Interview with Controller:How AI Improves Controls and Protect Margins

OpenEnvoy - I have the pleasure of speaking with a former Controller from a Fortune 50 company, now an expert consultant to CFOs at large utility companies. For this interview, we’ll call him Steve.

To introduce OpenEnvoy, we are an Applied AI company that lets companies improve control over costs with AP automation and real-time contract audit. There are 200 AP automation solutions on the market who promise to eliminate clerical work by capturing invoices, doing a basic PO match, and facilitating approvals. Some flag potential fraud. We do all of that. And we do it faster, better, and cheaper than the other solutions.

We also do a really innovative thing on top, real-time contract audit. Simply comparing invoices to POs doesn’t always give you a full picture of accurate costs. Our AI actually captures contracts and all types of transaction records and audits each invoice line in real time - BEFORE any payments are made. Companies often find that they’ve been losing 2-5% to errors and overpayments.

Like other technology innovations, this real-time audit creates opportunity and value that wasn’t practical to capture. It’s kind of like what happened with land values in Oklahoma when fracking was first used for natural gas. The potential–the gas–was always there. But, there wasn’t a good way to get at it. New technology makes the impractical very valuable.

Steve - Wow, I thought that you were going to tell me you have a better mousetrap to automate the basic AP process.

OpenEnvoy - Well, we do. Companies might see 50% or less of their invoice volume fully automated, even if they’ve invested in automation. But that’s not all we do.

Steve - Where do you see the most potential for auditing spend in real time?

OpenEnvoy - Real-time audit prevents overpayment where simple POs don’t capture the full picture. Typical AP automation is based on matching the invoice amount to the PO amount. Companies typically require manual reviews of their invoices to double-check, and that’s part of their controls. But, it can be a challenge for busy reviewers to manually evaluate complex invoices that might have hundreds of lines.

Invoices are approved when the total is less than the order total. But, what if the actual cost should be less than the PO total? Or, what if there is no PO? Real-time audit compares the transaction records to the contracted rates to validate the cost of each line of the invoice.

Steve - It sounds costly to audit every line of every invoice against your contracts. Where do you see this issue where the simple PO match isn’t enough?

OpenEnvoy - It’s very common. If your company uses “blanket POs”, or creates POs after an invoice is received, those are indicators that the amounts of your POs are a bit rough. You might have services that are billed according to time cards and schedules of rates. Craft labor is a big one. Prices of other spend categories vary based on commodity prices. Others are billed based on usage. Still others, like freight, see charges for a host of things like delays and cleaning that haven’t happened yet at the time that orders are created.

OpenEnvoy - A question for you, Steve: why don’t companies have controls that require this type of real-time audit?

Steve - Well, the main reason is probably that this real-time audit wasn’t possible before. Why would I create a control that I can’t enforce? If there was a small amount of error in those supplier invoices but it isn’t possible to catch it, it’s just a cost of doing business.

This is actually kind of like your example with fracking in Oklahoma. If you tell me that there’s a new AI technology that allows me to spot overbilling and prevent overpayment in real time, that’s a new opportunity. Controllers aren’t in the wrong if they don’t have this in their control framework because it didn’t exist.

Now, real-time control enforcement is a trend. So called “Continuous controls” are implemented in software that monitors transactions all the time. Fraud detection in AP might be like that. But, that’s enforcing a control that you already had.

OpenEnvoy - Yes, it is absolutely a new technology. AI lets us take invoices, contracts, rate cards, and transaction records from wherever they sit. In any format. And then we audit in real time. Managers at the company may have been asked to check invoices prior, but the AI is just much better than a person at sorting through these documents.

And it’s faster. Freight invoices are notorious. They’re due within 72 hours, often leading to overpayments. And sometimes to claw-backs.

Steve - I have two questions “How much does it cost?” and “What is the risk?”.

OpenEnvoy - Here again, the AI is amazing. The software cost for basic AP automation + Real-time audit is about the same as most companies are paying for AP automation. There are no document templates to maintain and no document extraction errors to review, so the cost of running the AI system is far less. The implementation is fast and inexpensive. Companies are up and running in just a few months.

As for the risk, OpenEnvoy has a unique approach. We all think of technology risk from a critical systems perspective. If you switch your GL from SAP to Oracle and it doesn’t work, your business stops. OpenEnvoy isn’t like that. You can run it in parallel with what you’re doing today, make sure you like it, and then turn the other system off when you’re ready.

The projects are so fast that the whole thing is a one-year payback.

Steve - Very interesting. If the operating costs are less, there’s no substantial switching costs, and you can deliver 2% by avoiding overpayments, that’s compelling. Controllers may not know about this because it’s new. Everyone knows that AI has opened up a lot.

They aren’t in the wrong if they don’t have real-time invoice auditing in their control frameworks. But, if a few years go by and they still aren’t doing it, then folks might start asking questions.