3 ways your business finances will be transformed by AIJan 18, 2023
Everyone is talking about ChatGPT, the latest creation from OpenAI.
They say it's going to change the world.
Maybe. But what you care about is will it change your business?
Today we talk about:
how AI will impact your business finances
what you need to do about it
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3 ways your business finances will be transformed by AI
Once upon a time, in a land far, far away, there was a young accountant named Bob. Bob loved his job, but there was one thing he hated more than anything else: data entry. Every day, he would spend hours upon hours typing in numbers, separating receipts, and making sure everything was in the right place. It was tedious, time-consuming, and quite frankly, a real snooze-fest. Little did Bob know, his life was about to change forever.
You see, in this land, a new technology had emerged: Artificial Intelligence. And with it, three major changes were about to take place in the world of accounting.
Goodbye Data Entry, Hello Automation
Thanks to AI-powered systems, Bob's days of data entry were a thing of the past. Imagine a robot butler, who would take care of all the tedious tasks for him. This robot butler would read receipts, extract the important information, and even sort it into the right categories. Bob was over the moon, he could finally put his feet up and let the robot do the work for him.
A Crystal Ball for Financial Forecasting
Bob's boss, the head accountant, was always asking him to predict the future. "Bob, I need you to tell me how much money we'll make next quarter" he would say. Bob would spend hours pouring over past performance, trying to make sense of it all. But with the help of AI, Bob could now make accurate predictions with ease. It was like having a crystal ball that could see into the future. Bob's boss was impressed and Bob was happy, he could finally get back to doing what he loved most, crunching numbers.
Fraud Detection, The Superhero Way
Bob's final nemesis was fraud. Every month, he would spend hours trying to identify any discrepancies or suspicious activity in the company's finances. But with the help of AI, Bob became a superhero in the fight against fraud. AI-powered systems would scan through all the financial data, looking for any red flags, and providing Bob with a list of suspects. Bob would then swoop in and make the arrest, saving the day once again.
These changes brought about by AI in the accounting world may sound too good to be true, but trust me, they are not. AI is revolutionizing the way accountants work, making their jobs more efficient and less tedious. It's like having a trusty sidekick that can do all the heavy lifting for you.
Of course, as with any new technology, there are challenges to be faced. The threat of job loss and the need for ongoing training and education are just a couple of examples. But as Bob's story shows, the benefits of AI in accounting far outweigh the challenges. So, if you're an accountant like Bob, don't be afraid of the robot uprising, embrace it and watch as your job becomes more enjoyable and fulfilling.
Now, do you trust me? Yes? Well… I’m sorry.
The above story and 3 points were written by AI. more specifically, by ChatGPT.
I prompted it with the below input and that was the first output it gave me.
Pretty good, eh?
Some of these things are already coming to be. Software like Bill.com, Expensify, and many more are already able to extract data from receipts/paper.
Software is already able to create really good forecasts.
Fraud detection is already being done by programs, especially in big business.
As I reflected on this topic, I had to think: what AI application will have the biggest impact on the small to medium business workforce in the next 5 years?
Here are 3 predictions and things to look for:
Accurate automated account coding
There are a lot of tools out there that automatically code transactions that come in. But, very few do it well for small business.
They often code based-on vendor alone, which means that any special cases get code wrong.
With AI’s power increasing exponentially, there will soon be the ability to combine different sources:
invoice and receipt details (scanned in by the user)
previous coding history
We’re really close to new AI automation in this area that will transform small businesses.
Imagine a world where you scan in a budget (with details like vendors, line-item details, and responsible parties) and then AI matches incoming expenses to these budget lines.
Quickly customizable forecasting
Most automatic forecasting tools today are a great starting point, but not good enough for a final output.
As forecasting becomes more granular, it will not only become more accurate, but it’ll highlight insights “us humans” might miss.
There is also the ability to make forecasting more interactive.
Imagine you’re in a leadership meeting and sales tells you they’ve added a big customer. With an interactive forecast, you could click on the face of the chart and add new data points (see the animation below).
AI could take into account all the variables that new data point would change and update it on the spot.
What about a recession? Revenue drops off the cliff, but expenses only go down by the change in COGS. Not until you cut your expenses do you get back to profitability.
Eventually, I could see these forecasts making suggestions on the actions to take, but we’re a long way off from that.
Better trend analysis
As AI gets more detailed and can "dig into the data," it's going to be very good at identifying trends.
It's easy to miss trends as they start, but AI will help you and your team uncover them more quickly.
I can see the day when a weekly report is automatically generated that says:
"Sales velocity on product A has gone down by 1.2% from last year. Based on the previous 5 years + previous 5 weeks data, we expect sales to decrease by 5% over then next 5-8 weeks."
Sure, humans will have to confirm. But, it'll give you insights before you could previously have gotten insights.
I believe AI is going to change the world, but I also believe more will stay the same than we think.
AI will replace jobs, but likely less than we think.
I do believe we’ll see significant disruption to the workplace and that many jobs will be changed (but not eliminated).
Times like these can be scary, but they also present opportunities.
Those who choose to embrace the new technology will thrive and those who don’t will have a more uncertain future.
I don’t know what that is and don’t want to fearmonger. But I do believe it’s really important we pay attention and adapt.
I started thinking about writing this more than a month ago and have just let it simmer. Partly because I wanted to think it through, but also because I wanted it to be actionable.
Despite that, I don’t think I’ve gotten quite there yet. Next week, I’ll dive into some more changes I see coming, as well as provide some advice for how to approach this emerging technology.
In case you missed it last week, I’m hosting a cohort with 2 friends called the Twitter Growth Community. Starting February 3rd, we’ll be teaching a class of 100+ how to build their profile, write viral content, and monetize their account. Use the code KURTIS100 to get $100 off!
Ali Abdaal is a Youtuber in the productivity space who went to school to be a doctor but eventually transitioned to full-time creator. Recently he released a video about how he made his money and it's really interesting. For those creating in any way, it's worth a watch.
With new AI tools like ChatGPT, schools are worried about students and cheating. The New York Times wrote about this and it’s a pretty good read. Check it out here.
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See you next week,