CoCredo and credit risk industry news

AI in business: how is it impacting financial management?

• 21/01/2025
• Paul Atkinson

 

Financial management is a key part of any successful business, so it's essential to get it right. With the emergence of AI technology, many companies are turning to new, innovative methods to collect data and track their money with optimal efficiency and ease. For business owners, adopting AI-driven tools goes far beyond simple automation – it's about leveraging data for smarter cash flow, debt, and credit management while gaining a competitive edge through informed decision-making. 

But how will the use of AI affect businesses in the long term? Here, we look at the changes AI technology is bringing to businesses and the impact this may have on their financial management. 

Optimising cash flow

Cash flow is the lifeblood of any business. Without proper management, even profitable companies can run into trouble. A robust cash flow strategy must be reactive and proactive, adapting to unexpected incidents such as late payments, stock shortages or the need to tap into an emergency fund. 

For small and medium-sized business owners, leveraging AI in their cash flow management can mean the difference between confidently investing in growth or struggling to pay the bills during slow periods. Financial services are one of the sectors that utilise AI the most – with 15% benefiting from its capabilities, which include:

• Predictive analytics: AI uses historical data, seasonal patterns, and market trends to predict future cash flow. Tools like Float and Fathom provide real-time cash flow projections, helping business owners anticipate periods of surplus or shortfall. By identifying these trends early, businesses can avoid financial bottlenecks.
• Automated expense tracking: AI-powered software such as QuickBooks and Xero automatically track expenses, categorises them, and highlights anomalies. This ensures that every pound is accounted for without the need for manual data entry, saving time and reducing errors. 
• Invoice and payment automation: AI streamlines invoicing by automating reminders for late payments or suggesting optimal payment schedules, keeping cash inflows steady, and mitigating the risk of delayed payments disrupting operations.

Debt management

Managing debt is a critical part of financial planning in any business. AI tools can provide business owners with data-driven insights that help them handle outstanding balances more effectively. Business owners burdened with debt can use AI-driven insights to reduce stress and focus on growth while avoiding costly missteps like late payments or suboptimal loan agreements. AI can support you with:

• Risk assessment and debt structuring: AI can evaluate current financial health and recommend restructuring debt for better terms. Machine learning models analyse current liabilities, interest rate trends, and loan repayment schedules to optimise a business’s debt profile. 
• Debt reduction strategies: AI identifies opportunities for accelerated debt repayment by assessing cash flow surplus and suggesting areas to cut unnecessary expenses. Additionally, these tools can automate tracking of all liabilities, ensuring no missed payments that could lead to penalties or lower your company credit score. 
• Negotiation assistance: Some tools can leverage AI to benchmark repayment plans and interest rates against market conditions, arming business owners with the insights to negotiate better terms with creditors.

Streamlining credit management

Access to credit can be the key to unlocking new opportunities for business growth. However, managing credit effectively requires careful planning and data-driven insights – both of which AI provides with unmatched speed and accuracy. Business owners, therefore, gain access to credit that aligns with their needs without increasing their financial risk. These tools often include:

• Credit scoring: AI-based platforms are changing the way creditworthiness is assessed. Algorithms can now analyse financial statements and less obvious factors, like invoice history and supplier relationships, improving a business’s odds of securing credit at favourable rates.
• Optimal credit utilisation: Using credit as a strategic tool can help prevent a business from falling into unnecessary debt. AI tools can identify underutilised credit lines and flag potential misuse of credit to avert over-leveraging, providing keen insights into your credit usage. 
• Fraud prevention: Some AI-powered tools can monitor credit usage patterns and swiftly identify suspicious activities or instances of fraud. This ensures the credibility of financial operations and helps safeguard businesses against credit fraud losses.

Leveraging AI for financial management

AI’s impact on financial management is vast, and its potential for business owners grows as technology advances. By leveraging AI-driven cash flow, debt, and credit management tools, business owners can confidently improve decision-making, reduce risks, and focus on long-term growth strategies. 

With AI at their disposal, you can access data-driven insights that were once only available to large corporations with dedicated financial teams. And, as AI continues to evolve and become more accessible, it will undoubtedly continue to revolutionise how even small businesses handle their finances.

CoCredo MD, Dan Hancocks says: Artificial intelligence (AI) is reshaping financial management, enabling business owners to make smarter, faster decisions. 

Integrating AI into cash flow, debt, and credit management processes allows businesses to reduce risks and predict financial outcomes quickly. For example, AI tools can analyse payment trends and identify potential cash flow problems before they become significant issues. Credit management, which can often be complex, is simplified through real-time assessments of creditworthiness, enabling businesses to mitigate risks and strengthen partnerships.

AI's transformative potential is clear: it's not just a tool for today but a catalyst for the future of financial management. Whether you're managing a startup or an established enterprise, leveraging AI could be the key to long-term success.

A CoCredo company credit report and our UK and International business credit monitoring services give the inside information required to evaluate the financial situation of your customers and suppliers to safeguard your company from bad debt.  At CoCredo, we are always looking at ways to improve and develop.  Integrating AI within our back office and our product offering to the market means we can continue to innovate and enhance our services. 

A low credit score or a history of late payments, defaults, or bankruptcies can raise concerns about a company's ability to meet its financial obligations, alongside many other factors that may work as useful indicators. This can serve as a warning sign and may prompt the need for further due diligence before establishing a business relationship.

For a complimentary, no-obligation trial of our company credit reports, please contact our customer service team or call us at 01494 790600 today.

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