How the advent of machine learning helps CFOs in their decision making

In recent years, there have been major developments in machine learning and artificial intelligence. Because of these developments, it is important to use these techniques in your organization and transfer them to your CFO. And no, you do not have to retrain your CFO to become a data scientist, but by transferring the right knowledge, everyone can make machine learning decisions. By implementing this technique, CFOs can make smarter and faster decisions. But what is machine learning? Machine learning is a method that allows you to build systems that can teach the processed data to perform better. By applying this to economic conditions, processes can be automated and decisions can be made faster.

CFOs and machine learning

A CFO is the CFO and responsible for a company’s fiscal policy. Because the CFO has insight into the entire company, he is the suitable candidate to use machine learning and digitize the company further. By using machine learning, better business decisions can be made. But how can machine learning help CFOs make decision-making?

On the average day for a CFO, they have to make hundreds and maybe thousands of choices. Their desks are full of reports and the mailbox is full every day. Unfortunately, due to too little time, a CFO can not always make the right decisions. As a result, the finance department is not properly managed and the processes in this department are outdated. Machine learning can be the solution to this! Using Machine Learning in the finance department, planning and forecasts can be made based on the historical data.

Another benefit of machine learning is that this technique can support the CFO with revisions and rules. It is possible to train computers to detect strange transactions or identify potential problems. Is there e.g. spent a large amount of a department? Then this transaction can be blocked automatically. The CFO can quickly decide whether it is legitimate.

In addition to predicting the future, machine learning allows you to perform pattern analysis in a smart way. The results of the past are studied and you let the analysis make a decision. As a business, you want to know which customers are paying on time and which customers are paying late. Based on the pattern analysis, it is determined which price and contract conditions are used for the customer, so that he pays on time. The computer determines this and the CFO does not have to make a decision.

Machine learning allows the CFO to make fewer decisions and has time for more important things. By predicting expected revenue and costs through machine learning, a company gets a better grip on profitability and can continue to grow the business.

How can CFOs and machine learning help companies in times of inflation

Last year was a record year in terms of inflation. In December 2021, inflation was 5.7%, which means that consumer goods and services were 5.7% more expensive than the year before. This large increase is mainly due to the increase in energy, which was 74.9% more expensive in December than the year before.

Image: CBS.nl

Where, for example, consumers can protect their assets by investing in tech bonds, the CFO can help a business against rising inflation. Maxim Manturov, Head of Investment Advising at Freedom Finance Europe, says: “Inflation has risen sharply due to strong consumer demand and a persistent shortage of labor and supply. While price pressure is likely to ease to 3% by 2022, many economists estimate that it is due to austerity measures on the part of the Fed. That said, investors should continue to invest in equities despite tightening policies. Equities are a good investment to fight inflation.

To offset the debt of the pandemic, households will have to deal with inflation. CFOs can protect their business by making scenario plans and ensuring that the company is well prepared for high inflation. Using machine learning creates these scenarios based on statistics and not on instinct. They can do this, for example, by increasing stocks. With machine learning, the computer can calculate whether it is useful to build up a larger warehouse and how large the warehouse should be. The computer does this by calculating what the price increase will be, the financing cost and the storage cost. Based on the decision made by machine learning, the CFO can make an easy decision.

Inflation growth will eventually stagnate and the central bank will tighten policy to curb inflation. The CFO will play an important role in the company because inflation means that important choices must be made about future investments. Due to rising prices, it is not possible to complete all planned investments.

But rising prices are not the only problem. Rising prices mean that employees also want more pay. Companies face higher production costs and staff costs. It is a waste of time to do these calculations yourself. By using machine learning, you can accurately map the expected costs.

Conclusion

When CFOs begin to automate standard processes, finance departments will be able to work more efficiently. To better predict the market, it is recommended to use machine learning. This technique helps you anticipate the market, resulting in lower costs. As a company, you greatly benefit from automation and machine learning. Start today and modernize the finance department.

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