How AI and Automation Are Changing Billing in the Supply Chain Industry
04 Jul

How AI and Automation Are Changing Billing in the Supply Chain Industry

The supply chain industry is in a process of change that is technologically induced. Much of the process of operating inventory and delivery coordination is being transformed by AI and automation. Billing and invoicing are one of the main spheres where innovation develops fast.

Billing is becoming quicker, more precise, and more accurate through the supply chain with the help of new technologies. This would be a significant cost-saving and time-saving mechanism for both the shippers, carriers, and logistics providers. It also enables the management of the supply chain finances in exciting aspects.

Also, in this article, we are going to consider the most influential AI and automation trends that alter supply chain billing. We’ll explore how invoice processing is becoming fully automated, how data extraction streamlines billing analysis, and how smart contracts ensure enforceable billing terms. And we will speculate where billing software development in the supply chain will be heading in the years to come.

Automating the Invoice Process

I said to myself we would begin with the invoice – the invoice. This is a critical document that has always brought bottlenecks. The conventional manual data entry is prone to errors. Authorization, transmission, and matching of invoices consume workforce. However, AI is currently making the whole process simpler.

Optical Character Recognition

Optical character recognition (OCR) is a key way AI extracts data from invoices instantly. OCR software can “read” scanned or photographed documents without human input. It converts printed text into computer-readable data.

For supply chain billing, OCR extracts key details from paper or PDF invoices. This data populates billing systems and ERP platforms automatically. Employees no longer have to manually enter invoice numbers, dates, totals, and line items. This alone saves teams hours of dull work each week.

IBM states that its Watson Discovery OCR tool achieves enterprise-grade character‑recognition accuracy competitive with leading OCR services. It brings considerable time savings through its integration with popular ERP platforms like SAP and Oracle.

Natural Language Processing

Like OCR, natural language processing (NLP) eliminates manual invoice data entry. But instead of scanning documents, NLP “reads” free-text fields. The AI tool can interpret sentences written in standard languages.

In supply chain billing, NLP often analyzes the narrative descriptions on invoices. It extracts things like part numbers, customer accounts, quantities, and product codes. This structured data then flows automatically into the right databases.

For example, the company Rossum offers an AI tool trained specifically on supply chain invoices. Its NLP algorithm has over 90% accuracy in extracting key billing details from supplier and carrier invoices.

Once invoice data is extracted, validation happens instantly too. AI checks for duplicate invoices, validates totals, and confirms the accuracy of vendor details. This prevents costly billing errors before they impact operations.

All this happens right after receiving the invoice, vastly lowering processing times. On average, supply chain companies cut invoice handling by over 70% using AI tools. This frees up employees to focus on more strategic financial tasks.

Predictive Coding

AI speeds up invoice processing in one more key way – smart workflows. Predictive coding algorithms learn from historical billing data. They identify patterns about which invoices get approved, when extra validation is needed, etc.

The predictive coding AI then automatically routes each new invoice to the right people. It also flags any risky or fraudulent-looking bills for additional scrutiny. This streamlines workflows and applies custom business rules tailored to each supply chain company’s processes.

In the future, expect deep learning algorithms to get even smarter. Invoice processing AI will integrate with procurement, logistics, and payment systems. For optimal efficiency, the entire cycle – from ordering to payment – will happen seamlessly without any human administration.

Professionals looking to understand the core technologies behind this transformation can benefit from the AI in Procurement Basics course, which explains predictive algorithms and AI-powered workflows in procurement and billing.

AI in Procurement Basics

Automated Auditing and Reporting

Along with streamlining core processing, AI is also automating the analytics of supply chain billing data. Invoices are audited using advanced algorithms that identify tendencies quickly than a human being. They also create financial accounts that meet the requirements of individual roles in the supply chain.

Now, how is automation improving auditing and reporting of billing data? Let us take a look at some of the ways:

Payment Pattern Analysis

The long-term relationships between carriers and suppliers lead to billing creep, where the former tends to overcharge the latter. With AI audit tools, historical payment data is examined to identify suspicious patterns. Such automated audits assist the supply chain companies in recovering their lost profits.

Invoice Variance Alerts

AI is able to immediately determine whether an invoice is out of the expected parameters. As an example, new invoices can be compared with purchase orders and agreed rates using algorithms. Unforeseen sums, amounts, or line items cause alerts to be generated to ensure human review. This guards against unintentional and deliberate overcharging.

Fraud Detection

With enough historical data, AI can build a profile defining “normal” billing behavior. Machine learning algorithms then apply this model to identify anomalies in new invoices that may indicate fraud. AI-powered fraud detection in supply chains helps cut fraud-related losses by approximately 25-40% annually, translating to billions of dollars in savings across the industry.

