“FP&A Leaders should take into account the maturity and needs of their own finance organization because the applicability may vary across organizations and industries,” said McDonald. “These use cases are commonly implemented and effective, but the most valuable use cases exploit a company's unique strengths and allow it to further differentiate itself.”
To clarify the use cases, Gartner experts provided more detailed definitions.
- Demand / Revenue Forecasting: Using both internal and external sources of data, models predict demand and associated revenue across a variety of dimensions including business unit, product line, SKU, customer type and region.
- Anomaly and Error Detection: Anomaly detection uses a series of machine learning (ML) models to highlight transactions or balances that are in error or potentially violate accounting principles or policies. A comprehensive solution will also include real-time analysis during data entry preventing errors from entering the workflow and avoiding costly downstream corrections.
- Decision Support: ML prediction algorithms designed to predict outcomes based on current data are used to predict outcomes when alternative data values are used. Using models with hypothetical data predicts the result of alternate decisions.
- POC Revenue Forecasting: Or POC accounting, ML models forecast the percentage-of-completion metrics (e.g., hours, cost, units, weight, etc.) to predict POC revenue and the total completion effort remaining.
- Cash Collections: ML models are used to forecast when customers will pay invoices triggering proactive collection efforts before payments are past due. Using the predictions from these models, collections staff focus their efforts on at-risk accounts. Forecast cash collections also contribute to overall ML-driven cashflow forecasting.
"Forecasting is a popular use case in finance departments because legacy processes are manually intensive and notoriously unreliable. AI excels at automation and improving accuracy.” said McDonald. "Many pre-configured software packages address common finance processes such as accounts receivable and accounts payable but be aware that use cases which address unique business needs, such as forecasting, will require some internal skills to build."