In finance, the leadership role continues to evolve during an era of extraordinary change and adverse macroeconomics. But it’s equally true that opportunities abound for agile and focused organizations.
Today’s finance leaders – and their teams – are being called upon to gather and analyze mounting volumes of data and provide valuable real-time insights that guide and influence the future. This represents a significant expansion beyond their traditional role as “scorekeepers” who continually complete the time-consuming task of closing the books. To meet these competing demands, finance and accounting teams need faster, more efficient ways to close.
As anyone in finance knows, today’s period-ending closes require coordination and execution of a series of processes that grow increasingly complex as the business grows. Unfortunately, many closings remain trapped in outdated and inefficient (or even redundant) processes that cry out for modernization and automation. Like any process that requires streamlining, an efficient and faster close requires new investments in technology, headcount, methodology, or time.
Unsurprisingly, companies are stepping up to the plate to ramp up their technology investments. In the latest Sage Intacct 2022 Close the Books Survey of CFOs, 40% of respondents reported that their companies have adopted new technology to help improve the financial closing process – nearly twice as many (21%) compared to last year.
Artificial intelligence (AI) continues to emerge as a compelling solution for finance teams that need to close the books faster and more efficiently. AI can not only check large volumes of data for accuracy, it also can learn from data and identify valuable insights. And since AI captures data in real time, you can operate with real-time visibility into key metrics and outcomes, your organization can identify opportunities for growth.
While AI is relatively new to accounting, there are many proven use cases of companies reaping benefits from it. In particular, early AI adopters are turning to AI to automate and accelerate repetitive, manual tasks such a data entry, reconciliations, and exception management, which are normally time-consuming and error-prone. Since AI performs these tasks with greater speed and accuracy, it's understandable that the period-closing is an ideal target for the first uses of AI in accounting.
In that same CFO survey conducted by Sage, time savings were cited as the top benefit of AI, with 71% of CFOs envisioning significant productivity gains (up to 40%). These time savings plus the accuracy of AI help increase both the speed and accuracy of your close. While AI is moving up the adoption curve and reaching the mainstream, Sage’s survey found that 21% of larger companies are already onboard with AI and seeing its advantages. That’s likely because new technology underpins the efforts of larger companies to scale their operations.
The power of AI in accounting
AI is so powerful when it comes to using it to help with accounting processes because of its ability to transform the finance function, and the many benefits it offers the finance team and to the organization as a whole. AI helps improve efficiency and optimize processes through its ability to review thousands of transactions in minutes to find errors or anomalies. AI can flag transactions or data that exceed threshold amounts, use incorrect GL accounts, or do not fit prior patterns. Previously, these analyses could take hours or even days and require numerous members of the accounting staff. With AI integration within accounting software, the finance team can move with speed through the closing process and deliver financial reports faster.
AI can also help streamline or eliminate manual workflows by replacing repetitive, time-consuming work that requires human judgement. As the company grows – and thereby produces a higher volume and variety of transactions – AI helps the finance operation scale up without hiring additional headcount.
Perhaps the greatest benefit is that, by automating mundane clerical work and automatically spotting errors, AI frees the finance team to participate in higher-value-added activities, analyses, planning, and decision-making. That simply means that finance delivers more value and impact to the organization. Eliminating the boring and repetitive work not only reduces fatigue. It also lets you upskill the finance team, leading to higher employee satisfaction, which reduces turnover and improves recruitment efforts.
AI also ensures your GL delivers real-time accuracy because AI works 24x7. It continuously scans your data to detect and highlight potential errors and can even alert you to fix errors as they happen. You can catch errors before they get posted, identify unapproved or incorrect expenses, or even reduce audit risk by ensuring compliance with revenue-recognition accounting rules. With AI, you gain higher accuracy and trust in your data sooner because you don’t need to wait until the month-end close to make adjustments and test for accuracy.
Ultimately, AI holds the potential to transform the mundane period-ending close by improving greater speed, accuracy, and efficiency while elevating the output and value of finance. The willingness of CFOs to continually invest in the infrastructure they need to support business growth should encompass AI strategies.
For more on how CFOs are automating AI, check out RPA, Machine Learning and AI: What Every CFO Needs to Know, by Sage’s Bill Fuesz.