The chief financial officer role is undergoing a dramatic expansion and the adoption of AI, encompassing everything from chatbot assistants to fraud detection, looks to play a critical role in that shift.
There’s no doubt that this new technology has the potential to transform the finance function, freeing up time by automating rudimentary tasks such as transaction processing and auditing, while allowing finance leaders to spend more time on tasks which create value. A recent Gartner survey predicted that 50% of organisations will use AI to replace “time-consuming bottom-up forecasting approaches” by 2028. The same research found that 80% of CFOs expect to increase spending on AI over the next two years.
At a time when finance chiefs are feeling the pressure to be everywhere and do everything, could AI be the answer to their prayers – or is it yet another spinning plate for them to manage?
CFO job satisfaction is waning
There is perhaps no better time for a shake-up of the CFO role. “Job happiness is at an all-time low”, observes Karim Ben-Jaafar, senior vice-president at software company Quadient, who has been researching work satisfaction levels among finance leaders around the world. While conducting his research, he has noticed a significant rise in turnover levels. In 2023, 29 companies in the FTSE 100 had a change of CFO – the highest rate of change within the past decade.
Ben-Jaafar suggests that a major reason for the high level of departures is because CFOs are finding it increasingly difficult to do their jobs. In many companies, finance teams are still relying on manual and outdated processes. These can give CFOs an unclear picture of their company’s finances and make it nearly impossible to accurately forecast, budget and react quickly to industry changes.
Being able to track financial performance accurately has never been more important, says Ben-Jaafar. The current economic climate makes “the cost of a mistake so much higher.” While nobody has a crystal ball, expectations about the financial safeguarding of the company fall largely on the CFO. They must be able to react instantly so businesses can survive and thrive. Without this ability, he explains, “CFOs are left powerless, increasing pressure on them and pushing them out the door.”
He believes AI could be the answer. As part of his research, Ben-Jaafar has been looking into the impact of this technology on CFO job satisfaction. He found that the majority of finance leaders are hopeful that AI will allow them to focus on more high-value tasks that bring them more enjoyment, including strategic planning, financial modelling and forecasting. There is even more appetite in the current climate, he says, for AI tools that can alleviate the pressure by streamlining financial operations and enhancing decision-making abilities.
How AI can alleviate the pressure
Recent research from software firm BlackLine shows that more than a third (38%) of CFOs believe AI will enable better analysis of historical financial data, which will help improve forecasting capabilities, and 35% think it will enhance audit capabilities by analysing vast amounts of data to identify patterns or potential errors.
Taking advantage of AI’s automation capabilities has allowed Emma Brown, CFO at spend management solutions provider Medius, to deal with the “ever-growing list of challenges” she faces. “We’re expected to be almost superhuman in protecting the business from the risks associated with poor financial performance, fraud or external economic conditions.”
We’re looking for smart AI solutions in the same way we are looking for smart employees – I want to make sure it’s going to be a long-term fit
The automation of cumbersome processes, such as financial close, consolidation, invoice-to-cash, and intercompany reconciliation, has made Brown feel “more in control of the basics of finance,” providing her with a sense of assurance that the numbers are right and giving her strong visibility of where money is being spent in the business. Brown says it has also freed up her mind and time to look beyond the next budgeting cycle and uncover more meaningful insights.
Research suggests Brown is not alone in feeling the need to regain some peace of mind when it comes to basic finance processes. Nearly 40% of CFOs around the world admitted that they do not completely trust the accuracy of their organisation’s financial data, according to another survey by BlackLine. Meanwhile, a staggering 98% confirmed they do not have complete confidence in the visibility their organisation has over its cash flow. Findings show this is because data typically comes from too many different sources, meaning they cannot be certain that it is all being accounted for. This lack of confidence is also due to an over-reliance on clunky spreadsheets and outdated processes, including manual data collection, which are prone to human errors.
To this end, Brown insists that using AI tools to improve the quality and accuracy of financial data will offer a “huge relief” to CFOs, giving them more visibility and control over company finances at a time when they need to be able to react quickly to market changes.
Kristina Majauskaitė-Adomavičienė, chief financial officer at fintech company PAYSTRAX, thinks AI can create real opportunities to run the finance function better. She believes forecasting tools’ enhanced auditing capabilities can help finance leaders to unlock more creative ways to solve problems, develop new skills and grow professionally. On top of that, at a time when more that a third of CFOs are concerned about staff turnover, Majauskaitė-Adomavičienė is hopeful that it can improve employee retention and engagement across finance team. “People in finance prefer jobs that allow them to delve deeper into a problem and AI gives us the tools to do that.”
Enabling the CFO to become a more strategic partner
But the potential for AI to transform the finance function reaches far beyond numbers and spreadsheets. “AI has a massive role to play in helping CFOs move away from their previous back-office position to become a strategic partner for CEOs,” says Dr Lee Eccleshare, head of AI research at market intelligence firm AMPLYFI. As finance chiefs are increasingly being called to drive business strategy, lead digital transformation and enable agility across the organisation, “the more time they have to focus on this strategic side, where they can add the most value, the better”, he says.
