There’s no doubt that AI adoption is here and possibly  more widespread than you would have thought.

Research from Equals Money of UK financial decision makers found that over three quarters (77%) are already actively adopting or experimenting with AI in their processes.

So, what role can AI play in your business finances? A core value of AI lies in its capacity to free up time by optimising rudimentary tasks. A lot of what the finance function does, such as reconciliation for example, is repeatable and ripe for automation. Equals Money’s research found that on average UK employees spend 65 minutes a day on automatable tasks, including day to day financial administration, totting up to a whopping 38 days a year.

AI seems to be the obvious solution to some of the productivity challenges that UK businesses are currently facing. However, there are a series of questions business leaders must ask themselves before and while adopting AI in order not only to achieve the desired performance, but to do so in a safe and conscientious manner.

Concerns and how to experiment

A lot of businesses are nervous about being the first mover because if AI adoption goes wrong then it may pose a big reputational risk. For those considering adoption, they need to have a good foundation to start with. AI can help to make a good business better, but using AI to fix core issues in a struggling business is where things can get dangerous.

You need to know your business inside and out, understand the processes most likely to benefit from automation, and have the relevant skills to measure the impact of these changes. That’s how you make AI work for you—not by expecting it to do all the heavy lifting from scratch, but by guiding it to enhance the good work you’re already doing.

In the loop, on the loop or out of the loop

When looking at a process that you believe could benefit from an AI tool, you should ask whether you want to be in the loop, on the loop or out of the loop. For initial adoptions, it’s unlikely you will want to be out of the loop, letting the AI do its own thing. Being on the loop means that the AI is allowed to operate freely but with regular reviews of the decisions it makes. Being in the loop will mean that while doing the majority of the leg work, the AI will not be able to make any active decisions, with all suggested decisions being reviewed by a human.

A financial team could use an AI tool for an intricate job like drafting policies and get a fairly credible response that is about 80% accurate. Human interpretation of that remaining 20% is vital to ensure the answer is not misconstrued. While the ROI from AI might stem from the removal of lower-level tasks, you still need experts who can scrutinise its responses to ensure credibility, especially for complex financial operations. AI will likely prove to be a fantastic asset, but I expect it to play that more supplementary role for a considerable period.

What about job security?

The concept of AI is a scary thought to a lot of people who think it’ll replace jobs, making their livelihoods obsolete. Our survey found that job security was cited by a third (33%) of respondents as a barrier to adoption. 85 per cent of businesses that have already adopted AI tools found it to have impacted workload, with almost half (46 per cent) claiming it has freed up employee capacity by reducing or eliminating certain tasks. However, 39 per cent felt that some job roles were at risk of being made redundant due to automation.

Transparency is key in managing this change. As with any large-scale change project, you need to bring people on the journey with you by reframing it as an opportunity to evolve. Finance leaders need to help communicate this shift. Doing so will help to turn what seems like a threat into an opportunity for personal and professional growth. Equally, with the right training or retraining in place, leadership teams can ensure that as many people as possible retain a meaningful role in the evolving landscape.

Embracing AI automation is crucial for finance leaders to gain a competitive edge. We must be receptive to change and treat AI adoption like any other transformative project. The real risk lies in being slow to adopt, allowing competitors to pass us by.

That’s not to say we should let AI run unchecked – it’s our job as decision-makers to ensure the correct level of oversight is applied to AI processes and that they are effectively managed. Not all processes should be automated and it’s key to understand which tasks can be given to AI, and which should be left to the experts.

Read more:
Getting AI right: How automation can help manage your business finances

In a world of struggling supply chains and unexpected economic circumstances – ensuring cash flow and profitability is a top priority for many businesses.

But shockingly, over half of businesses are still relying on manual checks for their B2B payments – meaning they don’t have a clear view on what their teams are spending and expensing. This is set to change, however as digitisation is increasingly re-shaping the way businesses keep track of their money.

One product of digitisation which has rapidly grown in popularity among corporate organisations is virtual cards.

In the following article we’ll explores 5 ways in which virtual cards could help businesses unlock their full potential.

Increased time and cost savings

Managing business payments requires meticulous tracking of invoices, follow-ups, and reconciliation, which can be time-consuming and prone to errors. Virtual card payments, on the other hand, offer automated systems that integrate seamlessly with accounting software, simplifying financial management and saving your finance and accounting teams valuable time and money.

Fortified security and fraud protection

The financial impact of fraud can be devastating to businesses, potentially leading to significant financial losses, disruption of operations, and damage to reputation. Lacking the magnetic strip and visible numbers of physical cards, virtual cards are much harder to infiltrate by unauthorised persons, offering businesses crucial protection against fraudulent activity.

