Dear CFOs: 3 reasons your peers use AI to audit spend

My team and I have spent a ton of time interviewing customers and digging into our sales data to understand better whom we serve and why finance teams are standardizing on AppZen’s artificial intelligence platform for their spend auditing.

We had an incredible 2018, with a steep ramp in our customer base. We have strong representation in the Fortune 500 and across global leaders in banking, insurance, manufacturing, pharma, high-technology, media and communications, and more. I was surprised at the relevance of AI-based spend auditing across so many different vertical industries, especially since so few companies have a specific initiative or budget line item earmarked for such a project.

As we took a step back and looked closely at the enterprises that chose to partner with AppZen – and their reasons for doing so – three primary themes emerged across this broad array of industries. Understanding these themes has helped us to clarify our thinking around our business strategy and product roadmap. Similarly, they may help you crystallize your own thinking around your department’s initiatives for the coming year, and the business cases you’re pulling together for those initiatives.

The three themes are compliance, spend reduction, and streamlining process.

1‍. Compliance

This year, large businesses in the pharmaceutical, chemicals, energy, food processing, and agribusiness verticals chose to work with AppZen. It’s easy to imagine that enterprises with large sales teams (like pharmaceutical) would be great candidates for AI-based spend auditing, not just because they have a lot of spend but because that spend is so fragmented with global sales teams and many knowledge workers. But not all of the enterprises in these segments fit this mold. Another characteristic this group of industries has in common is that they are heavily regulated. This led us to dig a little deeper with our customers into why regulatory compliance matters in spend audit, and the overwhelming response was that spend is where all of the clues are hidden when it comes to compliance issues. For companies that take a zero-tolerance approach to, say, payments to politically-compromised individuals, ensuring the careful review of all spend is critical. AI helps them get this done when there’s pressure not to increase the associated cost.

The takeaway: Enterprises that cannot afford regulatory infractions have a clear mandate to audit 100 percent of their spend.

2. Spend Reduction

Probably the most obvious reason for implementing AI-based spend auditing is the spend reduction associated with sussing out and eliminating errors, waste, and fraud. Indeed, this has the most tangible hard-dollar cost savings for AppZen customers. There seem to be two types of organizations that fall into this category: those that must cut costs because the dynamics of their business dictate doing so, and those that have many knowledge workers who travel and require predictability and control over their spend. We saw the former in industries with thin margins such as equipment or auto manufacturing, hospitals, and retail, and the latter in professional services firms where there is a need to control spend such as accounting and tax firms, advertising agencies, and systems integrators.

The takeaway: Enterprises that must control or reduce spend find tangible hard-dollar cost savings with AI-based spend auditing.

3. Streamlining Process

The area of value that was most inspiring to me was the streamlining of business process associated with AI-based spend auditing. Contrary to the belief that the primary benefit of this is headcount reduction, our observation is that companies that had the best outcomes had initiatives related to employee expense report turnaround, manager time savings, and employee upleveling – in other words, improvements and delighters that make employees better and happier. The companies that set forth an SLA (or at least a norm) for when employees would be reimbursed – usually 2-3 days – met their objectives and then some. Ditto for those that removed operational bottlenecks by bypassing managers in the expense report approval workflow or concentrated high-risk transactions in auditors’ queues to focus their attention only on high-value, impactful work. Companies in this category fell into a number of industries, but one commonality was that they were competing for employee talent and had active employee retention initiatives.

The takeaway: Enterprises that streamline process in order to improve or delight employees achieve positive outcomes from AI-based spend auditing.