Five ways artificial intelligence is helping small businesses succeed in 2023 [Updated for 2024]
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Fact-checked by: Bruce Sayer
Artificial intelligence is influencing every kind of human activity in 2024, including every corner of the financial world.
Consumers have embraced AI options for tax filing, money management, and more – some have even started using AI to help them make big decisions on where to put their money. Businesses, big and small, are also implementing AI to improve the accuracy of their financial planning and analysis.
The AI boom arrives as SMBs face growing pressure to find operational efficiencies as economic conditions remain uncertain and the credit market tightens.
Here are five examples of how AI is being used today to improve results for SMB’s across North America.
1. To Accelerate Bookkeeping
AI-powered accounting software can automate routine bookkeeping tasks such as data entry and categorization. This saves time and resources, reduces errors, and provides real-time financial data to inform decision-making. Here’s how it works:
- Data extraction: The software uses optical character recognition (OCR) to extract data from documents such as receipts, invoices, and bank statements. This data is then automatically entered into the accounting system, eliminating the need for manual data entry.
- Categorization: Machine learning algorithms are used to categorize transactions based on the type of expense, such as rent, supplies, or payroll.
- Bank reconciliation: AI-powered tools automatically reconcile bank statements with accounting records, identify discrepancies, and flag potential errors.
- Reporting: AI technologies can automatically generate and analyze financial reports, providing real-time insights into business performance and financial health.
- Integration: AI-powered accounting software can integrate with other financial tools and services, such as payment processors, inventory management, and tax preparation software.
2. To Enhance Financial Analysis
AI-powered financial planning tools can analyze financial data and provide accurate predictions of future financial trends. Planful, for example, uses AI to provide portfolio analysis, financial forecasting, and cash flow.
Small businesses can use this information to make informed decisions about budgeting, resource allocation, and investment strategies.
3. To Improve Supply Chain Integration
Leading consulting firms such as McKinsey have studied how artificial intelligence is already accelerating supply chains around the globe. For example, tech trailblazers such as IBM are crafting artificial intelligence systems that can predict issues in advance based on thousands of data points about both the supplier and receiver and analyze historical data to predict future problems based on past performance.
As well, AI systems can speed up tedious aspects of order fulfillment and shipping by syncing up documents and tracking data across multiple vendors, customers, and supply chain partners.
Integrated planning assisted by AI technology enables companies to balance trade-offs across functions and optimize earnings.
4. To strengthen risk management
Small businesses face the risk of unpaid debts and fraud, which can negatively impact cash flow and lead to financial instability. AI-powered tools can help small companies manage this risk by analyzing financial data to identify customers who are slow or unable to pay their invoices. In addition, companies like Fraud.net use AI to detect and prevent fraud in real time.
Here are examples of how AI powered tools can be used to strengthen risk management:
– Automatically analyze payment data: Analyzing payment data with AI tools can identify frequently late-paying customers.
– Provide risk scores: Based on the analysis, risk scores can be provided for each customer, indicating the likelihood of unpaid debts.
– Send alerts: AI tools can send alerts to small business owners when a customer’s risk score increases, allowing them to take proactive measures such as adjusting payment terms or following up with the customer.
– Provide recommendations: Recommendations can then be generated for managing the risk of unpaid debts, such as offering payment plans or incentives for early payment.
– Continuously learn and improve: AI-powered tools continuously improve their analysis based on new data, providing increasingly accurate risk assessments over time.
5. To Improve Access to Funding
AI-powered loan underwriting tools can analyze financial data to evaluate loan applications quickly and accurately.
This reduces the time and resources needed to process loan applications and improves access to capital for small businesses.
Industry-leading alternative finance companies such as eCapital use machine learning to analyze thousands of credit-related datasets to determine the creditworthiness of their customers.
Utilizing this technology provides more credit to more companies, simplifies the qualification process, and accelerates the speed of funding.
Navigating an AI Future
As AI continues to develop, small and medium-sized businesses are being offered thousands of products to automate nearly every part of their financial strategies.
Any decision to implement AI into your financial strategy should be made after extensive research and consultation. Combine innovative AI services with a sound business plan backed by reputable lending partners and trusted consultants.
Want to learn more about AI?
- Small Business Trends: Small Business Trends provides news, advice, and tips on how small businesses can use AI to improve their operations and stay competitive.
- Entrepreneur: Entrepreneur covers various topics, including AI, and provides news, trends, and advice on how small businesses can use AI to grow and succeed.
- The AI in Business Podcast: The AI in Business Podcast explores how AI is transforming business operations, featuring interviews with experts in the field and providing insights into how small businesses can use AI to improve operations.
- Technology Review: The MIT Technology Review dives into the most significant challenges and questions facing the tech world. Currently, much of its coverage focuses on artificial intelligence developments.
- AI Business: AI Business is a website that provides news, insights, and analysis on AI technologies and their applications in business.
ABOUT eCapital
Since 2006, eCapital has been on a mission to change the way small to medium sized businesses access the funding they need to reach their goals. We know that to survive and thrive, businesses need financial flexibility to quickly respond to challenges and take advantage of opportunities, all in real time. Companies today need innovation guided by experience to unlock the potential of their assets to give better, faster access to the capital they require.
We’ve answered the call and have built a team of over 600 experts in asset evaluation, batch processing, customer support and fintech solutions. Together, we have created a funding model that features rapid approvals and processing, 24/7 access to funds and the freedom to use the money wherever and whenever it’s needed. This is the future of business funding, and it’s available today, at eCapital.
eCapital Corp
eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit eCapital.com.