Amid rising inflation and rumblings of an impending recession, businesses of all sizes are working hard to stay on top of all aspects of business planning, especially their cash flow forecasting. While the initial reaction of finance leaders might be to cut back on technology spending, now is the time to make technology investments that enable more accurate and timely forecasts and that automate repetitive, manual accounting workflows. Small business leaders in particular need more time to focus on running their business and they need the confidence to make important decisions without fear they’re acting on bad information. As an added incentive to automate, the labor shortage makes it increasingly impractical to stick with manual processes.
The good news is AI and other emerging technologies previously only available to large enterprises are now available, affordable, and accessible for even the smallest businesses.
What are the ways financial professionals can leverage AI, automation, and predictive analytics tools to increase efficiency and build resilience in today’s volatile market?
Start with predictive analytics for cash flow management
At the heart of every successful small business is strong cash flow management. Automated cash flow forecasting software is a critical tool for SMBs to grow their businesses. By leveraging predictive analytics, cash flow forecasting software can quickly create three-way financial forecasts (profit and loss, balance sheet, and cash flow) and even allows finance leaders to see how business decisions will impact future performance. This forecasting is based upon a deep analysis of a business’s data, including historical trends, invoices, bills, cash on hand, and payment data. The real magic happens when forecasting software incorporates macro business trends, like shifting patterns in time to pay or the impact of inflation on prices to create forecasts that adapt to changing economies. Ultimately, these capabilities empower SMBs to make more confident and timely decisions.
Leverage AI to automate workflows
By automating finance workflows, finance leaders and business owners reduce expenses and reclaim time better spent on what really matters – running the business. They not only save time and money, but they also gain greater confidence that their data is accurate and their workflows are protected against fraud. Add to the list constantly shifting tax and payroll compliance requirements – accounting workflow automation solutions both automate the work and adapt to the changes. The good news is finance leaders don’t need AI specialists or degrees in data science to tap into the power of AI. New workflow automation technology incorporates AI seamlessly, hiding all the complexity from users.
Overcome the resistance to change
A sense of resistance or fear naturally arises when businesses discuss digital transformation. While it can be challenging for humans to let technology do the job they’ve been responsible for in the past, automating repetitive work through software frees up employees for higher-value tasks and gives them more time to focus on strategic work. This shift to higher-value tasks is especially imperative in a tight labor market where hiring staff to do manual workflows has become increasingly difficult. The average cost for a small business to hire a new employee is nearly $8,000, and actually hiring a new employee is increasingly difficult. In the US labor market, there are over 10 million job openings, but only around 6 million unemployed Americans.
The prize for small businesses when they adopt predictive analytics and AI-powered workflow automation will be a better response to rising inflation and a smoother ride through the potential recession.
It’s still early; most small businesses have yet to fully embrace digital transformation. But, solutions are available, accessible, and more affordable than ever. AI and predictive analytics will only continue to evolve and prove more advantageous for SMBs over the next five years. The small businesses that embrace these emerging technologies will have the smoothest ride through these uncertain times and will come out the strongest on the other side.
Aaron Harris is the CTO at Sage. Harris has more than 25 years of high-tech engineering experience in business applications and software development strategies.
AI stock image by metamorworks/Shutterstock
