The application of AI technologies in numerous business operations is a notable breakthrough in this century. One of the benefits AI offers is that it can improve or redefine financial procedures and help businesses gain control of all aspects of financial planning and cash flow management. Therefore, businesses are now substantially investing in AI-based financial technologies, which will provide the groundwork for simplified audits, fraud detection, financial forecasting, and predictive analytics. Let us discover how organizations can leverage AI to improve their business’s financial processes:
1. Reduce Fraudulent Transactions with Automated Transaction Screening
Anti-money laundering (AML) compliance and fraud detection are among the most critical financial procedures that were primarily performed manually before the introduction of intelligent tools. These processes not only took long hours to complete but also increased the risk of human error. Fortunately, the new AI-powered tools can screen all payment-related transactions, SWIFT messages, and alerts that have a structured or non-structured format.
Today, businesses can use SaaS-based AI tools to review and analyze thousands of transactions within minutes. This makes it easier for businesses to check the validity of each transaction alert, identify false positives, and review transactions in extensive detail.
AI tools can automatically detect dubious transactions and sanctioned customers or entities. Hence, you may need a dedicated and specialized digital worker to review and verify fraudulent transactions. Luckily, businesses can outsource their major financial operations to AI digital workers through companies like WorkFusion. These companies bring extensive expertise of AI workers to the table. Their digital employees automation allows you to take the AI workers on board through remote platforms and consistently monitor their performance, adjust their work capacity, and review KPIs.
For example, you can hire a transaction screening analyst from WorkFusion who can help you speed up payment processing. The analyst will identify individuals and entities and detect unusual patterns or anomalies. Then, they will compare entities with historical data and identify patterns indicating fraudulent activities or potential credit risks.
The best part about hiring a digital worker is that they can minimize the time your business spends processing thousands of transactions manually. The same task that took days to complete can be done within hours with ultimate precision, which helps you stay highly vigilant for each financial transaction involved in any business process.
2. AI Increases Accuracy in Financial Records
If your employees handle accounting and bookkeeping procedures manually, there’s a high probability of human error, inaccuracies, and mishandling of debit and credit accounts. The consequences of such human errors are far-reaching, and their impact is felt throughout your business’s financial operations.
Any deviations and inaccuracies in fundamental bookkeeping and accounting procedures can wreak havoc on your annual financial reports and audits. These inaccuracies can distort your assets, liabilities, and gross income, leading to financial health misrepresentation and inaccurate tax payments. You may even end up with penalties for wrong or incorrect financial reporting.
However, AI-enabled financial management tools and bookkeeping systems help you enhance the accuracy and reliability of financial recordkeeping by validating each transaction. The system can automatically capture financial data from every business process directly or indirectly related to finance. These functions range from sales and purchases to lease payments, salary disbursements, depreciation calculations, re-investments, and more. AI tools automate all the day-to-day accounting operations of these activities with ultimate precision.
Moreover, a digital worker will help you review automated transactions and recognize each transaction’s category and designated ledger account correctly.
3. Budgeting and Financial Forecasting is Just a Click Away
Besides automation, one of the biggest advantages of using AI tools in financial processes is streamlining the tedious financial planning task for the next fiscal year. AI tools use data to process historical performance data. These tools mine data from various online sources and internal databases to analyze the previous year’s financial reports, market conditions, and economic situation. The entire data is then processed to identify patterns and generate recommendations for financial budgets.
The comprehensive analysis of current market conditions and historical financial data also allows top management to predict financial outcomes for businesses based on given criteria. For example, businesses can use predictive models to forecast the financial results of a new product or diversifying their investments. More so, top management can evaluate how changes in certain variable costs can impact the financial targets set for the fiscal year. Based on these predictions, businesses can make data-driven decisions for allocating resources, cutting down expenses, and addressing financial challenges.
4. Identify Potential Financial Risks Well in Time
The role of AI in business finance isn’t just limited to automating processes and financial forecasting. These tools can also proactively identify any potential financial risks and help businesses address any challenges beforehand.
Smart AI algorithms with machine learning capabilities can scrutinize even the most complex financial data and detect anomalies. These algorithms can identify potential fraud or a loss in investments. This way, businesses can protect their valuable investments and assets and maintain strong financial health.
5. Take Advantage of Any Investment Opportunities Promptly
A business’s financial aspects are highly data-oriented, making them most suitable for AI-enabled business solutions. Since businesses are always searching for new ways to diversify their investments or expand their scope, AI tools can go a long way in helping businesses make their investment decisions.
AI tools can capture data from financial markets and process this data to identify any investment and trading opportunities. Businesses can use these algorithms to create a predefined trading strategy for open stock markets and execute transactions quicker than human traders to secure their investments.
AI algorithms can also help predict financial market conditions, which can help businesses trade their stocks promptly and get higher ROIs. Since decisions are based on accurate information and predictions, businesses can greatly reduce the overall risk in investment portfolios.
6. Ensure Compliance with Financial Reporting Standards
Accurate financial reporting according to industry-specific standards is crucial for any business. When a business fails to comply with financial reporting standards like IFRS, GAAP, GASB, and ASC, it could lead to penalties and financial instability. But that’s not all; if you don’t adhere to specific financial reporting standards for tax purposes, your business may also lose its reputation and credibility in the long run.
AI tools lead from the front to help businesses comply with these accounting standards. The systems can set predefined policies and standards for financial reporting and validate all the financial data based on these standards. Whenever it finds any inconsistency or discrepancy, it flags the transaction and notifies users to review the flagged transaction. This way, businesses can rectify any issues before further escalating and distorting the financial reports.
Given the applications of AI discussed above and the benefits of AI-enabled financial processes, there’s no doubt that artificial intelligence is all set to change the financial landscape of a business forever. We anticipate these AI tools will be further refined and extended in the coming years with features like natural language processing and advanced analytics. The future AI financial processes may further reduce the need for human participation and be able to provide precise outcomes and predictions to help businesses stay on top of their competition.