Technology & Innovation

Generative AI tools for SaaS finance: a CFO’s guide

Optimize your SaaS finance operations with generative AI tools. Our guide provides insights into the best AI tools available.

Today’s SaaS industry moves FAST, and it’s only getting faster. This means that SaaS CFOs need to leverage the latest technologies to stay ahead of the competition or risk falling behind at an ever-increasing pace. 

And right now, the cutting edge of SaaS finance innovation is generative AI (GenAI). 

For this post, we’ll be 1) Taking a look at what GenAI is and how it works, 2) Exploring the role of GenAI in SaaS finance and how it can overcome the challenges of legacy accounting, 3) Examining some profitable use cases of GenAI for SaaS CFOs.

Let’s get going. 

Understanding GenAI

GenAI, a technology that allows software to create new content and generate data, is revolutionizing SaaS finance and accounting. By utilizing algorithms to analyze patterns and generate fresh content, generative AI can automate a huge array of financial tasks and improve efficiency for CFOs and finance teams.

By analyzing your accounting data, AI models in cloud accounting software can learn the operative patterns in your organization’s datasets and use them to generate financial predictions and reports, keep your company safe from fraud, and much more.

How does GenAI work?

GenAI operates by training large language models (LLMs) on extensive datasets to rapidly learn patterns and generate novel content. It accomplishes this through deep learning capabilities and neural networks that mimic the human brain, allowing it to produce humanlike outputs.

Unsupervised learning methods can be employed to train GenAI models. Unsupervised learning enables software to learn from your accounting data and generate appropriate outputs without human intervention. The content your system generates can then be further refined and improved through iterative training.

This represents massive time savings, freeing you and your team up for the meaningful strategic work that truly moves the needle at your company. 

Keep this in mind as we progress through the rest of this guide: GenAI (and AI more broadly) is here to stay. But it’s here to make humans more effective, allowing us to focus on our unique strengths. It’s not here to replace us.

The evolution of GenAI

GenAI has come a long way in its evolution. Initially, it relied on rule-based systems, but deep learning models have taken center stage thanks to steady advancements in ML technologies. These models have significantly improved the quality and diversity of the content that AI tools can create.

The field of generative AI continues to grow, with researchers constantly exploring new techniques and algorithms to push the boundaries of what’s possible. But for now, let’s explore what GenAI tools can do for SaaS finance–it’s pretty impressive.

The role of GenAI in SaaS finance

GenAI plays a crucial role in streamlining finance and accounting processes in the SaaS industry. It automates routine and mundane tasks, allowing finance teams to focus on strategic initiatives like churn reduction and pricing optimization.

GenAI is helping SaaS CFOs effortlessly create all kinds of content and data, such as:

  • Financial reports
  • Role-based dashboards
  • Low-variance forecast models
  • Detailed capitalization tables and much more

The age of handling all of those tasks manually is over. Or at least it should be if you want to keep up with your competitors who have put manual accounting behind them. Let’s see why CFOs are increasingly opting for accounting automation.

The challenges of legacy accounting: compliance, risk management, and more

Traditional finance methods pose several challenges in the context of SaaS finance. Manual processes are time-consuming, prone to errors, and less secure than cloud-based systems. Also, the lack of integration and analytics around SaaS metrics can be detrimental to your financial visibility.

Additionally, legacy accounting departments may not be equipped to handle the complexities of subscription SaaS business models. SaaS billing has grown increasingly nuanced to keep pace with the flexibility and innovation that users demand. Billing models like feature tiers or usage billing are often too complex to handle manually at scale.

Not to mention the stringent regulatory requirements of ASC 606. Handling this multi-layered legislation is not easily achieved with legacy systems.

ASC 606 data for a SaaS company.

Additionally, for SaaS companies, forecasting and revenue recognition become particularly challenging without the use of AI tools. By relying on traditional accounting methods, SaaS companies put themselves at a serious disadvantage in the fight to win their market.

Now that you’ve got some context on GenAI in SaaS accounting, let’s dive into some use cases.

Profitable GenAI use cases for SaaS finance

Below we cover some of the highest-value use cases of GenAI for SaaS accounting leaders. These are great ways to leverage this new technology to boost your company’s success.

Streamlined financial reporting with analytics to boost cash flow

Financial reporting is the backbone of your forecasting, budgeting, and pricing decisions, to name only a few pivotal areas it impacts.

