Is your finance team using AI?
Only 11% of executives are making use of artificial intelligence (AI) and over one-third of companies spend more time collecting data than analyzing it. These are just some of the findings from a recent Association of International Certified Professional Accountants survey. Here are the details.
In January 2019, the association released the report Agile Finance Unleashed: The Key Traits of Digital Finance Leaders in partnership with technology firm Oracle. Its findings are based on responses from roughly 700 CFOs, finance directors, chief accounting officers and other finance professionals.
In a statement, Andrew Harding, the association’s chief executive of management accounting, said that businesses “are missing out on huge growth potential by failing to give finance teams the tools and training they need to make better corporate decisions.”
The report found that CFOs need to speed up digital transformation across three broad categories:
- Operational excellence,
- Digital intelligence, and
- Business influence.
On operational excellence, the survey found that only 13% of respondents have “scaled robotic process automation” across the finance function. And slightly fewer had “scaled intelligent process automation.” Respondents said the main roadblock was data security concerns.
On digital intelligence, nearly two-thirds of large organizations reported that “difficulty extracting data from legacy platforms” was a major challenge to fulfilling their data analytics goals. A minority of respondents (39%) reported highly effective capabilities in integrating financial and nonfinancial data.
On business influence, nearly half of respondents said finance “is playing a significant and influential role in partnering with managers on decision-making.” But only a third “are playing a similarly influential role in mapping future scenarios for a more disrupted and volatile future.” The top challenges to finance playing a more influential role in crafting digital strategy are competing core responsibilities, such as compliance and control.
Traditionally, finance departments have had to create and process significant paperwork, such as invoices, purchase orders and shipping receipts. Clerks manually enter those documents in computer systems and submit them for approval and payment.
With AI, software (not humans) recognizes, directs and exports data into a company’s financial system. AI can also be used to:
- Vet new suppliers and customers by checking credit scores,
- Set up new accounts in the accounting system,
- Track pricing among a variety of suppliers,
- Analyze expenses and expense reports,
- Facilitate eXtensible Business Reporting Language (XBRL) reporting requirements for public companies, and
- Simplify end-of-month or end-of-quarter closing.
Effective use of AI gives managers full access to real-time accounting data, allowing them to make better-informed decisions and, when necessary, take corrective actions. By automating routine transactional tasks, finance professionals have more time to focus on strategic planning and growth opportunities. In addition, AI can help lower transactional costs and minimize potential errors that can happen when transactions are entered manually.
As an added bonus, the use of AI can make financial statement audits more efficient and accurate. Instead of searching through file cabinets for paper records, auditors can follow a digital trail for each transaction in the accounting system. As a result, auditors can test 100% of a company’s financial transactions, rather than only a small sample.
This also makes audit fieldwork easier on the finance department. With an electronic audit trail, in-house personnel may not be required to pull as many original source documents to satisfy auditors’ inquiries.
Become a digital finance leader
In the 21st century, the best finance professionals may not necessarily be the best number crunchers. Instead, they’ll need to learn how to analyze vast amounts of electronic data and use it to shape their company’s strategy. Contact your CPA for cost-effective, secure ways to incorporate the use of AI in your finance department.