Pressure is mounting on corporate finance departments to help determine how their businesses adapt to new technologies. But this challenge is more layered for chief financial officers, who, in addition to weighing the broader organization’s approach to technology, must also strike a balance between automated efficiency and human judgment within their own departments.
The benefits of more automation and the use of artificial intelligence in corporate finance are many. Use of robotic process automation in back-office tasks like invoicing, receivables and payments can reduce errors and bring speed and efficiency to these processes. Fraud detection and prevention are increasingly made easier with help from AI. And the use of machine learning in financial planning and analysis is completely changing how companies forecast their financial pictures.
This explains why the number of corporate finance departments using robotics and AI tools more than tripled between 2018 and 2021. But while the vast majority of CFOs see opportunities for further use of AI in their departments, many cite the pace of digitization, challenges in adaptation and the costs of investing in new technology among their top concerns.
Confronting upfront costs
In a 2021 survey of CFOs, the high cost of investing in new technologies was the most prominent factor preventing their adoption within the finance department. Still, CFOs must move quickly toward this transition or risk being left behind.
Gartner, a corporate research and advisory firm, said in 2021 that companies would fall behind the curve if their CFOs didn’t invest in AI within a few years, and that those who take an outside-the-box approach to incorporating these technologies will see the most reward.
“There’s nothing wrong with using AI to modernize the finance function. It’s very important work. However, the most impressive rewards of AI will fall to the CFOs who think bigger about how the technology can fundamentally change the way their company does business,” said Clement Christensen, a director in the finance practice at Gartner.
As CFOs look to reinvent their departments, and their companies, for the digitized future, they, too, must step up their understanding of AI, automation and machine learning.
This is where a strong relationship with the chief information officer can be key. However, about one in four CFOs feel they have limited or no collaboration with their CIO compared to other C-Suite executives.
Building team support
Another major hurdle to adopting more AI and automation in finance departments is organizational resistance.
This can be felt in two big ways: Fear among staff of being replaced by AI, and general resistance across the organization to changes in processes. Both leave finance leaders in the unenviable position of having to tout the benefits of AI while also assuaging concerns that it will end the need for human workers.
A key step in taming this resistance is to get more staff involved in the researching, decision-making and deployment of new technologies in their line of work. Experts say that giving employees more buy-in with these steps will help them embrace the change, and will help prepare them for any training or upskilling needed to accommodate new or more automated processes.
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