Artificial intelligence (AI) is not just a future notion; it is already improving systems and procedures across various commercial operations, including finance. According to a McKinsey report, AI use has increased significantly since 2017, with prominent applications in the areas of service operations, product innovation, client acquisition, lead generation, and risk modelling.
AI’s ability to swiftly and effectively evaluate big data sets helps businesses automate repetitive jobs, expedite processes, and improve decision-making. AI will make work a lot more manageable for the finance industry, providing significant benefits to chief finance officers.
5 Ways that AI in Finance Can Be Helpful for Chief Finance Officers
Here are five ways AI in finance might improve CFO efficiency and performance.
1. Optimize Financial Compliance
CFOs may use AI tools to track financial regulations and ensure compliance with rules and legislation. AI can detect and indicate compliance risks, such as transactions that exceed regulations or involve vendors that do not meet regulatory requirements. This proactive strategy enables finance teams to manage compliance risks and avoid fines and penalties. AI in finance improves compliance management by rendering it quicker and more trustworthy.
2. Identify Ways to Reduce Expenses
AI can help CFOs uncover possible cost reductions and efficiency improvements by evaluating data on organizational expenditure, manufacturing processes, and supplier performance. For instance, AI can make it easier to identify which vendors offer the most economical costs while highlighting operational improvement opportunities.
On the other hand, CFOs may use Generative AI in finance to understand their expenses, allowing them to make improved financial decisions. Furthermore, machine learning (ML) can consistently track equipment and forecast when parts are likely to wear out or fail, enabling proactive maintenance. This proactive method helps businesses avoid costly repairs, improving the company’s financial management.
3. Improve Financial Analysis and Planning
According to the top goal for CFOs is to strengthen data and analytics capabilities for prediction, risk management, and recognizing value drivers. This is why finance managers may use AI in financial services for financial planning and analysis (FPA) tasks. AI-powered financial services software make it easier to collect and evaluate data from internal sources, like financial statements and balance sheets, as well as external elements, such as federal agencies, customer demand data, and currency fluctuations.
AI-driven advanced analytics in the financial sector reveal trends and patterns that human analysts may not see immediately. This leads to practical, timely information, allowing for a greater understanding of the company’s performance and the production of reliable financial models and predictions for better decision-making.
4. Point Out Errors and Fraud
A 2022 PwC report states that 46% of firms encountered fraud, corruption, or financial crime in the previous 24 months, often costing millions. Robust fraud detection and prevention are necessary. AI can be quite helpful in this field.
Machine learning (ML) systems can monitor financial transactions in real time, detecting trends and abnormalities that indicate fraud. AI systems may detect odd expenditures, huge transactions from unknown vendors, duplicate invoices, and abnormal payment patterns, which improves a company’s fraud protection capabilities.
5. Streamline Financial Process
AI in finance may greatly help CFOs by streamlining time-consuming and routine tasks like data input, reconciliation, and invoice processing. Artificial intelligence-powered systems may extract information from financial documents rapidly and correctly using technologies such as optical character recognition (OCR) and natural language processing (NLP). This automation enables CFOs to focus on more critical activities.
Conclusion
Artificial intelligence (AI) is already improving systems and procedures in various commercial functions, including finance. By 2024, AI will make finance more manageable, providing significant benefits to CFOs by optimizing compliance, lowering expenses, boosting financial analysis, identifying fraud, and automating financial procedures. AI in finance is poised to change the business and support the chief financial officers.
Software like Predict360 Risk and Compliance Management Software for Financial Services may greatly benefit CFOs by automating the monitoring of risks and regulatory changes. It uses artificial intelligence to categorize documents, extract critical regulatory change information, and provide predictive analytics, assisting in identifying possible compliance concerns and fraud.
This enables CFOs to proactively manage risks, maintain regulatory compliance, and make more profitable financial decisions.
