Data suggest that about 72% of businesses surveyed already used or planned to use Artificial Intelligence in their financial reporting. 99% of companies are expected to adapt AI in reporting operations in the next three years.
You might be surprised to know that 100% of company boards took strategic action in regard to artificial intelligence. In an era where technology is quickly transforming industries, the finance sector is clearly not an exception.
Since its launch, the technology has emerged as a game-changer, revolutionising the reporting methods used in traditional company setups. From enhancing accuracy to saving time and resources, AI financial reporting is reshaping how businesses manage their finances. Let’s look at the ways in which AI is affecting financials, its benefits and impact across key industries.
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Ways How AI is Effecting Financial Reporting
Every business’s plan and success journey are unique, and so are its reporting requirements. In a competitive world with rising customer expectations, using automation in financial reporting can help you go a long way in streamlining financial operations and optimising productivity.
AI can help you achieve these by automating manual work and providing real-time reports and financial statements. Here are a few promising ways AI can power your business’s reporting.
1. Financial Reporting and Analysis in Real Time
Most businesses rely on annual, half-yearly or quarterly reports and financial statements. However, for startups, the gap in period can cause costly issues in the form of missed opportunities and remedial steps wherever required.
Artificial intelligence software constantly analyses your financial data and provides real-time financial insights and reports. This means decision-makers and CFOs can access their cash flow statement, balance sheet, profit and loss and other important reports.
2. Tailored Financial Data and Recommendations
Among the most useful AI applications in finance is getting access to personalised financial data and insights. With the help of ML algorithms and advanced analytics, AI-powered accounting and financial management software provide tailored financial insights suitable for your business and its financial health.
For instance, you run a restaurant business and are struggling to manage your financial data. An AI-powered software can analyse sales patterns and expenses, offer custom insights and help you decide based on insights such as which products underperform or over perform and how it affects your profits.
3. Financial Risk Assessment
Traditional risk assessment and mitigation rely on using historical data and insights to analyse and suggest possible challenges. However, in this dynamic world, there are more reliable methods. On the contrary, ML algorithms constantly assess massive amounts of data in a short span of time. These are trained over a period and can enable businesses to assess risk quickly and execute plans and steps for mitigation.
For instance, imagine you are running a successful manufacturing business. Through ML in financial risk assessment, you can easily detect unexpected rises in the cost of inventory from a specific supplier.
This can directly affect your profit margins, if you don’t take the necessary remedial steps, which could mean negotiating new pricing with the supplier or increasing the final price of your finished products.
4. Data Validation Checks and Cleansing
Every recorded transaction in a business should fit together in your overall accounting. Even a single error can result in inaccurate books of accounts or a mismatched balance sheet. This stresses the importance of regular data checks and cleansing, if required. Using an AI solution, businesses and finance teams can automate this process, which means all data validation and cleansing can happen with minimal manual intervention.
AI can scan financial reports and statements, identify issues and gaps and even flag fraudulent activities. This reduces the probability of human errors and leaves accountants and finance professionals more time in hand to focus on critical tasks that directly impact your business revenue.
5. Consolidate Financial Data
Consolidating a company’s financial data is a time-intensive process but with automation this can be simplified. AI can help consolidate financial data from multiple sources, such as departments, subsidiaries and branches. This ensures that every relevant insight and data is compiled within unified reports. Consolidate financial data in reports enables decision-makers and CFOs to leverage a cohesive view of the company’s financial health.
Benefits of AI in Financial Reporting
- Increase Accuracy: AI algorithms have the ability to process vast amounts of data with minimal errors. This plays a significant role in reducing the risk of human mistakes. The precision is crucial for financial reporting, where even minor errors can lead to significant repercussions.
- Enhance Efficiency: The reporting of financial automation powered through Artificial Intelligence helps handle repetitive tasks quickly and efficiently. This helps companies free up valuable, productive time for financial professionals to focus on strategic decision-making. Further, it not only boosts efficiency but also allows for more timely and insightful financial analysis.
- Reduce Cost: By automating reporting, company finance teams can reduce labour costs and minimise the expenses associated with manual data entry and error identification and rectification. Additionally, AI-powered financial reporting tools can provide real-time insights, enabling businesses to make data-backed decisions faster.
- Leverage Real-time Insights: Leverage up-to-date financial data for quicker decision-making. This enhances the ability to respond to financial trends and changes promptly, giving businesses a competitive edge in managing their finances.
Impact Across Key Industries
- Technology: Tech companies can utilise multiple benefits from AI in financial reporting by automating revenue recognition, especially in subscription models. The technology helps track recurring revenue and generates precise financial statements, helping tech companies stay on top of their growth and meet accounting standards.
- Healthcare: In the healthcare sector, AI has played an important role as it helps with billing automation and ensures compliance with the latest regulations. Statistics suggest that the global AI market is valued at $20.9B in 2024 and is projected to reach $148.4B by the end of 2029, seeing a 48.1% growth in the Compound Annual Growth Rate (CAGR).
- Banking and Finance: The banking and financial institutions have seen a 360-degree impact post using artificial intelligence. Automation helps make the financial reporting faster and accurate in this sector.
- Retail: In retail, Artificial Intelligence enhances the analyses of sales and customer data to spot trends and predict future revenues. Retailers can create real-time reports that reflect current market conditions, allowing them to adjust prices, manage inventory, and improve overall financial health.
- Manufacturing: For manufacturers, AI simplifies reporting of financials by automatically consolidating data from different production sites and forecasting costs. This leads to more accurate reports and better cash flow management, helping manufacturers reduce costs and allocate resources more effectively.
Many believe that AI in automation in healthcare is about patient data processing. However, it extends beyond admin operation automation, personalised care of individual patients and diagnostic precision. This means healthcare providers can use accurate, real-time financial insights, helping them reduce administrative costs and focus more on patient care.
By automating compliance checks and providing real-time risk assessments, banks can quickly generate detailed reports for regulators and stakeholders, cutting down on manual work and enabling informed decision-making.
Summing up, it’s evident that Artificial Intelligence is more than just a technology trend but a transformative force in financial reporting. For businesses and startups today, this means more than just speed and accuracy—it’s about unlocking new levels of insight and efficiency in their reporting and operations.
AI’s ability to automate tedious tasks, provide real-time updates, and consolidate data from many sources means financial teams can focus more on strategic decisions rather than getting tied-up with paperwork.
Imagine leveraging Febi.ai’s smart features to instantly detect anomalies, tailor financial insights to your unique business needs, and streamline compliance. This is not a distant dream but a current reality that many companies are already experiencing and adapting. As AI continues to evolve, it’s reshaping how we approach financial management, making it more intuitive and impactful.
