Breaking the reactive cycle: Leveraging AI and automation in finance

Finance leaders are caught in an endless cycle of manual processes and delayed insights. Whether it’s chasing down receipts, reconciling expenses or navigating disjointed systems, the time spent on repetitive tasks leaves little room for strategic decision-making. 

According to a 2022 CFO report by DataRails, over three-quarters of responding CFOs said they have “the most manual labor-intensive role on a day-to-day basis compared to other C-level executives.”

98% of finance leaders polled in Pigment’s The State of FP&A 2024 report said they are “putting off important strategic work due to low-value tasks such as administration, data collection, or reporting.”

This manual burden on finance teams forces a reactive approach, which not only impacts efficiency but also limits the finance team’s ability to drive value across the organization.

AI and automation have potential – with caveats

Fortunately, the rapid pace of development in AI and automation have the potential to break the cycle. These tools streamline workflows, deliver real-time insights and empower finance leaders to focus on what matters most—strategy and growth. 

Yet, adoption can feel daunting. Questions about how to trust AI, including the “black box” nature of it, continue to stall progress. Oren Geshuri, Senior Manager at Deloitte, shared his view at PEX’s Chicago CFO Roundtable:

“As finance executives, we’re naturally cautious. Many of us are guardians. Guardians are meticulous and detail-oriented, and trust is a big factor for them. AI isn’t yet at a place where a finance executive can fully trust it.”

Trust is definitely a factor, and it’s definitely going to take time to learn to leverage AI in finance. But even with existing concerns about trust in AI and its uses, finance teams are still experimenting with it.

 31% of CFO’s in Coupa’s 2024 Strategic CFO survey reported that they are already using AI in their AP automation processes, and 34% said they’re planning to invest in AI for AP automation in the next 6 months. 

And organizations that adopt AI are already seeing results. Respondents in the IBM Business Value Report have reduced collections write-offs by 43% and slashed month-end close time by 33%. 

Transforming expense management with automation and AI

Finance teams play a reactive role in the majority of organizations. Managing expense reports as employees submit them. Researching fraudulent transactions after they happen. Sharing financial reports with key stakeholders upon request. And so on.

AI and automation in expense management processes help finance teams reduce the reactive burden. Instead of humans reviewing, entering, and extracting data manually, automated processes will perform these types of work.

How CFOs are using AI and automation in expense management 

Instantaneous data syncing

One of the most onerous finance tasks is syncing expense data with accounting software. In order to keep financial data up-to-date, finance staff have to frequently download expense data and then upload it manually to their accounting platform. It’s a slow, error-prone process – but it’s required to close the books.  

Expense management automation enables the continuous syncing of expense data with accounting software. Finance staff can set up an integration between an automated expense management solution and their accounting software, and then configure it to meet their needs. 

As transactions and expense data flow into the system, they are synced with accounting in real time. Finance teams get an accurate picture of spending and can make financial decisions with confidence.

Capturing receipts

One of the biggest time-sucks of expense management is recording and validating receipts. Using Optical Character Recognition (OCR), AI-enabled expense management tools are able to scan images like receipts, extract the necessary text and match the receipt details to existing receipt categories. Over time, these tools learn from the data they ingest – increasing the accuracy of expense data.

Classifying expenses

Another cumbersome expense management task is matching each expense to the appropriate GL code. It’s absolutely necessary for the business to understand spending patterns and track accordingly, but doing it manually is slow and error-prone. 

Expense management automation allows companies to categorize merchants ahead of time and automatically apply GL codes to those purchases. For example, a booth at a tradeshow would be tagged as a marketing and advertising expense GL code. Any new merchants without assigned GL codes could be flagged for review and/or use AI to suggest appropriate codes.

Detecting fraud

Unfortunately, finance teams usually find out about fraud after it’s too late. But with AI and automation advancements, they can catch it in real-time – or prevent it from happening.

Because AI records expenses in real time, it’s much easier to expose fraudulent purchases as they happen. But that’s not all: AI can learn the company’s spending patterns over time. When the system detects spending that is out of sync with the company, department or employee’s spending habits, it alerts users so they can take action.

Just like pre-programmed GL codes, expense management automation allows for pre-programmed spending rules. These rules enable employee spending with guardrails. For example, production staff can make purchases in New York only (not New Jersey) because they get a tax write-off. Salespeople can buy gas at service stations but not food and drink. Automated expense management solutions help employees comply with expense policies without having to think about it.

Automating approvals

Another manual lift in expense management is getting approval from an employee’s manager. It’s a necessary step in the process, but it’s frequently low on the priority list for managers. 

Similar to spending rules, expense management automation can lift the burden of manager approval and reserve judgement for exceptions only. Finance teams can create approval workflows that automatically deliver expense reports to the appropriate manager. The marketing manager’s charges for a booth at a conference, for example, will be automatically sent to the VP of marketing for approval – before anything is submitted to finance.  

Finance teams can also set approval thresholds so managers only need to review expenses above a certain amount. For example, any SaaS subscriptions below $25 per month could be automatically approved, where higher charges need review by a manager.

PEX’s AI and automation features eliminate reactive tasks

The PEX platform leverages AI and automation to stop the manual, reactive cycle of expense management. Finance teams are finally free to be proactive, making strategic recommendations for the organization based on real-time financial data.

First Baptist Church of Argyle saved 5 hours per month on receipt chasing and manual expense processing with the PEX platform. That time savings allowed Justin Schuff, Deacon and Treasurer, to focus on tracking budgetary spending and controlling the church’s expenditures.

Wheelhouse Group saved 4 hours per month on reconciliation work through PEX’s integration with their accounting partner, GreenSlate. With reconciliation done, Wheelhouse was able to close the books on time each month and program spend controls to keep spending in scope.

Using automation and AI, PEX does the following:

• Matches data from card transactions to employee receipts
• Categorizes expenses and assigns them to the correct GL codes
• Declines any transactions outside an employee’s prescribed spending rules
• Sends expense approvals to managers through an automated framework
• Integrates expense data seamlessly with ERPs like NetSuite and Quickbooks

 PEX’s AI and automation features can help reduce your organization’s manual workload. Contact us for a customized demo of the platform. We’ll show you how PEX can make your finance team more efficient.