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How AI is Shaping the Future of Financial Planning

Published on January 18, 2024
Joe Garafalo

Founder and COO

Financial planning processes are never going to be one-size-fits-all for any business. But that doesn't mean it can't benefit from AI — especially as finance software gets better and better at leveraging the technology. Here's where AI-powered financial planning will go in the months and years ahead.

To run a successful SaaS, you only really need two things. The first is software that people actually need and are prepared to buy, i.e. product market fit. The second, is an accurate and comprehensive business financial plan.

Oh sure, you need a sales team, a marketing strategy, coffee machines and ping pong tables (well, maybe not that last one), but if you don’t have a sustainable plan in place for how to pay for it all, you’re not going to have the ability to keep them long enough for the company to realize its potential.

It’s why CAC and cash burn rate are some of the most closely watched metrics in the industry, because they directly impact the financial planning of a SaaS business.

Getting financial planning right means the ability to better utilize the resources that you have at your disposal, allowing you to allocate funds to growth streams, cut costs where things aren’t working and double down on things that are. At the end of the day, it’s all about using your capital as efficiently as possible.

There’s good news for finance teams, especially those in the always changing SaaS space, because AI is well and truly here and it brings with it some incredibly beneficial use cases for SaaS financial planning.

AI can make the SaaS FP&A process faster and more accurate, allowing you to spend less time on manual tasks like data entry and building models, and more time on high value work such as analysis and strategy.

So let’s take a look at the details of how AI is helping improve the SaaS financial planning process.

Table of Contents

The Rise of AI in Financial Planning

Ever since ChatGPT came on the scene in late 2022, the world has been going nuts over the capabilities of AI. Whilst the potential in financial planning is no less exciting, it’s also worth noting that much of the technology now bundled under the term ‘AI’ has already been around for some time.

The whole reason Mosaic was launched back in 2019 was to help transform the business finance function from a manual, time-consuming and historic-focused one, to one that utilizes automation for low value tasks and refocuses the finance team on strategic insights on the future of the company.

With generative AI tech exploding, the scale of this vision has grown just as fast. We’re now seeing companies of all sizes implementing AI and automation into their business financial planning processes, from pre-Series A startups up to Fortune 500 companies.

They’re throwing out the models and forecasting tools built on top of Google and Excel spreadsheets, and connecting the information sources of their company directly to platforms like Mosaic. Tasks that took hours every week can now be totally automated.

The speed at which AI functionality is improving financial planning, means that finance teams need to embrace it in order to stay in touch with a hyper-competitive market.

The Advantages of AI in Financial Planning

But really, there’s more to it than just ‘keeping up with the Joneses.’ The benefits and advantages of using AI in financial planning for your SaaS are tangible and immediate. There are an almost unlimited number of uses for AI in the space, but here are a few standout examples:

Automates Data Entry

Gone are the days when your data consolidation consisted of hours upon hours of Cmd+C and Cmd+V. Cut and paste no longer needs to exist when data sources can be synced up automatically.

Using software like Mosaic, you can link multiple company datasets to a single source of truth, giving you an income and expense dashboard which is updated in real time, plus the ability to view both financial and non-financial data together. There’s no need to collate data, because it’s already there.

Produces On-Demand Financial Models

Building a financial model from the ground up is a hefty undertaking. It consumes a massive amount of time, relies on skilled analysts to create them, and managing the various versions of the spreadsheets can cause serious headaches. Not to mention the potential for errors in the formulas or data.

Using AI in the financial planning and modeling process eliminates these issues, giving users the power to extract data and extrapolate models using normal language prompts. Need to build a Discounted Cashflow model? Just ask your AI assistant and it can be done in minutes, based on your real time company information.

Analyzes Trends and Detects Anomalies

One of the key benefits of using AI in financial planning for a SaaS is that it is excellent at identifying trends in your data. An algorithm can analyze far more data points than a human can, and do it much faster. This means that it can identify potential issues in your financials, flagging them before they become a serious problem.

This doesn’t take a job away from your finance team, but it instead shifts their time away from trying to find potential problems, and gives them more time to work on effective solutions.

How to Leverage AI for Business Financial Planning

AI has become a bit of a buzzword, and AI in business financial planning is no exception. But fortunately, software such as Mosaic bridges the gap between the theoretical and the practical, providing your business with technology it can use from Day 1.