GenAI can instantly create accurate and highly readable reports incorporating financial storytelling techniques and data visualization. After all, your reporting will always be more useful when you tell a story with your data rather than just cutting and pasting it.

As you know, there’s a lot involved in financial reporting. GenAI can help you create:

Deferred revenue data for a SaaS company.
  • Billing and payment analysis dashboards
  • Fully integrated SaaS metrics and KPI dashboards

Reporting is at the heart of your department. The profitability of your FP&A will only be as high as the quality of your financial reporting, which is why GenAI is a wise investment.

Dynamic ML forecast models for enhanced FP&A

One of the best things about GenAI is that it can create dynamic forecast models. This means that your models will shift in real time to reflect the changes that occur in your datasets. This is an extremely powerful benefit over traditional forecast methods.

In contrast to legacy forecasts, where every external change has to be updated manually, automated forecasting is a continuous and dynamic process. This enables you to spot and capitalize on trends much faster than your manual competitors.

Automated forecast data for a SaaS company.

Accounting regulations stipulate that companies creating financial models with ML keep detailed process and assumption records. In other words, what processes did you follow when creating your models, and what assumptions informed those decisions?

Cloud accounting software automatically creates and backs up those records for you, supplying total peace of mind if you get audited.

Simplified multi-entity accounting

With international SaaS M&A activity growing more common, CFOs are increasingly running into the limits of legacy accounting methods for multi-entity operations.

Multi-entity accounting, or consolidation accounting, is a complex process that involves unifying your organization’s separate financial statements. It’s usually done to make that information more digestible for key stakeholders and shareholders. Cloud accounting has revolutionized the process.

Accounting software with GenAI can create accurate multi-entity financial statements, no matter how complex your corporate structure might be. And with the ability to instantly switch between currencies, you can do business from anywhere.

Equally crucial is the presence of a strong control architecture. Multi-entity accounting frequently requires following complicated approval chains. Accounting automation streamlines the approval process to prevent a potentially serious financial mistake from occurring.

Implementing GenAI tools in your SaaS finance operations

To fully harness the benefits of GenAI in your accounting department, it’s essential to take a mindful approach to adopting these tools. Slow down and think strategically so you get it right the first time around. 

Below we cover four critical steps to help you maximize your success when adopting GenAI for SaaS finance.

Step 1: Defining your goals for AI tools

Start by identifying the specific tasks you want to automate. Determine the necessary data sources that you’ll use to train your accounting software on those processes and the metrics you’ll use to measure success.

Also, make sure you spend adequate time addressing the issue with stakeholders and explaining how GenAI will benefit them by supplying critical real-time data for their departments.

Step 2: Training your team on your SaaS accounting software

Providing comprehensive training and resources will enable your team members to effectively use the AI accounting tool you’ve selected. 

If you choose a reputable software vendor, they’ll provide training sessions for your team and ongoing rollout support to get you up and running.

Step 3: Monitoring the implementation process

Regularly monitoring the performance of GenAI tools and adjusting accordingly is key to achieving a successful long-term implementation. 

Collecting feedback from your team will help identify areas for improvement during the initial implementation process.

It really is worthwhile to gather as much team feedback during the rollout as you can. Issues that aren’t resolved in the opening phases will carry over and impede your success with these tools. 

Step 4: Analyzing your results and making ongoing adjustments

Analyzing the data generated by your AI tool and comparing it to your financial goals is crucial. 

Look for patterns or trends in your data that may require adjustments to your strategy. Remember, GenAI isn’t there to solve all your problems and handle your financial strategizing. It’s not capable of doing that.

What it does extremely well, however, is generate accurate data to inform and guide your decisions, and help you meticulously track cash coming in and going out.  

Understanding that will help you keep things in the proper perspective as you implement these tools. 

Embrace a better way forward

Innovation is a critically important business principle in any industry. 

But in the breakneck SaaS sector, technological innovation is a prerequisite to winning your market. GenAI’s opportunities for maximizing cash flow and optimizing your accounting operations are simply too significant to pass up.

If you’re ready to see what AI accounting software can do for your department, check out our Sage Intact AP automation product demo tour. No more printing, stuffing envelopes, or shuffling invoices around for approval.

Sage Intacct AP Automation product demo

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