AI for Finance: How is AI Used in Finance and How Can It Improve Organizational Performance?

The office of the CFO is going through a new phase of transformation driven by artificial intelligence (AI). AI impacts how finance teams complete daily tasks and operations, and it has the potential to do much more. From automating repetitive tasks to uncovering hidden patterns in data and surfacing insights, AI has the potential to streamline operations, optimize workflows, and improve decision-making. 

This article dives into the current applications of AI in finance operations and explores how finance leaders plan to use AI and generative AI (GenAI) in the future. 

What is AI in finance and how does it work? 

AI uses a combination of techniques, such as machine learning algorithms, natural language processing (NPL), and deep learning, to automate time-consuming tasks, improve accuracy of financial data, and provide valuable insights to make smarter financial decisions. The following are just a few examples of how these technologies work in finance departments:  

• Machine learning algorithms learn from data to identify patterns, predict outcomes, and make recommendations. These algorithms are trained on robust datasets and can be used in critical areas such as  fraud detection and risk management.
• Natural language processing (NLP) can understand and extract meaning from financial data. NLP can be used for tasks like analyzing financial documents and automating report generation. For example, NLP can automatically read purchase orders and invoices, identify important information like supplier names, dates, and amounts, and then extract that into a structured format. It can also analyze text within invoices to identify suspicious transactions.
• Deep learning can be trained on historical data or image recognition, which can be applied to fraud detection by analyzing financial documents. For example, deep learning algorithms can analyze historical data on supplier performance, past disruptions, and industry trends to predict the likelihood of future problems. This allows you to prioritize risk assessments and focus resources on the best performing suppliers.
• Generative AI (GenAI) refers to a class of artificial intelligence algorithms that produce new and original data and content, such as text and images, by learning patterns from existing data. As it relates to finance, it’s like having a highly sophisticated virtual assistant that can analyze vast amounts of financial data, identify patterns, and generate valuable reports, contracts, or documentation autonomously.

Given these applications, many finance teams may already be using AI within their systems and processes without even realizing it. 

How is AI used in finance? 

With the understanding of how different AI technologies work in finance, there are probably a few use cases that now come to mind. AI is commonly used to automate tasks like data entry, expense report processing, and invoice processing with the goal of freeing up resources. Additionally, finance leaders use AI for data analytics, revenue and predictive forecasting, and decision-making because AI can identify missed trends and patterns. AI can also be trained to detect fraudulent activities and simplify regulatory compliance. 

In our second annual Strategic CFO Survey, Coupa interviewed 500 CFOs across North America and Europe to understand how finance leaders are currently using AI and how they’ll invest in AI in the future. 100% of finance leaders reported that they’re already using AI to cut costs and increase productivity across different business areas, with nearly half (45%) planning to invest in AI to drive growth.  The most finance leaders (31%) reported that they’re currently using AI in AP automation, followed by 29% using AI in procurement, and 28% of CFOs leveraging AI in cash and liquidity management. In the next 6-12 months, finance leaders plan to make the most AI investments in the AP automation (34%), followed by procurement (31%) and third-party risk management (29%). 

Download the full 2024 CFO Strategic Survey for additional AI insights.

“The time to embrace AI is now. In today’s dynamic market, those who leverage technology to gain foresight and optimize operations will stay ahead. It’s not about replacing people with AI, but augmenting their capabilities and evolving alongside the technology.” 

– Josh Waldron, VP Finance & Accounting, Scale AI

Benefits of AI in finance

AI offers several advantages for finance teams to do more with less and complete tasks with more precision. Some of the key benefits include:

• Increased efficiency and reduced costs: AI automates repetitive and manual tasks like data entry, invoice processing, and generating financial reports. This frees up resources and staff for more strategic activities and analysis.
• Enhanced fraud detection and risk management: AI algorithms can quickly analyze transaction data in real time to identify suspicious transactions or patterns that might indicate fraudulent activity. This helps finance teams prevent financial losses and protects customer information. By analyzing historical data, market trends, patterns and shifts, AI enables smarter decisions through predictive analytics to minimize risks.
• Faster and more accurate decision-making: With the ability to analyze vast amounts of data, AI is able to identify patterns that finance teams might miss and make informed recommendations. AI-powered analytics also provide real-time prescriptive insights, enabling better forecasting.
• Streamlined regulatory compliance: By automating tasks such as data collection and reporting, AI can simplify regulatory compliance. This saves time and valuable resources while ensuring companies remain compliant ahead of any regulatory changes. 
• Better industry benchmarks: AI-powered insights enable businesses to benchmark their performance against a global community to reduce risk, increase efficiencies, and improve margins and profitability. 
• Navigate macroeconomic uncertainty with confidence: With automation, analysis of market shifts and patterns, and visibility of data, AI can provide enhanced recommendations to confidently navigate complex business issues and disruptions. 

In addition to these benefits, CFOs and finance leaders hope to reap more benefits with GenAI. According to Coupa’s 2024 Strategic CFO Survey, 37% of finance leaders believe GenAI will provide strategic advantages to fraud detection, while 36% believe GenAI will enhance workflow process optimization. 35% of CFOs say GenAI will provide strategic advantages to both data analysis and insights and supplier evaluation. 

Download the full 2024 CFO Strategic Survey for additional AI insights.

AI-powered finance: a spend management platform for all finance needs

In addition to providing the benefits above, Coupa’s AI-driven platform equips finance leaders with comprehensive data visibility and control by unifying the organization’s supply chain, inventory management, contracts, procurement, invoicing, and automated payments in one place. The easy-to-use platform boosts user adoption, enabling more collaboration for smarter decisions across the entire team and organization. 

Through automation and AI, our platform acts as a CFO’s trusted co-pilot. It guides finance leaders through uncertainties by leveraging real-time spend data and comparing an organization’s metrics against others to prescribe ways for the company to be more efficient, profitable, and sustainable. With over $5 trillion in proprietary transactional data, Coupa’s platform provides intelligent insights and recommendations to take the guesswork out of decisions for smarter operations. This drives sustainable growth, better margins, and improved profitability.

Guide your team to greater performance and profitable growth with the total spend management platform that’s trusted by more than 3,000 global organizations and 10 million suppliers around the world.

Learn more about how Coupa’s AI-driven platform empowers finance