appropriate accounting attributes. To date, accountants use their accounting knowledge to assign this attributes manually or search for it. Here, new technologies emerged to automate this process using artificial intelligence. Abacus Intelligence® completes each invoice with the following information:

  • General ledger
  • Cost center
  • Tax codes

Now the accountant use accounting knowledge to carry out checks, especially to check soft criteria and circumstances. In addition Abacus Intelligence® highlights any deviations form the past automatically for manual transaction. Speaking in AI terms, this is a “classification” exercise. Data from journals and historical invoices are used to train classifiers, individually for each business partner.

Concluding Remarks – Invoice Processing based on AI

To create AI models for separation, capturing, completion, Abacus Intelligence® connects with accounting software and trains models. The self-learning AI-software processes per day for thousands of companies for accounting service providers, shared service centers, enterprises and software vendors. The software is a state of the art web application and runs either as SaaS or on premise. Software vendors can integrate Abacus Intelligence using a comprehensive RESTful API.

Abacus Intelligence® has already changed the business of accounting service providers and shared service centers.