Achieving STP: AI as your compliance intelligence engine

In previous editions, we described how AI has overtaken legacy OCR as the engine driving accounts payable (AP) transformation. Yet, it’s critical to understand that AI is not just a more accurate data capture tool. Rather, it represents an entirely new paradigm—one where compliance knowledge is embedded directly into the AP process, enabling decisions and validations that few human accountants (let alone OCR tools) could ever consistently achieve.

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From data capture to compliance intelligence: Traditional OCR tools focus on reading text from images. While improved accuracy is helpful, it falls short of understanding complex, dynamic compliance rules. AI, especially when paired with large language models (LLMs) like GPT, goes much further—it can interpret the meaning behind invoice data, identify country-specific tax obligations, and apply intricate regulations in real-time. This is not about just extracting “supplier name” or “invoice number.” It’s about making sense of what the data represents in the context of varying jurisdictions, industries, and transaction scenarios.

A real-world edge case: WHT on royalties in Germany: Consider this: In Germany, payments to non-resident artists may incur withholding tax (WHT) if the payment classifies as a royalty or fee for intellectual property (IP).

What? How many accountants are aware of this nuanced rule? OCR certainly isn’t. Even a well-customized SAP environment can only enforce rules on available data. The missing piece is recognizing the nature of the transaction in the first place.

Before AI: An invoice from a non-resident artist might be processed without the correct tax deductions, exposing the company to compliance risks. The complexity of local laws and language barriers often mean these details go unnoticed until an audit flags them.

After AI (Computer Vision + GPT): By understanding not just the text but also the underlying transaction type, AI identifies that this payment qualifies as a scenario requiring WHT. It ensures that the invoice data, along with the correct interpretation of the transaction, is passed into SAP for proper tax treatment—no human detective work is needed. This kind of advanced interpretation transforms AP from a simple extraction task to a compliance intelligence function. AI doesn’t just read invoices; it “understands” them in context, ensuring that SAP’s tax engines and approval workflows receive the right inputs, every time.

No more trade-offs between efficiency and compliance: Traditionally, finance teams have struggled to balance operational efficiency with strict compliance demands. High invoice volumes, manual interventions, and the complexity of global regulations often lead to shortcuts. Overworked Accounts Payable (AP) clerks may skip detailed checks or prioritize throughput over accuracy. THE RESULT? Inconsistencies, heightened risks, and missed opportunities for full compliance with local regulations.

AI-backed AP automation changes this equation:

• Eliminate manual compliance drudgery: With AI handling interpretation and validation, accountants no longer need to sift through complex invoices. This frees them from tedious tasks, allowing them to focus on strategic finance activities.
• Consistent global standards: AI ensures that no matter the region or regulation, each invoice undergoes the same rigorous compliance checks. Compliance and efficiency no longer conflict—they reinforce each other.
• Pathway to global capability centers (GCCs): Today’s AP shared service centers often operate as cost-effective processing hubs. With AI ensuring accuracy and compliance at scale, these teams can evolve into Global Capability Centers, focusing on higher-value activities rather than data policing.
• Not a replacement for SAP—a perfect complement: SAP’s robust logic and customization enforce tax, three-way matching, and approval workflows. However, SAP’s validation power hinges on receiving the right contextual information. AI ensures that SAP’s sophisticated logic is triggered accurately by feeding it fully contextualized, compliance-ready data.
• AI as the contextual interpreter: AI pinpoints nuanced details, such as intellectual property usage or industry-specific tax considerations, and provides these inputs to SAP.
• SAP as the compliance executioner: Armed with accurate, context-rich data, SAP applies the right tax rules, matches POs/GRs/INVs seamlessly, and ensures strict adherence to predefined approval workflows.

• Empowering CFOs and AP managers to lead with confidence: AI means CFOs no longer need to worry that obscure or complex regulations will slip through the cracks. The AI engine never tires or overlooks details, and it applies rules impartially and consistently. This isn’t about incremental improvements—it’s a transformative shift that ensures your compliance posture is as robust as your SAP configuration.

