Across industries, the adoption of artificial intelligence (AI) technology in strategy and corporate finance grew 21% in 2022. As AI has taken the world by storm, finance teams are now on a new path — one that promises incredible opportunities.
“AI never gets tired, never gets angry, never gets upset… it’s a lot of potential,” said Judson Stevens, Director of Software Engineering at TeamPay.
Consider all the routine tasks that consume your team’s time, including data entry, financial analysis, reconciliation, and routine reporting. On one hand, AI can automate these tasks and boost operational efficiency, freeing up valuable hours. But more importantly, it makes the heavy responsibility of leading your company into the future a whole lot easier.
In other words, AI could position you and your team as strategic advisors and drivers of business innovation — a role you have probably been expected to fulfill all along but often lacked the time and resources to do…until now.
That said, to leverage AI properly, you need to understand what it’s capable of, especially as it applies to financial planning and analysis (FP&A). In this article, we cover how AI transforms FP&A and how you can effectively leverage its power to level up your financial operations.
Table of Contents
5 Use Cases for AI in FP&A
Before you dive into using AI in your financial operations, it’s essential to understand how finance teams worldwide are already leveraging AI tools in business.
“I think one of the benefits that finance has in general is that a lot of the tasks are repetitive. Every month, every quarter, month-end close, board reporting, and so on. So you can really hone in on what you want to use AI for,” said Brian Campbell, Co-founder of Mosaic.
If you don’t know where to start, that’s okay — there are so many AI tools for business out there. In any case, we have you covered.
1. Budget Variance Analysis
Knowing the gap between what you budgeted and how much you actually spent is key to identifying if your company’s on track to meet its financial goals. If you can’t see where your money’s going, you’re going in blind.
And budget variance, especially a shortfall where your costs are higher or you pull in lower revenue than projected, can throw off your operations and any financial goals. But as you may already know, tracking budget variance is hard, especially in rapidly changing or volatile markets.
The good news? AI can help. In fact, 66% of finance leaders believe generative AI will have an “immediate impact on explaining forecast and budget variances,” and they’re not wrong. The benefits of AI budgeting are plenty, from greater efficiency and accuracy to predictive analytics and customization.
For example, AI can — and already does — transform how you process large amounts of data. Instead of spending days manually reviewing budgets, AI-driven software can help you do it in seconds. Obviously, this means substantial time savings for you and your team, allowing you to focus on high-value tasks.
2. Data Cleanup and Hygiene
Whenever you rely on manual work, especially when handling large volumes of critical data, you open the door to making mistakes. Spreadsheets that depend on formulas are no exception because the output is only as good as the data entered. If the input was wrong from the get-go, you were set up to fail before you even began.
That’s where AI steps in. By automating the connection of your data sources into a centralized database, like with Mosaic’s integrations, AI bases its calculations and forecasts on this single source of truth. So this eliminates the potential for errors or typos, leaving you with clean, organized financial data that helps you build better budgets and make informed business decisions.
3. Analysis and Insights
Traditionally, building a financial model from scratch is a time-consuming task that needs skilled analysts who are often, frankly, dealt a bad hand. They must navigate data silos and meticulously manage multiple versions of spreadsheets, all while running the risk of errors.
Luckily, AI financial modeling simplifies this process by allowing you to generate financial models through natural language prompts. For instance, you can ask your AI assistant to create a discounted cash flow model, which will probably be done in minutes — all using your real-time company data.
Additionally, AI excels at spotting trends and detecting anomalies within financial data, making financial analysis easier. Because, unlike humans, AI can quickly process vast amounts of data and spot patterns and potential issues way before they escalate. This way, your team can proactively focus on developing effective solutions versus instead constantly reacting to business changes.
And this doesn’t mean AI replaces your finance team. Instead, it elevates their role from routine, number crunching to being strategic partners.
4. Forecasting and Scenario Planning
At a recent round table on AI in finance, Rob Matthews from Spiff said it best: AI should handle “the simplest tasks that suck the most.” And one of those tasks can and should be to streamline financial modeling and forecasting by organizing data from multiple sources.
For instance, you can let AI do the heavy lifting instead of manually collating and categorizing large datasets. Machine learning models and predictive analytics can spot anomalies, trends, opportunities, and risks — all of which give your analysts a head start.
