FinOps Frontier

Happy 2024! ?? Welcome to the inaugural edition of FinOps Frontier, an exploration into the influence of Generative Technology on the field of Finance & Accounting.

Understanding GenAI & LLMs: A Deeper Dive

Before we dive into exciting use cases, let's ensure we establish a solid foundation on what is GenAI and LLM. GenAI, or Generative Artificial Intelligence, utilizes algorithms to interpret data, identify patterns, and produce results in various forms such as text, design, voice, video, and more.

LLMs, or Large Language Models, are specialized AI trained on vast text datasets to understand and generate content.

Legal & Ethical Considerations for GenAI Adoption

As we embrace GenAI, it's crucial to be mindful of legal and ethical considerations. Adhering to organizational policies is key, especially when dealing with open and public GenAI tools. Guarding against the sharing of sensitive internal data is critical for security, intellectual property protection, and risk management.

Remember the guiding philosophy: "Would you put your SSN on a public platform? Similarly, would you want the world to know your customers, products, revenue, or vendor details?" The answer is likely NO, reinforcing the importance of data privacy and responsible AI use.

This also presents a unique opportunity for finance teams to be on the forefront and implement guardrails, ensuring the responsible and strategic use of these tools. Elevate your team's reputation by providing sound strategies and policies that position them as business partners rather than just a support function.

Understanding the Evolving Role of Finance

As businesses and technologies evolve, so does the role of the CFO. Beyond managing finances, today's CFO is expected to drive efficiency and effectiveness across the organization. Think of the CFO as the conductor of a complex orchestra, making sure all the instruments (departments) are playing in harmony.

Today's Finance function can be broadly categorized into the following three areas:

Lets dive into the Internal Finance Function for this edition. We will cover the other Finance functions in future editions of this newsletter.

The Internal Finance Function is the engine room of a ship that keeps everything running.

As shown above the Internal Finance Function of an organization comprises of controllership, tax & treasury, internal audit and finance operations.

In this edition, we will focus on Corporate Controllership of the Internal Finance Function, exploring how GenAI can revolutionize mundane tasks and enhance efficiency.

Corporate Controllership comprises of multiple different accounting processes with various mundane and time consuming tasks. Some of the use cases that can adopt GenAI technology and achieve operational efficiencies and effectiveness are listed below.

Automating Tedious Tasks:

• Customer Invoice Matching: GenAI tools automates matching invoices and order forms, ensuring accurate billing terms alignment. This ensures accuracy and reduces the probability of rejected invoices by the customers.
• Vendor Bills Matching: Tools can process 2-way & 3-way matches, reconciling purchase orders, bills and goods receipt seamlessly and identifies discrepancies. This tremendously reduces the manual follow up required to ensure accurate matching.
• Order Entry and Form Processing: GenAI can extract information from documents like RFQs, quotes, and presentations, automatically filling out forms and saving you hours of manual data entry and errors. It's like having a super-fast typist who never gets tired!

Improved Data Accuracy:

• Enhanced Master Data: GenAI tools can extract data from invoices, bills, purchase orders, SOWs, etc, minimizing errors and streamlining processes. Imagine GenAI as a data janitor, cleaning up and organizing your customer and vendor information, ensuring consistency and accuracy across all your systems. No more duplicate entries or misspelled names & you have a clean Customer Master Database & Vendor Master Database!
• Master Data Accuracy: Ensuring precise customer and vendor data across all tools and software reduces redundancy and misalignment of information across different departments, resulting in more cohesive partnership with Finance.
• Improved Reporting and Analytics: GenAI based data process eliminates the need for cleansing and modifying data to generate different reports. It can analyze your data to provide insightful reports and forecasts, helping you make data-driven decisions.

Enhanced Reporting, Reconciliations & Analytics:

• Automated Transaction Matching: GenAI can compare transactions across different accounts, identifying and reconciling discrepancies automatically and ensuring that entries align accurately. As generative algorithms can analyze vast data sets with precision and enhance the reconciliation process any issues and errors are identified immediately and can be corrected instantly. This in turn helps reduce the close cycle and provide faster financial results.
• Integration with External Data Sources: GenAI can be employed to integrate with external data sources (e.g. APIs), such as banks, vendor databases or market feeds, to validate and cross-reference information during reconciliation. This contributes to a more comprehensive and accurate reconciliation process.
• Real-time Monitoring: GenAI enables continuous monitoring of transactions in real-time, allowing for immediate identification and reconciliation of discrepancies. This proactive approach ensures that financial records are always up-to-date and accurate.

The integration of generative technology into accounting processes is just the beginning. As these tools continue to evolve, we can anticipate even more innovative solutions that streamline workflows, enhance accuracy, and empower finance professionals to navigate the complexities of the modern business landscape.

Embrace technology, overcome FOBO (Fear of Being Obsolete), and let GenAI be your ally.

If you have questions or want to explore how generative technology can benefit your business, reach out to us at [email protected]

For early stage companies wanting to build their finance infrastructure reach out for best practices, insights or policy templates at [email protected]

Exciting times ahead on the FinOps Frontier!