Artificial Intelligence (AI) has been disrupting various industries, and the financial sector is no exception. Previously, only large financial institutions could justify the development costs, harness big data, and capitalize on new technology. However, recent advancements in Generative AI now empower entrepreneurs and small business owners to automate operations, reduce costs, and accelerate growth. Innovative solutions like ChatGPT, Jesper AI, and Copy AI have already made a significant impact on marketing efforts. The transformation of financial management may take more time, but it's well on its way. In this blog post, we'll explore how AI will change financial management for entrepreneurs, from automating routine tasks and saving time to optimizing taxes and cutting costs.
I. Automating Financial Tasks
One of the primary advantages of AI in finance is its ability to automate tasks while maintaining a high degree of personalization. Without human intervention, AI-driven tools can execute various financial tasks, such as invoicing, bookkeeping, and expense tracking. This saves entrepreneurs hours of work and minimizes the risk of human error. Here's a list of tasks that AI is expected to automate, although we anticipate discovering unexpected use cases for AI as well:
Creating fully personalized and compliant invoices from short prompts or existing email threads;
Following up on unpaid invoices;
Parsing paper/PDF-based invoices and checks;
Managing bookkeeping and expenses, including invoice reconciliation;
Calculating income, sales, trade, social, and employee taxes;
Keeping track of the reporting timelines, latest tax code changes, local subsidies, and new reporting requirements;
Generating completed tax forms.
This automation will allow entrepreneurs to focus on more critical aspects of their business while AI will handle repetitive and mundane tasks.
II. Enhancing Financial Analysis
AI-driven financial analysis tools can process vast amounts of data, identifying trends, patterns, and anomalies. This advanced data analysis enables entrepreneurs to make informed decisions based on real-time insights. These tools can also generate financial forecasts, evaluate investment opportunities, and assess risk factors, empowering entrepreneurs to make strategic decisions that drive growth and profitability. Additionally, they can detect expense categories spiraling out of control or outlier costs deviating from historical patterns.
III. Streamlining Decision-making Processes
AI-driven financial management tools provide accurate, real-time data and insights, helping entrepreneurs make better decisions. AI can analyze various factors, including a specific business's historical financial performance, market trends, customer behavior, and competitor performance, to offer actionable recommendations. This enables entrepreneurs to make more informed decisions, improving financial performance and fostering business growth.
IV. Identifying Financing Opportunities
Different business lines are often at various stages of maturity and require diverse financing options. AI can analyze financial performance to find the ideal financing options for each independent business line, whether it's a credit line for acquiring costly equipment, invoice-based financing to avoid cash flow gaps, or a revolving line of credit for a low-cost, high-impact marketing channel.
V. Facilitating Regulatory Compliance
Compliance can be time-consuming and expensive, especially for businesses operating in heavily regulated industries. AI-driven regulatory compliance tools can help entrepreneurs stay current with the latest regulations, streamline reporting processes, and ensure their businesses remain compliant. This mitigates the risk of fines and penalties and helps maintain a positive brand image.
Vision for the future
Artificial Intelligence will revolutionize financial management for entrepreneurs. By automating routine tasks, identifying new opportunities, and streamlining decision-making processes, AI will allow entrepreneurs to concentrate on strategic growth initiatives and drive business success. As AI continues to advance, its impact on financial management is expected to deepen, making it crucial for entrepreneurs to leverage these cutting-edge technologies.
At Norman, our mission is to unlock more time and energy for entrepreneurs. We envision an AI financial co-pilot for entrepreneurs, managing finances autonomously. To achieve this, we address the challenges businesses face, not just the available technology. We tackle specific tasks (or, as product managers like to call them, "Jobs to be Done") and continually expand our range of services. Our founder would love to hear about your biggest financial management struggles. Feel free to reach out directly to peter at norman dot finance.