At Mosaic, we see AI as a blend of data administrator, financial analyst, and data modeler. You can lean on AI to deliver clean data and baseline models, which your team can refine and build on. This way, your FP&A team can spend less time on the “what” of financial modeling and forecasting and more time on the “why” behind the numbers.
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5. Formula Writing
In the end, if you still need your Excel spreadsheets, AI can help you there, too. Have you ever gotten stuck trying to figure out the right formula? Or do you think you have the right formula, but Excel is not giving the output you expected, and you’re left troubleshooting the error?
Well, AI can handle all that grunt work for you. In fact, it can create or edit custom formulas more accurately and much faster than any human can. So, if your company is still transitioning to AI-powered financial software, formula writing is an excellent place to start.
Risks and Rewards of Using AI in FP&A Processes
That said, AI isn’t a catchall solution. Like any technology that’s still evolving, it has its benefits and risks. Before deciding if and when to use AI in finance, you need to be aware of these to make an informed, calculated decision after carefully weighing the pros and cons.
Rewards
Let’s start with the benefits.
Quickly pull insights from large datasets
As we’ve already covered, AI can rapidly analyze large datasets and insights that would typically take humans days or weeks to uncover. Specifically, AI software can sift through structured and unstructured data and identify patterns, correlations, and anomalies that traditional or manual processes might miss.
With the right AI-powered software, FP&A professionals can make quickly informed decisions, stay ahead of market trends, and spot investment opportunities. Simply put, AI can be the factor that decides if you’ll have a competitive edge in a fast-paced market or get left behind.
Improve ROI on your team’s time
AI can also significantly boost the return on investment (ROI) for your team’s time by automating routine, labor-intensive tasks such as data entry, reconciliation, and even report generation. As you’d expect, this reduces errors and frees your team to focus on more strategic work.
Moreover, by optimizing your team’s time and efforts, AI can help you increase productivity and allocate resources more efficiently, leading to a higher ROI.
Make your FP&A processes more agile and responsive
AI-powered FP&A software keeps your financial forecasts updated in real-time with the latest data, making your projections more dynamic and accurate. Additionally, it quickly simulates various financial scenarios, allowing your team to switch strategies to rapidly changing market conditions.
In turn, this cuts down on the time and effort needed for data collection and reporting, saving you money on additional headcount. Ultimately, with AI financial planning tools, your FP&A team can focus on strategic analysis and provide timely, data-driven insights for better decision-making.
Risks
That said, AI has downsides, too. Below, we cover two major risks of using AI in FP&A.
Data security concerns
One primary security concern with AI is data privacy, especially since the technology is still evolving. Finance professionals handle highly sensitive information, and there’s a risk that the software could use this data to train the AI model and possibly share it with others outside the company.
You don’t want to put highly confidential, highly sensitive data into these things because, depending on what you’re using, that data could stay where it is and be perfectly safe, or it could be used as another data set or another data point that will eventually evolve the tool, and someone else could ask a question.
Additionally, using sensitive financial data in AI systems increases cybersecurity risks. Because AI technology is new and still developing, much about it is still unknown. This means AI, and by extension, any company that uses it can be vulnerable to cyberattacks.
That’s why it’s essential to consistently monitor your tech stack and ensure strong data protection and cybersecurity measures to prevent breaches and misuse.
Overreliance on AI for decision-making
AI also carries algorithmic bias, so if you train AI models on biased datasets, the algorithm can produce incorrect or misleading financial projections and, by extension, lead to poor business decisions.
Additionally, the complexity of AI models can cloud the decision-making processes. You can’t fully trust the outcomes without insight into the reasoning behind an AI software’s recommendations. So, this lack of transparency can get in the way of building stakeholder confidence and complicate regulatory compliance.
Top AI Tools for FP&A
If you’re new to the world of AI, it’s totally normal not to know where to start. Below, we’ve rounded up a few of the top AI tools on the market for FP&A teams to help you on your journey.
Mosaic’s Arc AI
Meet Arc AI, the newest addition to Mosaic’s strategic finance platform that’s designed to streamline FP&A for companies of all sizes. Our chat-based AI tool can enhance your finance workflows, uncover deep insights, and tackle complex tasks — at remarkable speed.
Budget vs. Actual Arc AI Insights
Just imagine transforming your ideas into actionable results with a simple command. With Arc AI, you can identify performance drivers, summarize trends into executive and board-ready stories, and soon share your insights directly through Slack to keep your team aligned. In other words, Arc AI helps you shape your financial narrative and set the right tone with your stakeholders effortlessly.