Automated Reporting

AI tools can take billing data and create customized reports for each manager. For example, CFOs may want high-level overviews of spending and discounts. Logistics leads could request drill-downs on carrier invoice accuracy. AI builds these reports automatically without having to code rigid report templates.

In the near future, expect analytics automation to go a level deeper. AI will analyze supply chain invoices in light of broader market events to enhance revenue and margins. For example, algorithms may adjust shipping rates on carrier invoices to account for dynamic diesel prices. Or they may leverage spot market rates for storage facilities to lower rental invoices.

To track billing accuracy and supplier performance, tools like the Basic Procurement and Supply Chain Scorecard enable KPI visibility across functions. These dashboards help leadership monitor overcharges, payment delays, and vendor compliance.

Basic Procurement and Supply Chain Scorecard

Extracting Rich Data from Documents

As we have observed, AI does not require people to manually input the information in the supply chain billing. However, automation gives an even greater benefit – structured data.

In contrast to people, algorithms are able to sort through line items, dates, codes, and totals on invoices to predetermined categories. This digitizes paper or PDF non-structured documents in an organized manner, ready to be analyzed.

Converting unstructured billing documents into usable data is hugely impactful. It allows supply chain leaders to analyze costs, identify problem vendors, optimize policies, and make accurate forecasts.

Let’s explore some of the ways AI enriches supply chain billing data:

Categorized Spend Analytics

AI structuring makes it simple to categorize transactions from invoices. For example, algorithms can auto-tag vendor payments by type – fuel, maintenance, tolls, etc. This provides visibility into exactly where supply chain dollars are spent. Managers gain data to optimize policies that improve margins.

Once billing data is structured, the Cost Breakdown Analysis Template helps teams identify savings by comparing individual cost drivers—such as freight, duties, and storage—against benchmarks.

Cost Breakdown Analysis Template

Enriched Carrier Profiles

Structured data also provides a holistic view of supply chain partners. AI can extract fields from invoices to build rich transportation provider profiles. Details on drivers, trucks, routes, and more all get compiled automatically. Supply chain companies use these profiles to identify their best carriers and phase out underperforming ones.

Total Landed Cost Analysis

AI can also connect invoices to their originating purchase orders. This provides total landed cost insight – invoice cost plus logistics fees. Companies can then easily see which suppliers and carriers offer the best delivery value. Over time, AI begins predicting landed costs for more strategic decision-making.

Overall, no human team could ever manually structure supply chain billing data at scale. AI unlocks this capability, delivering new levels of financial control and cost optimization.

The Future: Smart Contracts and Decentralized Systems

Smart Contracts and Decentralized Systems

Currently, AI focuses on streamlining current supply chain billing processes. But in the future, blockchain-based smart contracts will automate even more. These self-executing codes will remove ambiguity and manual oversight from billing flows.

Smart contracts make supply chain billing rules transparent and enforceable:

  • Contract terms like dates, rates, and totals get encoded directly into invoices
  • Payments automatically execute when contract conditions are met
  • All parties share the same tamper-proof view of billing data

Implementing smart contracts requires integrated ERP, WMS, and blockchain-ready systems. The Supply Chain Information Systems course explores the digital architecture necessary for such seamless billing automation.

The Supply Chain Information Systems

New initiatives such as TradeLens currently provide supply chain users with building blocks of smart contracts. With increased adoption, there will be automated billing using immutable contract logic that will not need human management.

Even more impressive functionality will be offered by decentralized apps. These will be peer-to-peer networks that will interlink companies in the supply chain. The invoices can be exchanged, shipments can be tracked, and payments can be released in the integrated workflows.

Decentralized supply chain billing has a lot of potential as blockchain matures. Transactions will become instant, transparent, and highly integrated via shared data layers. The result is faster processing, lower costs, and tighter financial control.

The Future of Supply Chain Billing: Autonomous and Integrated

It is a thrilling period in supply chain billing. The new technologies are doing away with stacks of paper invoices, manual data entry, and disintegrated systems. Through AI and automation, there is a hands-off working process, increased financial understanding, and efficient activities.

There is no doubt that in the following years, billing will become fully integrated in the functioning of other supply chain activities:

  • Smart contracts automatically trigger payments when IoT sensors detect successful delivery
  • Predictive analytics recommend dynamic billing rates based on spot market prices
  • Cloud-based apps offer instant spend visibility across the multi-party supply network

All this will be occurring in an automatic manner without any human administration. The billing component of the supply chain will be moved out of view. The transactions will be real-time on the basis of the best business logic, which would be AI-controlled.

The outcome is lower expenses, clear relationships, and chances of earning. The supply chains will be smoother with maximum profitability than before as billing continues to get to graver levels of automation.

Before scaling to fully autonomous billing, companies should evaluate operational readiness using the Distribution Operations Assessment Tool, which helps identify inefficiencies and digital gaps in current workflows.

Distribution Operations Assessment Tool