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Mark Hickman, Managing Director, North America at Sage – Simplifying business workflows to break down barriers and achieve growth.
Moore’s Law posits that the speed and power of integrated circuits will double every two years. During that cycle, technology will become increasingly powerful and businesses will need to quickly adapt to remain competitive or else risk falling behind.
In the early 2000s, businesses had to adapt to e-commerce and the web. A few years later, the rise of smartphones demanded a mobile-first approach. Cloud computing followed in the mid to late 2010s; now, we find ourselves in the age of artificial intelligence (AI).
As AI matures, new use cases are emerging daily, enabling businesses to drive greater efficiencies across various business functions, including operations, sales, customer services and marketing. The finance function—particularly in Canada—is well positioned to embrace an AI-powered future. The great majority (87%) of Canadian businesses are already testing or utilizing AI in their reporting, according to a recent KPMG survey; this is compared to the global average of 72%.
What’s Driving The AI Adoption In Finance?
The finance function in businesses has typically taken a more measured, risk-averse approach to adopting new technologies. But in the case of AI, senior finance leaders are recognizing the immense potential of AI to improve efficiencies, reduce risk and help meet compliance requirements. So, what’s driving this adoption?
CFOs and senior financial leaders need to be more tech-savvy than they were five to 10 years ago, and I see them as far more integrated within their organization’s day-to-day operations. They recognize that as the pace of business increases, it is critical that finance embraces new technologies and ways of working to enhance their agility and resilience to market shifts.
According to my company’s annual research report, the vast majority of CFOs (89%) say their role is different from just a year ago, with CFOs now required to collaborate more closely with other departments. Additionally, 86% believe tech will have a major impact on their role in the future, with AI, machine learning and automation cited as the biggest opportunities.
Beyond the impact AI is having on their roles, CFOs also recognize the immediate value it can bring to the wider department from a productivity standpoint. My company’s same report found that more than four-fifths (81%) of finance leaders acknowledge that automation frees them up for more strategic initiatives, while 79% believe AI has the potential to revolutionize their organization’s workflows and bolster revenue growth.
Most importantly, CFOs acknowledge that implementing AI in finance is not optional, but necessary to maintain a competitive edge. However, given how extensive AI is, it can be a bit daunting on where to begin their AI journeys.
Here are several areas within the finance function where I think AI can have the most immediate impact.
Financial Forecasting
One of the most valuable jobs that finance departments perform is forecasting. Forecasting has traditionally been a static process updated quarterly and annually, but modern financial tools are enabling finance leaders to be far more dynamic and responsive.
CFOs can use AI tools to stay ahead of the curve by leveraging actionable, real-time insights to respond to market conditions while dramatically reducing the time and resources spent to forecast. In addition to increased speed and efficiencies, it helps organizations be more compliant by increasing accuracy in reporting.
That said, the most effective AI forecasting tools are tempered with human expertise. What AI does is make more outcomes and data available in real time to inform actions. From there, financial leaders can provide greater context to ultimately drive their decision engine.
Continuous Accounting
For many businesses, finance teams have been locked into cycles like the monthly close, the annual audit and quarterly tax filings that are often tedious, slow and manual processes. Traditional reporting processes mean companies are often not getting the most accurate, up-to-date view of their financial performance until halfway through the following month.
Similar to financial forecasting, by leveraging AI tools, teams can adopt a continuous accounting approach to capture business activity and account for it in real time. AI and other technologies can continuously monitor what’s happening in the business, looking for exceptions and anomalies with leadership bringing in humans when needed to make critical decisions about that data.
Pairing continuous accounting with continuous assurance can help drive financial reporting latency toward zero, allowing teams to make more timely and informed decisions. Breaking the reporting cycle can also free up accounting teams to prioritize value-added work and innovation.
Accelerating Skills Development
With talent challenges continuing to impact organizations across a variety of industries, upskilling has emerged as a critical tool for ensuring teams have the right skill sets. This is especially true for modern CFOs whose roles are quickly evolving.
Again, AI can play a vital role by freeing up time and resources for those at all levels to expand their skills. AI tools can alleviate some of the time spent on administrative work, so professionals can prioritize developing the critical skills necessary for success in more senior executive leadership.
For example, employing generative AI tools or large language models can help educate individuals on everything from regulatory frameworks to finance best practices. Additionally, they can be immensely helpful in quickly getting senior staff up to speed on a given topic and helping them stay ahead of the curve.
As the digital-first economy continues to evolve, the finance function stands at the forefront of technological transformation, driven by the increasing adoption of AI. With a majority of Canadian companies already integrating AI into their operations, finance leaders are recognizing the imperative to leverage these technologies for enhanced efficiency, accuracy and compliance.
Embracing AI is not just a strategic advantage but a necessary step to maintain competitiveness in a rapidly changing market. The journey may be daunting, but with the right approach, AI can revolutionize the finance sector, enabling it to thrive in the digital era.
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