Many companies are considering artificial intelligence transformation (AX). However, it is often understood merely as 'trying out AI tools' or 'automating tasks with AI.' Yet, automation and AX are different. While automation involves replacing a few steps in existing workflows with machines, AX starts with the question, 'If AI can do this, how would we design the task from the beginning?' It fundamentally rethinks the way work is done.
The first question when considering AX is usually, 'How many people can we reduce?' However, starting with this question in a finance organization often leads to disappointment, as the savings are usually less than expected. While cost reduction improves immediate profits, changing the financial structure lays the groundwork for a company to handle more business and transactions in the future. AX in finance is an investment in the latter.
As a company grows, the flow of money in and out increases. New sales channels emerge, fee structures diversify, and the number of partners and countries to settle with expands. While this presents opportunities for business departments, it creates entirely different challenges for finance teams.
With each new flow, finance professionals must first understand what the incoming data signifies. They need to interpret which items are costs, which are pure revenues, and the basis for the aggregated figures. Then, they must convert this data to align with the company's closing standards, track discrepancies, and prepare documentation to substantiate the numbers for audits.
Most of this process is done manually in Excel. Therefore, as transactions increase, Excel quickly reaches its limits. Files become cumbersome, and formulas break, forcing tasks that were once handled in one go to be divided into smaller, more frequent repetitions. This does not make the work itself more difficult; rather, it creates a structure where the same tasks must be repeated more often.
The result manifests in two ways. Labor costs continue to rise, but there are not enough people to manage the workload. This is one reason for the high turnover in finance teams. The problem is that the criteria for closing and handling exceptions are often not documented but reside in the minds of the individuals. When one person leaves, the next must start from scratch. As experience does not accumulate within the organization, even with continuous hiring, the team's processing capacity does not improve.
Despite constant job openings in finance, many companies find that the scope of manageable work has not significantly changed from years ago. Ultimately, the issue is not a lack of personnel but a structure where the team's capabilities revert to square one each time a person changes.
More significant than the loss of personnel is the additional burden placed on a team already at its limit with closing tasks. Consequently, finance organizations often adopt a defensive stance when considering new channels or business models. This is not due to conservatism; rather, it is a rational decision to avoid taking on unmanageable tasks. However, the cost of missed business opportunities and delayed market entry remains.
Consider two companies with the same revenue size. One can respond to new opportunities within a month, while the other takes two quarters. While today's profit and loss statements may look similar, such differences, if repeated, will inevitably lead to different valuations for the two companies three years down the line. The speed at which a company can embrace new channels, businesses, and markets is crucial to its growth potential, and one of the foundations supporting this is its financial structure.
This is where financial AX makes a difference. It is not about reducing headcount but transforming the finance organization from a department that evaluates growth to one that supports it. When new business opportunities arise, instead of slowing down due to the burden of finance tasks, the structure should enable existing personnel to manage the increasing business and workload. The time spent on reconciling numbers should shift to profitability analysis and risk assessment.
One caveat: aiming for complete automation in finance is risky. A single error can lead to a loss of trust. The goal of well-designed financial AX is not 100% automation but accurately distinguishing what requires human verification from what does not. Identifying the 5% that needs attention is far more robust than attempting to automate everything and risking credibility.
One question I would pose to executives is this: When new opportunities are discussed, what expression does our finance team wear? If it is one of burden rather than welcome, it indicates that the financial structure is already determining the pace of growth. Now is the time to view the finance team's AX as an investment in enhancing the company's growth capabilities.
* This article has been translated by AI.
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