Are AI CFOs a threat to the fractional CFO business?

Finance Financial Management AI & Machine Learning

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Senior Accountant in Consumer Goodsa year ago

I think this is true, especially the creation of financial reports and estimated budgets.

Principal in Finance (non-banking)a year ago

I think AI is a threat to many financial role, but not for the reason you think. It has nothing to do with replacement and everything to do with a different style of thinking. Imagine for a moment that you're overseeing a small team of young finance and accounting professionals who didn't learn finance and accounting in a traditional sense, but instead learned how to use AI as their base of knowledge.

While these teams will be able to get their work done far more efficiently than their elders, there will be a void in what and how they learned. Fractional CFOs will therefore have to manage teams differently and have a far more critical eye. But on the plus side, they'll be able to leverage technology in new ways that weren't possible in the past.

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Principal in Finance (non-banking)a year ago

I have experimented a lot - there's a lot that it can do. However, I believe that what it can do is low-level and generic. Let's say that at its best, AI can take over 60% of someone’s busy work. You're not going to have AI replace a person entirely. It's going to augment their job. It's going to be addressing the complaints that everybody's been having for 20 years: having to do all this rework and all these mistakes. Well, now you have the time to be able to do the work that you've been wanting to do because you don't have to do a lot of manual work anymore. However, AI software cannot summarize people’s performance and include certain nuances.

I also believe that there's going to be an increasing chasm between experts who really know what they're doing and people who are pretending to know what it is that they're doing and who are just leveraging AI to get the answers. You don’t want to find yourself in a situation where you’re having a conversation with someone who has been leveraging AI for 80% of their work and you don’t know any of the answers they may ask you. You're going to have impostor syndrome in the workforce and in promotions. Instead of taking shortcuts, we must have some kind of learning where people become experts and become knowledgeable while leveraging and augmenting.

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CFO in Finance (non-banking)a year ago

Yes and no. I think they will change the way we work, manage people, and will automate some of the base stuff fractional CFOs do but you will still need a human to oversee it. The human will manage relationships and help with the more complex stuff like strategy, fundraising Relationships, etc.

CFO/FP&A Advisor in Finance (non-banking)a year ago

I don’t think so. The value a fractional CFO brings to the table is not transaction-based like a bookkeeper or Controller, but insightful action. For example, AI can probably tell you sales are down because X, Y and Z, but can it tell you what to do about it and the context in which the sales are down? AI will be able to tell you that sales are down at (let’s say) your coffee shop, but it probably won’t be able to say that this drop is most likely caused by a competitor opening up down the street or temporary road construction in front of the store. Adding context with insight allows an Executive to take the most appropriate action. In addition, a fractional CFO will partner with the Executive to put together and execute a plan of action for which resources will be held accountable.

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Content Editor in Services (non-Government)a year ago

Thanks Ken. When do you think about "graduating" from a fractional CFO to bringing one on full time? How do you think businesses should evaluate this?

CFO/FP&A Advisor in Finance (non-banking)a year ago

The need to hire a full-time CFO from a fractional CFO is not dependent on businesses’ revenue or profitability but on complexity, which means that it can’t be determined only by a single metric like Revenue. For example, many SaaS businesses need a CFO very early in their maturity due to the need to manage capital raises and business metrics but a government contractor with a single contract with only one government agency can wait much longer, especially if they do not intend to grow beyond that contract.

CFO in Finance (non-banking)a year ago

Probably not until it can pass a basic accounting test: https://www.researchgate.net/publication/370211135_The_ChatGPT_Artificial_Intelligence_Chatbot_How_Well_Does_It_Answer_Accounting_Assessment_Questions

But ... that might come sooner than many of us think:
https://aijourn.com/framework-to-design-an-ai-finance-accounting-assistant/