Truly effective spend management goes beyond just controlling costs—it’s about enhancing efficiency and unlocking value. The advent of artificial intelligence is introducing new ways for payment processors to increase that value.
John MacIlwaine and Alexander Hagerup are on complementary sides of this discussion. MacIlwaine, Co-founder and CEO of Highnote, helps companies move beyond legacy payment providers, while Hagerup, CEO and Founder of Vic.ai, leverages machine learning to power more efficient, automated payments flow. In a recent PaymentsJournal webinar with Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, they discussed how advanced spend management tools, integrated with modern embedded finance features, are transforming back-office processes.
The AI Enhancements
AI offers the opportunity to take a comprehensive look at corporate spending across both vendors and customers. Real potential becomes visible through AI, which serves as roadmap for moving customers away from checks or other outdated processes.
According to Hagerup, there are two primary ways AI is enhancing the payments process. The first is through insights and analytics. Since AI is processes data in real time, it enables instant reporting across accounts payable and expenses, while its predictive capabilities help organizations forecast future spending in both areas.
The second enhancement is in processing efficiencies. AI improves error reduction and fraud prevention while also delivering cost savings by reducing the need for manual transaction processing.
This increased data visibility offers deeper insights into various fraud patterns, not only for individual programs but across the entire platform. It can help detect transactions that deviate slightly from normal spending patterns, allowing them to be flagged as suspicious.
“I like to view AI as a coworker,” said Bodine. “I’m a farmer, and when the tractor was developed, it didn’t replace the farmer. It made the farmer more productive. Where the farmer used to be able to plow and harvest 5 to 10 acres, they now could plow and harvest maybe 100 to 200 acres. I view AI the same way.”
The combination of a strong payments platform and a forward-looking AI operation propels payments into a much brighter future.
“These types of symbiotic relationships really are pushing the overall experience and the outcomes for our customers to be developed much, much faster,” said Hagerup.
The Benefits of Payments Orchestration
The benefits arise not only from what the data reveals but also from the events occurring throughout the entire payments lifecycle. One of the capabilities of a high-quality payments platform is event notification.
“Traditional platforms and solutions historically in our view have been a bit of an encumbrance,” MacIlwaine said. “It’s our job to enable AI and to do what they need to be competitive with regard to both the data, but also orchestration. As checks are cleared, all those events are able to be sent to Vic.ai in terms of how they want to consume them to make business decisions.”
In many payment processes, the different windows and timings can’t adhere to specific rules, making it hard to develop solutions. However, combining event notifications with data allows for innovative solutions to emerge and facilitates the management of these different workflows.
Payments orchestration refers to the strategic coexistence of payment types, allowing an organization to handle different payment methods from various customers or vendors while maximizing the value of downstream data and analytics.
Much of the challenge lies in customizing solutions to meet the varying needs of different vendors or customers. The goal is to allow each company, with its unique processes, to innovate within the payments platform.
“Vendors have different preferences, and they can even have different preferences depending on what they’re getting paid for,” said Hagerup. “Catering to the vendor’s preferences is really important. They need to get paid in the most important payment rail so the money gets to their vendor in time and at a low cost.”
Breaking New Ground
Maybe the biggest advantages for payments processors come from addressing edge cases—businesses that are breaking new ground and leading the way toward new developments.
“The innovators building on top of this platform are what we’re most excited about,” said MacIlwaine. “That’s what is allowing our platform to evolve into the best platform to support accounts payable automation and build on the processes that Vic.ai is highlighting.”
Many organizations remain in a state of transition, relying on legacy systems to manage their payments while eagerly anticipating the benefits that new technology can offer. It’s essential to have a platform that can support older payment modalities while continuing to demonstrate and provide the value of newer models.
“The whole modernization of the back-office is happening at a very rapid pace,” said Hagerup. “The technology is there. Now we just need the world to adopt and build into it.”
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