A tool is only as good as the hand that wields it.
And with the influence of artificial intelligence (AI) becoming more prevalent in our daily lives, CFOs and treasury function leaders are re-assessing the historical calculus around integrating AI solutions into their workflows to open up a new horizon of opportunity.
Merely automating a process or porting it over to a more efficient technology doesn’t always deliver enough return on investment (ROI) to justify the initial outlay. Ultimately, the real value of a transformation comes from how the new technology changes what gets done.
Today’s dynamic operating environment and higher-for-longer macro landscape has emphasized to businesses and finance teams that superior visibility of cash is now king and underscored the tangible benefits of better control of working capital.
The latest PYMNTS Intelligence from this month finds that firms are increasingly using generative AI (GenAI) for medium-impact tasks, such as financial reporting and data visualizations, surpassing the share using it for more routine tasks.
Creating data visualizations or reports is the most common use of GenAI, according to the findings detailed in “Most CFOs See Limited ROI From GenAI, but Boost Its Investment,” the fourth edition of PYMNTS Intelligence’s 2024 C(AI)O Project.
But the greater availability of data and superior tools for analyzing it is super-charging performance across five traditional CFO and treasury disciplines, including cash-flow forecasting, risk management and fraud detection, the automation of routine tasks, real-time treasury, and strategic decision support.
Read more: Treasury’s Digital Migration Creates Greater Synergies With Finance Function
AI offers powerful tools that can analyze vast amounts of data, automate routine tasks and provide predictive insights, enabling financial leaders to navigate challenges with greater agility and precision.
Historically, the finance function focused on diagnosing reporting results. Now, the role is evolving toward one where CFOs have an opportunity to establish sustainable competitive advantages, in part by optimizing their firm’s financial workflows with the help of AI and data analytics.
“Technology, especially AI, has accelerated the success of finance teams by providing real-time access to data and insights,” Brian Unruh, CFO at global AI company ABBYY, told PYMNTS for the series “A Day In The Life of a CFO.” “This allows us to proactively address issues before they become significant problems, rather than just reporting on them after the fact.”
Automation is one of the most immediate benefits of AI. Many financial tasks, such as invoice processing, account reconciliation and financial reporting, are repetitive and time-consuming. These tasks are also prone to human error, which can lead to costly mistakes and inefficiencies. AI-driven automation tools can take over these routine processes, freeing up time for financial professionals to focus on more strategic activities.
Read more: CFOs Tap AI to Optimize Cash Flow
As PYMNTS Intelligence revealed in “60 CFOs Can’t Be Wrong … AI Can Help Accounts Payable,” 78% of CFOs surveyed said their access to AI technology is very or extremely important. Only 5% said the AI automation they are now using to support their AP cycle is not at all or only slightly important.
Sixty-three percent of CFOs say AI has reduced their need for lower-skill workers; however, the new technology may also require new skill sets. Fifty-eight percent of CFOs told us they need more analytically skilled employees.
“The finance function has been dealing with artificial intelligence for some time. I don’t want to say we’re the tip of the spear on this, but tools such as expense management tools in the accounting function [have long been built on AI],” Jim Sparks, CFO at Kalderos, told PYMNTS. “In a perfect world, I think artificial intelligence won’t replace humans, but it will make humans more effective by unlocking insights and making projections more accurate.”
CFOs’ perceptions of AI’s importance for increasingly complex tasks have significantly evolved since PYMNTS’ March survey. In June, CFOs were 86% more likely to say that GenAI is important for financial reporting than in March. And 58% of CFOs said the technology is important for capital management in June, compared to just 30% in March. The data suggests that CFOs have gained confidence in embracing the technology’s capabilities in just a short time.
Read more: AI for Real-Time Treasury Delivers Up to 90% Efficiency Gains
Treasurers with high levels of influence are far more likely to report that their companies have predictable cash flows, expect revenue to increase and are agile in responding to shifting marking conditions — all areas in which AI can be leveraged.
“AI and ML [machine learning] are transforming everything treasury, it’s the equivalent of the Industrial Revolution 4.0,” Jarrett Bruhn, managing director and head of data and AI in global transaction services at Bank of America, told PYMNTS. “When you think of what a treasurer does, trying to find operational and cost efficiencies, these tools and technologies fundamentally change how they can do their daily job.”
AI-driven analytics assist in optimizing investment portfolios by analyzing large datasets, including market conditions, interest rates and credit risks. AI helps treasurers and CFOs make data-driven decisions on asset allocation, hedging strategies and capital deployment to maximize returns while minimizing risk.
By identifying patterns and correlations, AI helps treasurers anticipate cash needs, optimize liquidity and ensure sufficient capital for operations and investments.
And the use of AI isn’t just reserved for sprawling enterprises either. Smaller firms are well positioned to capture the upside of the innovation.
“Proactive AI solutions are helping even lean finance teams that don’t necessarily have the manpower of large treasury teams to be in control and make more optimal decisions,” Noam Mills, CEO at Panax, told PYMNTS. “It’s a tectonic shift that is happening rapidly.”
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