CFOs Tap AI to Optimize Cash Flow

The influence of artificial intelligence (AI) is becoming more prevalent in our daily lives.

Within this new ecosystem, the chief financial officer (CFO) and finance department are no longer bean counters in the back office, but financial architects in the captain’s seat of the business intelligence office.

That’s because as companies worldwide transition to accelerated computing that leverages AI-powered analytics, CFOs have a front row seat to tapping future-fit technologies that can help manage their cash positions, grow their investment yield and support other key treasury functions.

In the present environment, with soaring interest rates and sky-high costs of capital, CFOs are facing increased scrutiny and expectations around financials and performance.

Fortunately, AI tools are increasingly offering finance leaders a solution when it comes to balancing growth and cost management, while being strategic around treasury operations and investments.

Historically, the finance function was just about diagnosing reporting results. Now, the role is evolving toward one where CFOs have an opportunity to establish sustainable competitive advantages by optimizing their firm’s financial workflows with the help of AI and data analytics.

Read also: How Data-Informed Decisions Help CFOs Manage Spend and Growth Cycles

From Bean Counter to Business Driver

Today’s finance leaders have unparalleled visibility into all the operating aspects of their organizations, allowing them to understand every element and lever of the business.

Data lies at the heart of this operational transparency. New technology enables CFOs to work seamlessly with large volumes of information to provide insights supported and even generated by technologies like AI and machine learning (ML), ushering the role into a new era of responsibility.

“AI and ML are transforming everything treasury, it’s the equivalent of the Industrial Revolution 4.0,” Jarrett Bruhn, managing director and head of data and AI in global transaction services at Bank of America, told PYMNTS. “When you think of what a treasurer does, trying to find operational and cost efficiencies, these tools and technologies fundamentally change how they can do their daily job.”

There has never been a better time for organizations to double down on their cash flow forecasting capabilities than right now.

Advances in AI and ML technologies are increasingly being purpose-built for treasury and finance operations, helping CFOs better control investment choices and manage the allocation of scarce capital and resources.

“[Technology investments] are about continuing to enhance traditional concepts like planning and budgeting and forecasting. How do we use more predictive information and [automate inputs so we don’t] spend all the time building out scenarios, but instead help the finance team build out plans for how to move the business forward strategically,” Angela Floyd, CFO at DPR Construction, told PYMNTS last week (Aug. 31).

Read also: How AI Co-Pilots Can Future-Proof the CFO Office

Data Fuels the Engine of Success

CFOs may have a corner office, but they increasingly need to look around the corner, too.

“It’s about protecting the core [today], which means going back to basics. What is the liquidity management strategy? What is the approach to working capital management? Is it as efficient as it can be?” Catherine Simpson, co-head of treasury services for middle market banking and specialized industries at J.P. Morgan Chase, told PYMNTS.

And as CFOs increasingly take a data-driven approach to achieve success, they get to wield the double-sided sword of operating within increasingly data-rich environments that can lead to more insight and better forecasting foundations.

“Digital adoption has created a massive influx of data which was not previously there, which has helped not only give a greater advantage to [CFOs] during financial planning and budget forecasting, but also provided them more real-time visibility around other departments to help the other business stakeholders make very informed decisions,” Manish Jaiswal, chief product and technology officer at Corcentric, told PYMNTS.

Echoing that sentiment, Jeffrey Noto, CFO at global communications infrastructure provider Zayo Group, told PYMNTS: “It’s becoming a very blurred line between where you need to have finance acumen and skills on one side, and where you need to have more technical capability on the other side to really balance the two out.”

It is an exciting time to be in the CFO seat, and the best applications of today’s AI innovations depend on where specific business priorities lie — whether it’s preservation of capital, wanting to earn yield, or something more unique to a particular business situation.

But one thing is certain: the finance team’s capabilities around working capital management have never been stronger, which is good news for their organizations’ growth prospects.