There’s a spate of AI tools out there designed to help people spend fewer hours on tedious tasks and more time on higher value work. One such example is Microsoft’s Copilot, a chatbot that can perform key tasks for people working in finance. “A couple of thousand people on a financial planning and analysis team each spend one or two hours doing reconciliation each week. With the new Copilot, that takes more like 10 or 20 minutes per week,” says Cory Hrncirik, modern finance lead in Microsoft’s office of the chief financial officer.
In Brown’s view, those pockets of earned time have allowed her to focus on being a more strategic partner when, in the past she has been “stretched too thin”.
Furthermore, by combining real-time data with AI-enabled analytics, Brown describes how she’s been able to uncover new insights, develop multiple scenarios for capital allocation and improve negotiating positions. “I can spend more time looking forward and finding new ways to add value to the business, from engaging with customers and assessing competition to understanding market tailwinds and looking at what opportunities to exploit.”
Not ready to take their hands off the wheel
While some may welcome the tide of change, others are still hesitant about automation overhauling key aspects of the finance role. While AI has the ability to alleviate pressure, this doesn’t mean CFOs are ready to take their hands off the wheel. They are grappling with a contradictory reality in which they understand the benefits of AI, but are not yet confident in their ability to use it.
“CFOs want to see the process at play,” says Ben-Jaafar. “They don’t just want the conclusions, they want to understand how the system arrived at the answer and they want to be able to challenge the inputs and assumptions.” It is, perhaps, because of this more measured approach that CFOs are not typically at the vanguard of technological change, he adds. “They feel the heavy weight of responsibility when buying financial software for their company and must shoulder the fallout when it doesn’t go as planned.”
Majauskaitė-Adomavičienė admits that working out the best way to integrate AI into PAYSTRAX’s existing finance function, including choosing the right provider and weighing up the cost versus the benefits, is one of the biggest challenges she faces. “We’re looking for smart AI solutions in the same way we are looking for smart employees – I want to make sure it’s going to be a long-term fit for the company.”
It’s understandable that CFOs are treading carefully. After all, the most hyped technology of 2023 is still in its relative infancy. Trust and reliability are critical for finance chiefs to maintain, and there is concern that AI is promising too much, too soon, says Ben-Jaafar. “This could be why CFOs aren’t adopting the technology as quickly as they can. A lot of them are holding back to see how other companies are adopting it first.”
AI is not a quick fix
Despite its potential, AI should not be seen by CFOs as an easy solution to their problems. As Eccleshare points out: “The industrial revolution didn’t make anyone’s lives any easier.” It could very well end up adding even more to their already overloaded plates.
Finance chiefs are “very aware of the challenges they need to navigate,” says BlackLine CFO Mark Partin. While they remain keen to understand how they can benefit from this technology and where the competitive advantage lies in using it, they are also grappling with what exactly implementation looks like, the talent they need to integrate AI, and where they are going to find it. As second-in-command to the CEO, there is additional pressure on CFOs to take a leading role in defining company policies around AI, Partin explains. This means ensuring compliance with constantly evolving regulations and ethical frameworks, as well as training AI models to understand and interpret complex financial data accurately.
For some, this is a challenge they feel ill-equipped to handle. A study by Deloitte found that 50% of CFOs feel unprepared to implement AI, with only 8% feeling well or very well prepared. At the same time, 32% of CFOs believe this technology will displace people working in the finance function in 10 years. These fears are not unfounded: the CFO of Google recently announced that the company’s finance teams would see restructuring, including relocations and layoffs in favour of further investments in AI. In an internal memo, CFO Ruth Porat said: “The tech sector is in the midst of a tremendous platform shift with Al. This means we have the opportunity to make more helpful products for billions of users and provide faster solutions to our customers, but it also means we collectively have to make tough decisions, including how and where we work to align with our highest priority areas.”
It serves as a sobering reminder and future indicator that, for finance leaders, AI is to likely create just as many problems as it will solve. Nonetheless, it is up to them to navigate these new challenges and to mitigate the risks as best as possible.
In Partin’s view, it will be a steep learning curve and one that requires CFOs to have a long-term vision on how AI can positively transform their role. “Pragmatism is essential when it comes to integrating AI across business and financial operations,” he says. “In the near-term, moving at a thoughtful and careful pace to integrate AI into existing solutions is a more practical approach that can result in immediate benefits for CFOs and their teams.”
Nancy Person, CFO of content management company Hyland, stresses the need for CFOs to approach AI with more than just a financial perspective. “Although most finance professionals are known for being risk-averse it’s no longer a matter of whether they will be successful with it; they now should know they need it.”
In her view, CFOs need to focus on training teams to ensure they understand the tools available to help them succeed. She also recommends sharing their achievements and milestones with automation to key stakeholders and others across their organisation. “Showing the benefits might inspire broader adoption and innovation. Organisations might reimagine the products and services they’re providing and explore building out robust in-house AI capabilities. To keep pace with changes, automation will be an important investment with implications for other business functions.”
For those feeling overwhelmed with the prospect of creating and implementing a shiny new AI strategy, Brown advises them to “first figure out what business problem you want to solve and work backwards.” It’s not something that should be viewed as a box to tick, she says. “It’s important to ensure you have a real business case for using it.”
Brown believes finance chiefs should embrace AI rather than shy away from the challenge. Despite the challenges and hesitations involved in implementation, she sees it as “another string to her CFO bow” and encourages others to do the same.