Virtual card providers often also offer online management platforms where cards can be cancelled or paused instantly if suspicious activity occurs or a card is suspected as lost.  Many of these platforms also allow the cards to be un-paused or replaced from the same place. By relying on virtual cards for payments, businesses can make more secure payments and better protect their finances from the impact of fraud.

Greater visibility over spending

Constantly generating a stream of real-time data and reports, virtual cards allow you to know exactly what your teams and departments are spending and where. What’s more, virtual cards can be issued instantly, allowing employees to start spending immediately, with all expenses tracked within the same centralised platform.

By having greater visibility over your business transactions and cashflow you can work on cutting unnecessary expenditure, better budget and forecast, and in turn, focus on profitability and growth.

Empowered employees

Virtual cards can be used in a variety of ways: shared amongst members of a company for things like online subscriptions and software; created for a single use that becomes void after the purchase it was created for; or for individual transactions such as in-person purchases, attached to a specific balance. This provides clear purposes and limits for the cards, empowering employees to take payments into their own hands while making them feel engaged and valued.

Employees can request funds when they’re low or checking their PIN if they’ve forgotten it. Financial controllers can then respond to top-up requests, pause and block cards, and monitor budgets.

Improved vendor relationships

Maintaining good relations with suppliers and vendors is key to keeping a supply chain running smoothly. Through utilising virtual card payments, businesses can by-pass the issues and errors associated with manual payment and in turn improve key relationships through faster and more accurate transactions.

Virtual card payments also allow businesses to seamlessly handle both large, recurring payments in addition to one-off smaller needs allowing the versatility and flexibility needed to adapt and grow.

Read more:
Unlocking business success with virtual card payments

2024 is set to be another turbulent year for the global economy. More than 2 billion of the world’s population are heading to the polls this year to vote in crucial elections, including for new leaders in the US, EU and here in the UK. This, added to the ongoing geopolitical instability and tense relations between major players, means it’s fair to say that the next 12 months will be difficult to predict.

However, even with an unpredictable future, there’s a strategy to help reduce or eliminate risk that’s often misunderstood: currency hedging.

What is currency hedging?

Currency hedging is a strategy used to reduce the risks associated with fluctuations in exchange rates. If your business deals with multiple currencies, it exposes you to the danger of exchange rates moving against your favour, which can create a lot of unpredictability and impact the overall value of your international transactions. Currency hedging acts as a shield, protecting your business and increasing stability in these dealings.

Many might have hesitations around hedging due to a reluctance to participate in or gamble on the market. In actual fact, without hedging, you open your business up to market movements. With hedging, you mitigate the risk of either an upswing or downswing in the economy by choosing a rate and give yourself room to plan and predict cash flow.

Understanding with an example – forward contracts

Most businesses today operate internationally in one form or another, either through their supply chain or with a cross-border customer base. This often means having to be able to receive and pay out in multiple currencies.

Without any hedging, when it comes to making those payments, you’re forced into paying whatever the current exchange rate is for the currencies you are dealing with. Rates could be more favourable in future than where they are currently, but they could also become less favourable to your market. Not only will this lose your business money, but it also makes forecasting much more difficult, as you can’t be certain how much you’ll have to pay for a future purchase.

With a forward contract, you are locking in the current exchange rate for a period of time, for example for a quarter of a year or even up to two years. That way you know exactly what your outgoings are in that currency and are protected from any future drops during that time.

The benefits and potential risks

While it’s a way to protect against negative downturns, it’s important to understand both the pros and the cons.

Hedging does mean a commitment to the rate you’ve booked, regardless of how It moves after the fact. However, many find the stability and certainty of something like a forward contract outweighs the possibility of a rate moving further in your favour. Without hedging, business open themselves up to more risk, which many can’t afford in the long run.

To effectively hedge, you need to have a solid understanding or seek consultancy on your business’ particular risk exposure and tolerance. You want to put in place a strategy that aligns with your business goals, while taking into account the wider market dynamics that could impact your investments and operations.

Navigating hedging

Financial instruments and hedging are a crucial element in any toolkit to protect against the unexpected. By understanding the basics of hedging and working with knowledgeable advisors, business leaders can manage their financial risks more effectively and protect their companies from unexpected losses.

Equals Money offers a personal service with expert consultancy to help you start. We also provide a briefing every day that you can subscribe to, as a digestible way to stay on top of the market trends.

Our team is on hand to evaluate your risk appetite and talk you through your options so you can focus on your business.

Equals Money can only offer forward contracts to facilitate payments for goods and services.

Read more:
Hedging: Understanding the basics