Today, enterprise leaders across industries are striving to keep their business operations intact. The CFOs, however, are burdened with the responsibility to not only allocate and look after the finances of enterprises but also to enable their peers to make informed decisions in a dynamic marketplace.
As enterprise leaders seek to get back into the market to strengthen their organization’s position, they are constantly bombarded with challenges that they have never witnessed before. And, the CFOs, who are usually tasked with managing the finances of their enterprises, are struggling to find the effective metrics to efficiently allocate the resources. In the words of Bjoern Herrmann, VP of Sage AI Labs, “The challenge is the slow period close; a process which is taking a very long time to get the needed data. There are challenges around compliance, a lack of trust in the data reporting, and with it, there’s a lack of visibility into the business. To make matters worse, a lot of businesses have poor financial KPIs which hamper their ability to drive businesses effectively.”
To effectively operate in this post-pandemic world, CFOs need to incorporate innovative technologies that will enable them to efficiently manage their finances, successfully execute their business planning and efficiently solve problems in the business world.
AI, which has already moved away from experimental stages to the operational ones, can help CFOs with operating costs from production, receivables from the organization’s customers and enhance the financial performance of all the business units. Below are some of the effective ways that can help CFOs leverage AI for driving business operations:
Providing in-depth insights into the book value
CFOs often struggle with assessment of the true value of assets. Not having effective valuation methods while acquiring an asset-intensive enterprise or determining the tax basis of the present assets can increase or decrease millions from the bottom line. Currently, most CFOs assess a large number of comparable independent transactions to determine asset values. Integrating AI in this method can enable them to successfully build predictive models for asset prices. This will not only help the enterprises save costs but also provide value to all the stakeholders.
Listen to the Podcast with an Interview with Bjoern Herrmann, VP of Sage AI Labs
Helping with forecasting and management of debt
According to the US tax authorities, bad debt accounts for 0.5% of the revenues of the firms in the country. In 2018, this figure was over $100 billion in missing money, reducing profit margins by almost 5%.
With AI, CFOs are empowered to predict which customers will pay on time, which ones will be delayed or may not pay at all. A variation in B2B customer data analysis such as industry type, product purchase, credit rating, and sales person can forecast if a business will pay on time and if they should be extended credit.
Expense fraud and embezzlement
Quite often, CFOs struggle to detect, control and predict internal frauds. Since it is often executed in small increments, they often go undetected. Also, the perpetrator can distort the data trail to prevent detection of any kind. Dealing with this can distract CFOs from focusing on the more strategic issues.
By implementing AI, CFOs can analyze and interpret expense data and detect suspicious expense claims. They can also explore spending patterns as well as employee behaviors in every role. With AI, CFOs can successfully forecast potential expense fraud before it happens. And, integrating AI across various financial processes will also help them efficiently manage the finances of enterprises and enable them to help their counterparts make informed decisions.