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The Smarter Startup

Two Paths Forward: AI in Startup Finance

Back office solutions and decision support solutions will both be natural beneficiaries of AI’s core promise.

As we’ve followed developments in AI, particularly those around startup finance, we’ve become increasingly convinced two related but distinct sub-groups are emerging: Back Office solutions and Decision Support solutions. Both will be natural beneficiaries of AI’s core promise, even if many first-generation products remain more “A” than “I” at the moment. In fact, we see a lot of parallels between the dawn of AI and the initial phase of internet development more than twenty years ago. Like the early days of the internet, AI currently means different things to different people, it is beginning to evolve into multiple subsectors with multiple use cases, and the full measure of what will ultimately be revolutionized is still coming into focus.

Back Office AI Solutions

For us, the first group, back office solutions, will focus on the speed, accuracy, and efficiency of finance mechanics. These are the repetitive, data-entry-heavy accounting-oriented tasks that happen in the background at companies, often unheralded and unnoticed and usually at risk of human error. Items such as:

  • Task Automation
  • Information processing
  • Quality assurance
  • Query response
  • Data and trend analysis

AI Decision Support Tools

Meanwhile, the second group, Decision Support tools, are those that will utilize ALL sources of information and data, some of which are processed and analyzed by AI and some by people, to assist senior executives in making sound, informed, more complete strategic decisions more rapidly. These include:

  • Scenario planning
  • Input testing
  • Rapid modeling
  • Identification of patterns, anomalies, and associations
  • Risk management

To us, the former subgroup is the domain of the accounting and controllership team, and the latter is that of the CFO. We’ve written recently about our premise that AI-driven decision support tools will elevate, not replace, the CFO. In fact, we believe AI pulls the CFO out of the number-crunching business and increasingly places them at the nexus of strategic finance, accounting, data interpretation, and predictive modeling. In turn, this moves the role, particularly within venture-backed startups, to where the full value of an experienced CFO can be realized.

AI pulls the CFO out of the number-crunching business and increasingly places them at the nexus of strategic finance, accounting, data interpretation and predictive modeling.

As we noted earlier, the two groups are developing rapidly but questions abound. Accordingly, we’ve approached AI applications in startup finance with a healthy dose of cynicism. Since the beginning of this year, we’ve reviewed dozens of applications to determine if they were REALLY using AI or were just machine language/big-data routines dressed up as AI. At the same time, we’ve been adamant that only when we were truly utilizing actual AI in the provision of fractional finance support to our clients would we include it in our marketing and client communications.

Burkland AI Suite

Thankfully, we’ve found several legitimate AI applications that help our clients and our staff alike process and analyze enormous amounts of information faster and more accurately. We’ve named this core group of applications the inaugural Burkland AI Suite, and they’re just the beginning of what will be multiple generations of such tools.

We’ve named this core group of applications the inaugural Burkland AI Suite, and they’re just the beginning of what will be multiple generations of such tools.

Within the Burkland AI Suite, we’ve embraced first-generation tools that perform internal quality assurance not only for relatively simple things like audit compliance, coding bank feeds, and processing AR, but also for complex tasks like proper SaaS revenue recognition under ASC 606 and the correct inclusion of expenses in a company’s Cost of Goods Sold. We have also added tools to instantly provide dashboard metrics for certain clients, along with variance analysis at the click of a button.

On the CFO side, other elements of the Burkland AI Suite function as an early-warning system for both our team and clients. Flagging material departures from established norms, like an inconsistent invoice amount to a longstanding vendor or a change in banking coordinates, help protect against human error and fraud at the same time. Others can quickly provide – at the click of a button – input-driven scenario plans, FP&A dashboards, trend insights, and variances in comparative financials that save loads of time and considerably increase the situational awareness of our personnel and, by extension, our clients. This allows the CFO to maximize time strategizing with senior management and not worrying about building such early warning systems from scratch. Finally, we’ve added an AI-powered knowledgebase tool, allowing our CFOs to seamlessly query Burkland’s CFO Library housing extensive templates, best practices, and case studies going back more than a decade and spanning hundreds of clients.

If the past is prologue, this initial suite of AI tools will evolve and change as the technology matures. We can’t wait – the application of AI technology in startup finance will allow for faster and more accurate delivery of financial information and strategy to founders and investors, which is the core goal of any finance team. We’re excited to be on the forefront of this revolution, and continue to serve our core purpose to Accelerate Dreams.