How AI Can Help Your Small Business Financial Management

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Some trends are here to stay, and Generative Artificial Intelligence (AI) is one of them. AI tools are finding their way into every industry. And while big businesses are quick to adopt these technologies, small businesses are often left wondering how to leverage them to their advantage. 

Let’s look at some ways generative AI can help you streamline small business operations, enhance efficiency, and boost your bottom line. 

What Is Generative AI in Finance? 

Generative AI is a subset of artificial intelligence that uses machine learning to create (or “generate”) content, be it text, images, or other types of data. Primarily, it is designed to generate new and unique content based on the patterns it learns from analyzing enormous amounts of existing data. 

In the context of small business finances, this means the ability to analyze vast amounts of financial data, identify trends, and make predictions to enhance decision-making processes. 

Right now, popular generative AI tools like ChatGPT are reshaping the way small businesses handle their finances from automating mundane tasks to providing insightful analytics.

Understanding the Small Business Landscape

Before delving into the ways generative AI can transform financial processes for small businesses, it’s imperative to understand the challenges these businesses face. 

To provide some context, nearly 20% of small businesses fail  during the first two years of being open, 45% by the fifth year, and 65% by the tenth year. While there are many causes that can lead a business to fail, financial mismanagement, undetected fraudulent activities, and the use of crude financial/accounting methods are significant contributors. Many small business owners are good at their craft, but they lack the financial education and skills to turn their craft into a thriving company.

How Generative AI Can Help Small Business Financial Management

Streamlining Operations with Generative AI

One of the most significant advantages generative AI offers small business owners is the automation of financial tasks. Traditionally, small business owners had to dedicate a considerable amount of time to manual data entry, invoice generation, and bookkeeping.

Accounting software platforms like QuickBooks and Xero use AI to automate simple, time-consuming tasks, freeing up time for entrepreneurs to focus on more strategic aspects of their business.

Improved Decision-Making through Predictive Analytics

Generative AI is not just about automation; it’s also about leveraging data for better decision-making. Small businesses can harness the power of predictive analytics to make informed financial decisions. 

By analyzing past financial data, generative AI algorithms can provide insights into future trends, helping businesses anticipate market changes and adjust their strategies accordingly.

For example, ChatGPT can help you analyze historical financial data and identify patterns and trends that enable more accurate forecasting. 

This is useful for day-to-day operations, but it’s also useful when you need to show accurate revenue forecasts in order to secure business financing.

Enhancing Customer Experiences

Generative AI can also enhance the customer experience through custom chat bots. 

For example, you can set up a chat function on your website that allows customers to learn about your products and services without tying up valuable employee time. If you’re moving from a no chat function, or a basic chat function that doesn’t use AI, the added functionality can increase customer satisfaction and lead to more sales. 

Fraud Detection and Security Measures

Most small business owners are shocked to discover the level of fraud that occurs in the marketplace (at least until it happens to them). Generative AI can enhance security measures by providing advanced fraud detection capabilities. Machine learning algorithms analyze financial transactions in real time, identifying unusual patterns that may indicate fraudulent activity or cybersecurity threats.

Over the next three years, AI-enabled financial fraud detection spending is estimated  to exceed $10 billion.

Overcoming Budget Constraints with Cost-Effective Solutions

One common misconception about AI adoption is that it’s only feasible for large enterprises with substantial budgets. However, generative AI tools tailored for small businesses are becoming increasingly cost-effective. These tools offer scalable solutions that grow with the business, making AI adoption financially viable for smaller enterprises. 

For instance, Sage Intacct is a cloud-based financial management solution that incorporates generative AI. It provides small businesses with a cost-effective alternative to traditional accounting systems, offering features like automated accounts payable and receivable, expense management, and financial reporting.

How Biz2Credit Helps Small Businesses Secure Business Funding

With AI freeing up the time you previously spent on your finances, now it’s time to focus on growing your business. And if you need financing for that–whether to purchase equipment, buy inventory, or simply expand into new markets–funding from Biz2Credit could help you.

Ajay and Arjun Sondhi, owners of Customers Kitchen and Bath, can testify to this. They faced business challenges during the pandemic but overcame them with Biz2Credit’s fast funding. 

After multiple rounds of funding from Biz2Credit for different projects, Ajay and Arjun were able to expand their business to include a new warehouse and store in New Jersey. 

What’s Next?

In a nutshell, the integration of generative AI into small business finance represents a significant leap forward in efficiency, decision-making, and customer satisfaction. And this is a leap your business should take sooner rather than later, as the marketplace is only going to become more competitive.

For more resources, discover the comprehensive suite of helpful articles curated for you. If you prefer personalized assistance in securing financing, don’t hesitate to contact us today. Let’s chart the course to financial success together!