A quick comparison: OCR vs. AI-driven compliance intelligence

Is this reality or fantasy?

It’s a reality today. NXT AP embeds Azure AI services—namely Computer Vision and GPT—directly into SAP, ensuring that even the most complex compliance checks happen seamlessly and automatically. NXT AP operates in the background, validating invoices and enriching them with compliance context, and also assists accountants and business users interactively via a context-aware chat interface available 24/7 in all languages. By freeing human talent from the drudgery of manual compliance checks, NXT AP helps your AP operation evolve. Instead of sacrificing compliance on the altar of efficiency, you get both—at scale, across every location, every time.

Volkmar Ahrens (CEO NXT4SAP ) highlighted the transformative impact of AI in finance at a recent global customer workshop, stating -

"With NXT AP, we’re not talking about the future—we’re delivering it today. It’s a fully operational solution that integrates Azure AI directly into SAP to transform how businesses manage compliance and financial processes. By automating even the most intricate compliance checks and seamlessly enriching invoices with real-time intelligence, we’re addressing challenges that were once considered insurmountable."

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Projected Growth Amid AI Integration:

The Information Technology and Business Process Association of the Philippines (IBPAP) anticipates a 7% expansion in the IT-BPM sector for 2024, projecting revenues of approximately US$38 billion and a workforce reaching 1.82 million. Although concerns persist regarding the potential impact of artificial intelligence (AI) on employment, industry leaders emphasize AI’s role in enhancing, not displacing, human capabilities. According to IBPAP President Jack Madrid, “Generative AI will not replace people… but people who use Gen AI will replace people who don’t.” This sentiment highlights the importance of equipping professionals with skills in AI, IT support, cybersecurity, and data analytics to achieve the sector’s future growth objectives. Source:?Reuters

Revised German Transfer Pricing Documentation Requirements (December 3, 2024)

The Fourth Bureaucracy Relief Act, enacted in October 2024, introduces updated transfer pricing documentation obligations in Germany, effective January 1, 2025. Under the new provisions, documentation must be submitted within 30 days after receiving a tax audit notification, or upon request by tax authorities at any time—even outside a formal audit. Previously, documentation was required within 60 days and only during a tax audit. Additionally, a new “transaction matrix” will serve as the central element of transfer pricing records. Source:?Transfer pricing documentation. Download pdf

HSBC and IFC’s US$1 Billion Trade Finance Collaboration

In December 2024, HSBC and the International Finance Corporation (IFC), part of the World Bank Group, introduced a US$1 billion trade finance program designed to support emerging markets, including those in Southeast Asia. By addressing the global trade finance gap—estimated by the Asian Development Bank at US$2.5 trillion—this initiative aims to facilitate trade transactions and bolster critical export industries. The program is expected to ease cross-border commerce, strengthen supply chains, and promote economic growth throughout the region. Source:?Reuters

NXT4SAP’s Innovative E-Invoicing Initiative in the DACH Region

NXT4SAP has unveiled a pioneering reseller program for its NXT EDGE solution, enabling regional partners to seamlessly integrate PDF, hybrid (ZUGFeRD/xRechnung), and Peppol invoices into SAP-based accounts payable automation workflows. Tailored to meet growing e-invoicing compliance requirements, NXT EDGE offers real-time processing, flexible usage-based pricing, and a transparent migration path from PDF documents to fully compliant electronic invoices. Source:?NXT4SAP/Partners

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CFO Forum 2025

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Date: Tuesday, 7th January 2025

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Contact: Nigel Standley

Unlock the future of finance with AI-driven financial solutions that automate compliance and optimize decision-making. Leverage AI-powered compliance to stay ahead of the competition. Enhance your financial operations with AI for real-time financial intelligence, and automated invoice processing. Start transforming your business with next-gen AI finance solutions today—experience the power of intelligent financial systems that drive results and ROI.

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