Traditionally, business relied on statistical models and time series analyses to predict and forecast future outcomes. While these techniques are extremely valuable, it is still limited to historical data and often struggles to account for external factors.
However, the rise of artificial intelligence (AI) has given companies the opportunity to conduct thorough analysis of complex data for better financial insight.
Here are (7) seven ways in which combining artificial intelligence (AI) with predictive analytics can contribute towards financial insights if done right:
Increasing prediction accuracy is one of the primary advantages of using AI and predictive analytics. As mentioned above, traditional financial forecasting mostly depends on human intuition and historical data, both of which have limitations.
AI, on the other hand, is capable of processing huge volumes of data—far more than a person could—and identifying patterns or trends that an analyst might not see. It may take into account current data, external market trends, and even unstructured data such as sentiment from social media in addition to historical data. Using this cutting-edge tool can give your company a clearer picture of your current financial situation.
Revenue growth requires an extensive knowledge of your clients, and AI-powered predictive analytics may provide insightful data on how they behave. By using AI to your advantage, you can accurately forecast what your clients or customers need.
In fact, an article by the Harvard Business Review affirmed that AI is already helping companies understand their customers better. And many theorize that AI will soon know us better than we know ourselves. By using this tool properly, your organization can concentrate its efforts on building more value to clients and increase their loyalty over time.
Any organization can be at risk of fraud, and using AI can be highly beneficial in identifying and preventing it. Traditionally, setting guidelines based on documented fraud trends is the foundation of fraud detection techniques. However, this traditional strategy can no longer be as effective since fraudsters are always inventing new ways to get around the laws.
However, AI is able to spot irregularities and minor patterns of financial transactions that could suggest fraud. For instance, if a certain employee starts making purchases that don't align with their typical spending habits or if an invoice from a supplier is noticeably inflated, AI algorithms can flag these anomalies for further investigation.
Unlike traditional methods, AI systems can continuously learn and adapt to new fraudulent behaviors, making them more effective over time.
In our recent article, we discussed how generative AI helps CFOs improve scenario planning. Incorporating AI into your scenario planning can significantly enhance your organization's ability in various ways:
Using AI and predictive analytics together gives you a better handle on potential risks. Here are some ways it helps:
When you’re aware of risks early, you can take steps to handle them before they get out of hand:
AI and predictive analytics can also help your organization save money. By automating routine tasks like data entry and report generation, AI frees up your team to focus on more strategic activities. Plus, it helps you find areas where you may be overspending, so you can cut unnecessary costs.
With more efficient processes, you can get more done with less, which is a win for your organization.
At the end of the day, combining AI with predictive analytics helps you get better business insights and analyze vast amounts of data. With real-time dashboards and reports that offer a clear view of your company’s performance, you can make smarter and more data-oriented decisions that drive growth.
Instead of relying on gut feelings, you’ll have the data to back up your decisions, giving you the confidence to move forward with your plans.
Your organization’s success and competitive advantage depends on how you run and integrate powerful tools such as AI into your processes. By keeping tabs on the latest advances in technology and learning their practical applications, your organization can remain relevant and financially stable.
Consider D&V Philippines. We are a trusted finance and accounting outsourcing company with extensive experience and top-notch services. We can help you prepare for your accounting automation journey. Schedule a free consultation with us today to learn more about how we can help you integrate AI into your business.
You can also visit our website to learn more about how we can help you or you may also download our Business Analytics whitepaper to learn more information on how you can leverage data to drive your business forward.