With today’s high cost of capital, finance chiefs need to make effective decisions about where to spend their organizations’ funds for best use — during a time when many are also struggling with antiquated technologies and processes in their own finance functions.

Though generative AI could represent a promising way to upgrade those processes, there’s currently “a lot of smoke” but “not a ton of fire,” with the technology, said Matt Cotter, CEO of AP automation software provider Pairsoft.

“I think for a CFO, the challenge is kind of two or three fold when it comes specifically to spending on generative AI technologies in a business to business world inside the office of the CFO,” he said in an interview.

Jumping the AI hoops

While the conversation around GenAI continues, many organizations have failed to implement it at scale, with over half of AI-related digital transformation projects still in the experimentation phase, CFO Dive reported citing data from McKinsey.

The slow uptake by the finance function — just one in five CFOs reported using GenAI tools, McKinsey found — comes as finance chiefs face a tough balancing act when it comes to determining where to allocate their organization’s resources, especially given ongoing macroeconomic headwinds.

The first hurdle an organization needs to jump over when it comes to GenAI projects is convincing the CFO of the worthiness of spending that money — a hard bar to clear given today’s high interest rates and cost of capital, Cotter said.  

Secondly, CFOs need to be convinced there’s a clear business case for the technology, which, with GenAI still in its early phases, can be difficult to identify. Lastly, once the CFO is convinced, “then, somebody's got to come to me,” Cotter said. “And I'm like every other CEO in the world right now, the default answer…is no.”

Cotter has served as CEO for the Miami, Florida-based Pairsoft — a provider of financial automation services including procure-to-pay, fundraising, and document management solutions — for three years, according to his LinkedIn profile. Prior to Pairsoft, he served as an executive vice president for Toronto-based Altus Group, an asset and fund intelligence provider for commercial real estate, and has also held executive roles at ExactBid, D+H and SAP.

Looking towards generative AI and other emerging technologies comes as organizations are rethinking their approaches to the overall finance function, he said. Historically within the finance function, processes such as procurement, accounts payable and invoicing were siloed, but one of the things Cotter is seeing play out in the market is “viewing that entire office (of) the CFO as one process, not a series of connected siloed processes,” he said.

New technologies have emerged as ways to ease that pressure, especially as businesses confront the costs of legacy technology — maintaining and upgrading such systems cost businesses approximately $3 million on average last year, Industry Dive sister publication CIO Dive reported.

While finance chiefs in different geographies and industries naturally have different issues they’re keeping an eye on inside the finance function, if there’s one overarching theme on the minds of CFOs, it’s “the combination of a treasury problem with a more traditional AP, AR sourcing automation problem,” Cotter said. “Where it manifests itself is cash. Cash forecasting.”

Answering the big questions

Considering where to spend on technology is also yet another line item for CFOs which are seeing their roles change and expand outside of pure finance and into that of a strategic advisor of the CEO.

As the CEO of a mid-sized global organization, the top three things on Cotter’s mind are, “Can I pay my people? Am I making best use of my capital? Is my downside protected?” he said. The person he looks at for answers to those problems is his CFO, and, “if you think about that, that’s a massive mandate,” he said.

Finance chiefs are providing key answers to those questions while they also continue to juggle their traditional finance responsibilities, which are complex and time-consuming within themselves: even with a simple balance sheet and finance organization, “it is hard for my CFO to give me a read on what my cash position is going to be at the end of the year,” Cotter said.

How the organization is going to service its debt or how clear it will be of its debt covenants, for example, are dependent on a constant flow of data that the CFO needs to watch, he said.