As middle market companies keep close watch over looming economic factors threatening to throw them off course, they are increasingly mindful of protecting their cash flow and finding ways to future-proof their business. Joseph Fox, chief product officer, AvidXchange, shares how investing in AI solutions for the finance department can help create more efficiencies, fill skill gaps, and provide newfound visibility into invaluable data to strengthen the entire organization.
Mid-size companies are outpacing enterprises in their adoption of artificial intelligence (AI), according to Deloitte’s latest State of AI in the Enterprise survey. The report shows that 80% of mid-size companies intend to increase their annual AI investments, a jump from 25% in 2018.
This comes as no surprise, given that the benefits of AI can be helpful for nearly every area of middle market business. For instance, the technology can provide stronger supply chain management, more targeted marketing, and tighter security. The finance department is another core business area that should not be overlooked when it comes to AI adoption, as finance leaders can benefit from AI modernization and, perhaps, have never needed it more.
Amidst today’s economic upheaval — inflation, a possible recession and shortages on everything from microchips to staff — the finance team is charged with minding its organization’s bottom line. The company’s future often depends on the team’s success. AI-driven solutions can help ensure that the organization stays afloat, can more readily adapt to change, and is better positioned to seize competitive advantage to ensure a more profitable future.
As middle market companies consider their overall information technology (IT) budget, below are three powerful ways that AI investments can empower the finance department and lead to a healthier, more lucrative future for the business.
- AI-driven Automation Creates Efficiencies, Ensures Accuracy
As reported in The Harvard Business Review, 52% of middle market companies surveyed by The National Center for the Middle Market (NCMM) cited digitization as either important or extremely important, and 46% already have a digital transformation roadmap built into their strategy. AI is an important component of those digital transformation initiatives, as it can power tools that promise to create efficiencies and provide competitive advantages, such as automation.
Specifically, the finance department is ripe for an efficiency boost, laden with time-intensive tasks like reviewing documents, reconciling invoices, and processing payments. Many of the tasks can be automated with AI, freeing staff for other work while simultaneously reducing the likelihood of errors that could result in additional loss of time and money.
AI can be trained to analyze financial data, helping finance teams assess a company’s current financial well-being and forecast for the future. It also pinpoints areas of concern and can identify patterns, such as a customer that is routinely late with payments, enabling teams to make swift changes like offering a more convenient payment method to improve outcomes. Some automated financial management solutions are cloud-based, providing real-time access to financial data to any approved user whenever needed. The solutions keep data safer and can help save data owners the hassle of regularly fielding requests from internal stakeholders who rely on financial data for budgeting and forecasts.
AI solutions can also save time for external users through the use of chatbots and virtual assistants that provide 24/7 access and enhanced experiences for customers and partners.
- AI Addresses Workforce Shortages, Empowering Finance Teams To Do More With Less
Labor shortages continue to plague organizations as leaders struggle to fill an estimated 11.3 million open jobs driven by a shift to remote work and “The Great Resignation.” Middle market companies are not immune to the labor challenge. Joint data from insurance company Chubb and the National Center for the Middle Market (NCMM) found that 51% of middle market firms find it extremely or very challenging to find and hire employees with the right skills for the jobs available and feel the strain is hindering growth.
AI can help by identifying patterns in who is leaving, why they are leaving, and where they are going, and it can also help identify replacements.
Often, those most vulnerable to jumping ship include those saddled with mundane, antiquated processes, like the ones inherent to finance departments. According to Pew Research, feeling stuck in a job without opportunities for advancement is among the top reasons for an employee to quit. Feeling overworked is also a motivator for change.
By incorporating AI into existing processes and workflows, middle market finance leaders can reduce workloads and make the work more attractive for employees. Automation also provides more flexibility enabling remote work environments, and it reveals opportunities for growth, which helps to retain talent and attract new hires. And automating tasks enables companies to elevate finance roles, freeing staff from growing workloads and repetitive tasks, such as data entry, and empowering them to focus on the more strategic aspects of their jobs. Instead of managing vendor databases or cutting checks by hand, finance teams can spend their time analyzing historical data to help their organization more accurately forecast the future.
- AI Enhances Visibility, Guides Important Decision Making
The wealth of data possessed by finance departments can be overwhelming if mid-sized companies do not know how to extract it or harness its value. Machine Learning (ML), a component of AI innovation, captures data and can arm teams with valuable insights into their business. The Deloitte State of AI survey states that, given the current fluid environment, mid-size and small companies are increasingly using AI and ML for digital transformation.
The AI and ML technology learns and works by analyzing and detecting behavioral patterns, such as how and when vendors interact with their invoices, and it predicts the likelihood of those behaviors continuing. By analyzing historical data and spotting habits and trends, AI and ML can also help companies make market predictions, forecast future spending increases or decreases and detect the statistical probability of invoice anomalies or fraudulent checks. This helps manage risks and create more accurate financial forecasts.
The visibility provided by AI empowers finance teams to help steer proactive, informed decisions and respond quickly to change, strengthening agility amidst uncertainty.
Strengthening the Finance Department Through AI Investments
As larger economic forces and uncertain market conditions continue to unfold, IT teams at mid-size companies are challenged with deciding how and where to spend precious budgets. In evaluating organizational needs, leaders should consider investing in AI solutions for the finance department to increase productivity, aid retention and provide better visibility into cash flows.
These efforts can empower the department to make a remarkable difference within the organization at-large, bolstering bottom line results and creating resiliency. Ultimately, modernization through AI can mean the difference between surviving economic uncertainty and emerging stronger than ever.
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