As chief financial officers face economic uncertainty, more are turning to artificial intelligence to optimize their financial processes, particularly in accounts receivable (AR).
Middle-market firms are leading the charge, recognizing AI’s potential to cut costs, reduce delays and improve cash flow predictability.
The PYMNTS Intelligence report “CFOs Eye Accounts Receivable as New Direction for AI Investments” found that AI-driven solutions are being adopted to automate invoice approvals and payments, providing operational benefits.
AI Investment Grows Despite ROI Concerns
CFOs are confident in AI technology, despite initial concerns over ROI. CFOs plan to boost AI investment by nearly 10% this year, with an average spend of $3.16 million, per the report. Firms recording strong ROIs are increasing budgets by 19%, while those with marginal returns are planning a more modest 6.2% increase.
According to the report, 78% of middle-market CFOs plan to increase their AI budgets this year. Additionally, 86% of middle-market CFOs now recognize AI as essential for improving financial reporting, reflecting familiarity with the technology and its potential to drive operational efficiencies in uncertain economic times.
The Case for Using AI in Accounts Receivable
AI’s application in AR is useful as companies seek to streamline their payment processes. Traditionally, AR processes have been slow, prone to errors and costly, but AI is helping improve efficiency. Sage’s global expansion of its accounts payable (AP) automation product, for example, demonstrated AI can reduce processing times and costs — savings that can be extended to AR.
According to the report, 55% of middle-market companies are willing to pay a 3% fee to automate invoice approvals and payments, signaling their commitment to improving cash flow management. These firms typically process about 1,500 invoices each month, meaning that even small improvements in invoice payment efficiency can lead to savings and reduced operational uncertainty. Firms that use AI for at least half of their AP processes are 47% less likely to report high levels of operational uncertainty.
Investment in AR Solutions Reflects Demand for Efficiency
Middle-market firms, which face tighter margins and greater sensitivity to cash flow disruptions, are seeking AI solutions to reduce uncertainty and boost revenue collection efficiency. On average, these firms lose 3.1% of their revenue, or roughly $14 million, due to payment collection issues, with smaller companies losing a slightly higher percentage. By automating invoice approvals and payments, AI-driven tools help mitigate this loss and provide a clear incentive for middle-market firms to invest.
Companies adopting AI solutions reported lower levels of uncertainty and greater satisfaction with the technology’s impact on financial workflows. As the demand for operational efficiency grows, middle-market CFOs are expected to continue increasing their investment in AI-driven AR solutions, recognizing the technology’s ability to improve performance and reduce costs.
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