Does AI in finance sound overwhelming?
Based on his many years looking for the best tools to automate the redundant tasks in reporting as group CFO and now founder of a reporting tool, Claus Grove Finderup shares his 8 practical examples for the use of AI in group reporting.
“Everyone talks about AI, but it can be difficult to navigate in the AI jungle. However, it is essential to remember that even the most minor steps can lead to significant transformations. The better your finance department becomes at utilizing AI and automation – the more testing you can do, and literacy will follow.
AI literacy means both knowing the benefits but also knowing the limitations.”
Mapping local accounts is a good place to start
At Konsolidator, we have huge ambitions about AI and believe it will be a vital tool in, e.g., budgeting and forecast. Still, we also believe in testing and learning its potential.
A couple of months ago, we started testing the possibilities of using AI to make group reporting even more straightforward and less time-consuming. As our entire software is built to automate the complete group reporting process, one component, which still was manual, was the Mapping of Local accounts. In under a week, we had our first version of a mapping feature – a feature we, even with automation, still had to keep very manual. And the result was fantastic.
In the fast-paced world of finance, staying ahead of the competition, retaining top talent, and ensuring data accuracy are paramount. But there is always the question of how finance professionals can achieve these goals amidst ever-evolving regulations and standards.
The answer lies in not just discussing the benefits of automation but actually exploring the power of artificial intelligence (AI) and automation by using it to create more intelligent and better work processes – and testing the possibilities.
“Don’t think of AI as a trend, but a powerful tool that will improve our work significantly. The only requirement is to learn to use it properly.”
Mapping, for example, is not the most exciting part of group reporting and is seen as a one-time task but an extremely time-consuming task. With the release of ChatGPT and other OpenAI tools, the barrier has now been broken – allowing everyone to become AI literate.
In group reporting, we’ve found 8 specific areas where AI allows us to upgrade outdated processes into more innovative and more efficient ways of working, including:
- Data availability and grouping
- Forecast including cash flow
#1 benefit: From Past Reporting to Future Predictions
Historically, finance teams have excelled at reporting on past financial data, such as revenue recognition, cost audits, and compliance monitoring. While CFOs are now adept at forecasting income statements, predicting the balance sheet still presents challenges, particularly regarding net working capital.
We can see how AI propels CFOs into the future by providing data-driven predictive capabilities. As AI can see patterns in the past that the human eye can’t and include external factors, which is impossible for us, finance teams can forecast financial metrics and predict competitor reactions, customer responses, and emerging risks. Imagine the ability to foresee the most significant risks for the upcoming year.
“AI equips CFOs with data-driven tools, positioning them at the forefront of strategic decision-making in ways previously unattainable .”
#2 benefit: Optimizing Group Reporting with Automation
Today, most finance departments use an ERP system, and more and more are migrating to the cloud. But imagine if you had to write every transaction into a ledger and manually do everything an accounting system does – I’m guessing it is not a scenario you want to experience.
So why are we so determined to keep other tasks in Excel, tasks that might not even deliver value in terms of profit but must be done due to regulations?
In finance, your reports are only as good as the data they’re built on. With the proliferation of digital solutions and automation, accessing and utilizing data has never been easier. To create more influential reports, consider two critical factors:
- Automated Data Flow: Is your data flow working seamlessly and automatically?
- Complete Data Access: Do you have access to all the data you need?
Automating processes, such as data integration from your ERP system, provides more data and facilitates comparisons—essential for informed decision-making.
#3 benefit: Strategic Alignment: Management Reporting and Company Strategy
Management reporting must align closely with the company’s strategy. While it might sound like common sense, only 24% of finance departments currently link their Key Performance Indicators (KPIs) with corporate strategy, according to PwC. With AI and automation, you can automatically align reporting with KPIs faster.
But you still need to change this by first considering these questions:
- Does your report support the company’s strategy, including goals like entering new markets?
- Are you monitoring success criteria, such as market share and acquiring new customers?
- Are you analyzing the results on existing KPIs or just reporting on them?
Shifting KPIs to support strategy enhances decision-making and ensures forecast planning focuses on specific targets.
#4 benefit: AI and Data Relationships: A Catalyst for Efficiency
Automation and digital solutions are pivotal in enhancing data handling. Take our own software, Konsolidator, that simplifies financial consolidation from data upload to the final group reporting. With the software, group CFOs can ensure data consistency across subsidiaries and regions and deliver fast and error-free management reports. Using Excel for complex consolidation when you have a tool powered by AI and automation makes less sense than it used to do. And this goes for many other manual tasks as well.
#5 benefit: Navigating the Challenges of Multiple ERP Systems
For many organizations, using multiple ERP systems is a reality due to mergers, acquisitions, regulatory demands, or simply because “it has always been like that…”. However, challenges such as data accuracy, timely results, and resource optimization pose a significant risk to the output quality. The lack of system integration compounds these issues.
We see an increasing trend that when groups convert to cloud ERP, the same ERP system is chosen for most, if not all, of the subsidiaries. The full benefits of cloud-based add-ons (apps) are materialized by having the same ERP system in all subsidiaries. Cloud-based software offers quick integration possibilities, standardizes processes across borders, and ensures everyone follows the same methodology. So here is yet another opportunity to tap into automation and AI as the same AI methodology can be embraced by all subsidiaries and deliver even better results.
#6 benefit: AI-Powered Finance: The Future is Here
AI is reshaping finance, automating repetitive tasks, and freeing up professionals to focus on analysis.
Cloud, AI, and other digitalization possibilities still have a reputation as becoming massive implementation projects. But with the OpenAI tools at our disposal, like ChatGPT, the opportunities are available to all of us.
The key is to foster an AI-literate culture within your finance team and organization. By upskilling your team, you empower them to harness the full potential of AI. Let them play around with AI, maybe with some from the IT department, or create a task force. Start with something harmless and get some experience.
Letting it be up to the single employee not only enhances productivity but mitigates risks
Find the automation tools that streamline processes, reduce errors, and speed up operations. It not only saves time but also ensures data accuracy within your finance department.
#7 benefit: Budgeting and Cash Flow Mastery: Key to Financial Success
Budgeting, Forecasting, and managing cash flow are pivotal aspects of finance. Cutting corners is not an option. So, here, you have to invest in understanding your business, market dynamics, and the importance of accurate predictions.
Consider incorporating AI in the forecast of the cash flow. Imagine a complete set of group Balance sheets, including Net Working Capital prepared based on AI. An AI model that includes patterns of the past together with exogenous factors that we can’t imagine will bring incredible value to decision-making.
#8 Benefit: The AI Revolution: Testing the Waters and Learning from Data
As AI evolves, it’s essential to thoroughly test and learn from old calculations to harness its value. We’ve made significant strides in forecasting income statements and cash flows, but Net Working Capital remains a challenge.
In conclusion, AI and automation are revolutionizing the finance departments. By embracing these technologies, CFOs and finance professionals can redefine reporting, drive better decision-making, and position their organizations for success in an increasingly data-driven world.
Don’t wait; the future of finance is here, and it’s time to seize the opportunities it offers.
Rome was not built in one day. But remember that even small changes can have a significant impact. Start by finding tasks in your own work that are repetitive, time-consuming, and resemble some of the things mentioned above, like our Mapping of local accounts.