But before you get to that stage, you need to understand how to best leverage AI in your business, because no SaaS is exactly the same. There’s no point spending time and money on implementing new tech into your business ‘because AI.’ It needs to have features and functionality that helps move you towards your strategic financial goals.

 

Identify Manual Processes

This is the foundational starting point of any proper AI financial planning integration. You need to identify which areas of your current finance workflow are taking up valuable time which could be done through automation.

Consolidating financial data from multiple sources, updating data into a central financial model and close management are all examples of tasks which can be made much more efficient, or replaced entirely, with AI.

The more of these manual processes you have in place currently, the bigger the immediate benefit you’ll likely find from using AI.

Highlight Past Problems

Think back over the last 12 to 24 months. What were the biggest problems you faced? Maybe it was the speed in which you adapted to a change in consumer habits or miscalculating the impact of the Fed’s rate rises.

Now, think about what could have helped you deal with this issue better or faster. It’s likely that using AI for business financial planning could make a big difference here. Functionality such as detailed scenario planning allows you to plan for multiple outcomes, seeing how they could impact your business before they happen. Not only that, but the ability to instantly update your projections means you can iterate on the fly if something comes totally out of left field. Understanding your risk tolerance and the types of protection measures you put in place will make it easier to see how AI can help.

Pinpoint Future Planning Needs

What are the key drivers for your business growth in the future? What are the metrics you need to watch carefully to keep that plan on track? With a clear vision of where it is you’re going, you can identify ways AI can help you measure and manage your progress.

For example, maybe you need to keep net profit per customer above a certain level, or CAC below a specific threshold. AI financial forecasting software can help segment your customer base in line with these metrics, so you can better analyze where your best opportunities are, and which acquisition areas might be dragging you down.

Once you’ve broken down exactly where you want AI to help improve your business, you can then find the tech solution that matches your needs. You’ll know what features are important to you, and which you don’t necessarily need. Not only that, but with an estimate of the amount of time you could save, you can even start to gather a basic idea of the cost/benefit analysis of various options.

The Future of AI in Financial Planning with Mosaic AI

The reality is that we’re only just scratching the surface when it comes to AI in financial planning. Ok, that sounds like a cliche, but it really is true. If AI and large language models were Netflix, they’d still be shipping DVDs in the post.

We’re going to continue to see rapid developments in how AI integrates within your business, and how it can give your staff the tools to become better at their jobs, and more efficient with their time.

At Mosaic, we see the functionality of AI in financial planning fit into four main roles, and we’re busy building tools and features that realize these to their full potential.

 

AI as a Data Analyst

Whether it’s detecting outliers on your data, spotting trends or identifying how a change to one part of your business impacts the others, we see AI as serving as a front line data analyst to give your real analysts a head start.

AI as a Financial Modeler

As we’ve touched in this article, AI enables you to build, adapt and update complex financial models using nothing more than natural language prompts. Whether that’s checking for errors in your existing models, providing effectively unlimited ‘what if’ scenarios or allowing you to update baseline projections instantly based on new data, AI is set to drastically improve your modeling and forecasting capabilities.

AI as a Data Administrator

This is pure number crunching, and it’s the perfect spot for AI to fit into your SaaS business. AI can quickly analyze massive swathes of data, flagging potential errors, transposing outputs from one software to provide a clean data feed to another and manage data protection risks.

AI can take specific, human instructions and impart those rules on any number of complex datasets, giving you clean, accurate data and seamless integration between all of your tech and departments.

AI as a Strategist

While most of these examples focus on the detail, AI capabilities can zoom out to the big picture. That same trend analysis that can spot opportunities or irregularities in your corporate transaction history, can do the same when looking at your entire market segment and the broader economy.

Using AI in your business financial planning can support your executives in their thought process, and provide them with an automated assistant to help guide and tease out their best insights.

AI Financial Planning FAQs

What is AI financial planning?

AI financial planning is the process of utilizing artificial intelligence to improve the business financial planning process. This can come in many forms, such as helping to ensure accurate, real time data, spot errors in company transactions or highlight trends in the financials.

As with any form of financial planning, it’s about managing the resources of the company in the best way possible for the future, and AI-driven tools can help do that.

How can a company transition to AI-based financial planning?

Are there any limitations or challenges to using AI in financial planning?

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