Beginning in Q4 2024, Arc AI can streamline your budget variance analysis, too. It can quickly detect deviations from your plan, pinpoint root causes, and deliver accurate, detailed explanations in seconds. So, this means no more endless hours spent searching for the “why” behind variances.
By automating your FP&A processes and through reliable, real-time insights, Arc AI allows your team to focus on strategic analysis and make informed decisions faster. And you can finally unleash your finance team’s full potential.
ChatGPT
ChatGPT is probably the most well-known (and popular) AI platform out there — it played a significant role in making AI mainstream. As a large language model (LLM), ChatGPT’s natural language processing features allow it to analyze vast amounts of data, spot trends, and pinpoint deviations in seconds. It can be particularly handy if you still do a lot of your FP&A in spreadsheets.
Moreover, ChatGPT allows you to create custom GPTs to match your company’s specific needs, which can help small companies that don’t have a lot of resources.
It can also make drawing insights easier, simulating various financial outcomes based on different assumptions, and help you make business decisions quickly. Plus, by reducing the time spent on manual data entry and analysis, ChatGPT frees up your FP&A team to focus on strategic planning and high-value activities.
However, the platform has its drawbacks, and there are ongoing incidents of the software being trained on unauthorized datasets. So, weighing the risks and benefits before testing it out for your processes is important.
Glean.ai
Glean.ai transforms Accounts Payable (AP) into a powerhouse of strategic spending insights and automation for finance teams. By leveraging rich AP data, Glean.ai empowers your team to make smarter decisions and drive efficiency.
With features like AP automation for approvals, payments, and general ledger (GL) sync, you can streamline your processes effortlessly. Enjoy powerful spend analytics, one-click variance analysis, and new vendor approval flows, all while keeping everything organized with centralized document storage. Designed for unlimited users, Glean.ai fosters better collaboration across the entire finance team, making your operations more strategic and effective.
Spiff
Spiff, now part of Salesforce, is a leading sales commission software and commission tracker. Spiff’s AI assistant takes the hassle out of building and managing commission plans, eliminating the heavy lifting and steep learning curve. With Spiff, you can easily understand logic and commission calculations and identify errors, ensuring everything runs smoothly.
Plus, you can effortlessly design and optimize workflows while accurately predicting commissions, attainment, and attrition. Simply put, you can streamline your commission management and let Spiff handle the complexities. This way, you can focus on driving performance and growth.
Numeric
Numeric is built to boost your accounting team’s confidence, streamline timelines, and ensure you’re always audit-ready. With Numeric, you can generate clear accounting guidance and policies, draft detailed variance explanations, and easily ask questions about your accounting data.
In other words, this powerful AI accounting platform simplifies complex tasks and automates your accounting workflows (including month-end close), making it easier for you to manage your processes and stay ahead of the curve.
A Peek Into the Future of AI-Powered FP&A Workflows
At Mosaic, we see AI revolutionizing finance — it’s more accessible, affordable, and scalable than ever before. When we started Mosaic in 2019, we set out to modernize the outdated finance toolkit and transform the CFO’s role from a backward-looking scorekeeper to a proactive growth catalyst. And as AI continues to evolve, we’re excited about its potential to solve some of the biggest challenges in finance almost instantaneously.
We believe the future of finance lies in automation, augmentation, and empowerment. By automating routine tasks and through real-time insights, AI empowers finance teams to move faster, work more efficiently, and make more strategic decisions.
That said, as AI becomes more integrated into finance, the “trust, but verify” philosophy is as important as ever. Our take is that AI should empower decision-makers with powerful insights and recommendations, but the final decisions should always involve human judgment.
And we’re committed to using AI to empower finance teams, streamline complex workflows, and prioritize strategic initiatives, ensuring finance remains a key driver of business growth.
If you want to see the future of strategic finance at Mosaic firsthand, request a personalized demo.
FAQs About AI for FP&A
Are companies using AI in their FP&A processes right now?
Yes, many companies are already using AI in their FP&A processes to varying degrees or are actively considering using it soon. According to NVIDIA’s 2024 State of AI in Financial Services report, 91% of organizations are assessing or already using AI. Specifically, these companies were using it to “automate manual processes, enhance data analysis, and inform investment decisions.”
Will AI replace certain FP&A roles?
Can I use ChatGPT for FP&A?
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