CFO, your days as a co-pilot are over!
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
This channel is "Trends in Finance and Accounting" with 285,000+ subscribers! Click "Subscribe" to receive a notification and an e-mail when I publish new articles every Thursday and the occasional Saturday.
Listen to the latest #FinanceMaster Podcast episode here.
Listen to the #FinanceMaster Show today at 15:00 CET. Sign up here.
Sign up for the next #FinanceMaster Show on 5 April?at 14:00 CET here.
Dive into our new LinkedIn Learning course on business impact here.
It's brought to you always by Business Partnering Institute.
It’s been a popular saying for the past 20 years that the CFO should become the co-pilot of the business. Essentially, the CFO should act as the wing person to the CEO and together they should run the company and optimize value creation. This relationship should then trickle down into the organization, pairing every business leader with a financial wing person.?
With Generative AI, the game is changing. You have probably noticed that co-pilots are popping up everywhere. In a few months, your AI co-pilot will be a click away embedded across Microsoft Office applications. This enables anyone to get answers to simple requests in a matter of seconds rather than sending an e-mail and waiting a while before receiving an answer.?
In Finance this is the realization of what we’ve been discussing for years. AI can now answer “what happened” and “why it happened”. Previously this could take hours or days of financial analysis and dialogues to uncover. On a positive note, this frees a lot of time, but it probably also leaves many finance and accounting professionals wondering what will become of them. In this blog, we will explore the capabilities of Generative AI for CFOs and discuss what comes next since the co-pilot role is now spoken for.?
Exploring Gen AI use cases for CFOs?
The introduction of AI into our daily work processes has been gradual over the past decade. Generative AI simply sped up the implementation process. Today, most finance functions are experimenting with building their own Gen AI solutions. At the same time, the tool providers are building this into their applications. Finally, concerns about data security are also being alleviated as solutions are being integrated into existing tools.?
The prerequisite for making AI work, though, is that your data is neatly organized. Otherwise, you may get imperfect or even incorrect answers to your queries. Data should be captured correctly at the source and be ready for use straight from the ERP system without manual manipulation. Naturally, AI can also help you with that but that goes beyond Gen AI.?
We can then consider various examples of how Gen AI acts as a co-pilot.?
Accounts Receivables: The simple use case would be a query to understand your current overdue balances by customers and initiate action where needed. The dialogue could look like this…
?
Data quality: Despite the need for high-quality data most companies struggle with getting the quality right. Here a use case could be to query your co-pilot on finding and fixing the bad quality data…
?
Financial analysis: Most time spent on financial analysis is to identify what happened during the period analyzed and why it happened. This is an area where co-pilots are increasingly helpful. Here’s an example…
?
Financial forecasting: Another area where co-pilots are becoming useful is financial forecasting. Here, non-biased forecasts can easily be produced based on historical information and assumptions updates provided by central teams. The example could look like this…
These are but a fraction of the potential use cases and the capabilities of the co-pilots are evolving fast. We hope that it gives you an idea about the potential though and gets you thinking about where co-pilots can be used and what humans should work with instead.?
The future finance function is more human than ever!?
To some, this may be a frightening picture. Co-pilots are taking over my job. What will I be doing instead? This should be on the CFO’s agenda. The good news though is that the future finance function is more human than ever. Let’s explain.?
First, consider the efficiency gained from using co-pilots. No longer do you need to spend time on the mundane part of the analysis. Building on some of the prompt examples above you could now spend time talking to the manager of market X and the product lead for product Y. Understand the root causes for the shortfalls and the prospects of turning things around. You would also have time to help them problem-solve for good solutions for the turnaround. In the forecasting example, you easily do scenario modeling and can consider the numbers to be given. Instead, you can discuss with the management team what to do to improve performance. There’s no denying that this is time much better spent.?
Second, we should discuss the capabilities needed to do what we have outlined above. You will need relationship-building skills to engage with market and product managers. You would need problem-solving skills to help find solutions for their challenges. You would need influencing skills to get the management team aligned around the forecast and actions to address performance shortfalls.?
Finally, we can debate how to develop these capabilities. For most finance professionals this will be outside their comfort zone. However, most of them have a desire to make an impact on the business and they’re aware that their jobs are changing with the advent of the co-pilot. Accountancy bodies like AICPA-CIMA have also published a lot of knowledge about the need for changing capabilities. This is showcased by the CGMA competency framework.
The continued developments in the technology space will only further enable CFOs and their finance teams to be business partners. The co-pilot brand might now be spoken for; however, the co-pilot may just be what helps CFOs to finally become the co-pilots they were originally meant to be. That indeed makes the future finance function more human than ever. How do you see the co-pilots impacting the finance function and what CFOs and finance and accounting professionals should be doing in the future?
This was the sixth blog post in our new series "The Top 10 Priorities for CFOs in 2024". Starting from this series we go even deeper into the issues, bring you candid perspectives from the frontlines, and share actionable advice on what the Office of the CFO should do to create more value. Read the previous articles in the series below.
领英推荐
Catch the insights from our latest series "The Modern Finance Function" here.
You can read all blog posts in our previous series "Demystifying AI in Finance & Accounting" below.
Continue reading below for more articles about trends in finance and accounting.
Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 12,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner”, a long-time Finance Blogger, a LinkedIn Learning instructor, and a Top Voice on LinkedIn with 330,000+ followers.
CFO | Finance Executive
8 个月Great read Anders!
Financial Modeller | FP&A | Economist | AI for Finance & FP&A
8 个月The use cases are very clear! in fact some of the processes indicated are already automated.
Commercial advisor for large-scale procurement in major projects, critical contracts, & cost reduction. I lead a team applying commercial rigour to help clients achieve optimal outcomes, not just follow processes.
8 个月Absolutely fascinating take, Anders! ?? The idea that Generative AI is becoming everyone's financial co-pilot is both exciting and a bit nerve-wracking. It's like having a super-smart assistant at your fingertips, ready to crunch numbers at lightning speed. But here's a thought - maybe this is our cue to level up? Instead of getting lost in spreadsheets, we could be using that freed-up time for creative strategy or building stronger relationships within our teams. Imagine focusing on big-picture thinking because AI's got your back with the details. It's kind of like having cake and eating it too! ?? What do you think?
?? Financial Reporting & Analytics Expert | ??Providing Business Insights through Data Analytics |?? Creating Value for Businesses Through Improved Financial Processes | ?? ESG | ?? Sustainability Reporting | Ex EY |
8 个月Exciting times ahead with Generative AI shaping the future of finance!
? Asset-Based Lending ?? Get Terms Now ?? #SecuritiesBasedLending | #RealEstateFinancing | Connecting #Investors and #Borrowers.
8 个月Exciting to see how AI is transforming the role of the CFO! #financetransformations