How Generative AI Is Transforming Financial Reporting?

Artificial Intelligence is simplifying workflows and enhancing accuracy and efficiency across various sectors. Particularly, Generative AI (GAI) is gaining increasing attention among users recently because of its ability to generate new content such as text, images, videos, music, code, or even 3D models, by analyzing and processing past or existing data using large language models (LLMs) and deep neural networks.

As many sectors use Generative AI to improve their workflow, the finance industry is no exception. Generative AI is used in financial reporting to automate processes and generate precise financial reports, reducing manual errors and saving time. In this article, let’s understand how generative AI is transforming financial reporting by helping the finance team produce faster and accurate reports.

What is the Role of Generative AI in financial reporting?

Financial reporting involves recording documents on how much the company makes, where the money comes from, what its assets and liabilities are, and its profit & loss statement. The finance and accounts team maintains separate records like the income statement, balance sheet, cash flow statement, equity statement, and notes & disclosures. These records help stakeholders review and make better decisions.

Generative AI, or GenAI, makes this process easier and generates insights, narratives, and summaries from large data sets in human languages. In financial reporting, GenAI analyzes large financial data, generates reports, summaries & insights, produces projections, and ensures compliance with accounting standards such as GAAP or IFRS. Thus, Generative AI acts as a virtual financial analyst, helping financial experts make more informed decisions.

How GenAI is Transforming Financial Reporting?

Preparing a quarterly or yearly financial report involves collecting multiple datasets, reconciling numbers, checking for errors, and drafting a narrative that explains a company’s financial performance. All these are done manually and may take weeks to prepare a complete report. GenAI easily interprets large datasets and generates faster, accurate, and insightful reports. Here’s how it transforms:

Automates Report Generation Process

Generative AI analyzes huge raw financial data and generates financial reports in minutes. GenAI can draft income statements, balance sheets, & cash flow statements, provide summaries, and highlight trends & anomalies. This helps the finance team focus more on strategy building and smart decision-making rather than creating reports.

Enhance Accuracy

There is a risk of miscalculations, typos, and misinterpretations in manual reporting. Whereas AI uses pre-built models that reduce the chances of typos and miscalculations, maintaining consistency and accuracy. It also detects and flags unusual patterns that require human review, preventing costly mistakes.

Provides Real-Time Insights

Unlike traditional reporting, which involves summarizing past data, Generative AI offers real-time insights. It constantly monitors your financial data and provides instant updates whenever the market changes. These early insights open new doors of opportunities and greatly reduce financial risks.

Supports Compliance and Audit Readiness

GenAI not only generates reports and provides insights, but also follows compliance set by accounting standards like GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards). GenAi automatically checks the report and ensures that it meets all standards.

Transforms Data into Actionable Insights

More than just calculations and reporting, it also narrates the story behind the report, helping companies to make better decisions. It clearly describes why profits increased or decreased and predicts trends based on past patterns. These insights help companies to act immediately before it is too late.

Helps in Smart Decision Making

As GenAI handles time-consuming and error-prone tasks like report-generating, financial experts can focus on smart decision-making, advising management, and planning for organizational growth.

Manual Reporting vs. Generative AI Reporting: A Comparison

Here’s a comparison of manual reporting and generative AI reporting to understand the key differences better:

Real-World GenAI Platforms for Financial Reporting

Financial experts use several generative AI platforms to automate the financial reporting process. Below are a few real-world Generative AI platforms used for financial reporting:

C3 Generative AI - Generate insights, reports, & narratives and supports analysis of financial statements, document generation, and ensuring compliance across frameworks.

ZBrain - Automates data ingestion, report generation, and compliance checks.

Vertesia - It simplifies complex datasets, supports compliance, and automates report generation.

GenXAI - Focuses on forecasting, budgeting, and planning, which helps in generating insightful reports.

GiaGPT - Useful for generating interactive and on-demand insights.

Finstory.ai - Used to convert complex financial data into easy-to-use narratives.

Glib.ai - Useful for creating compliance-ready reports and maintaining audit trails.

Benefits of Using Generative AI in Financial Reporting

The usage of GenAI in financial reporting helps financial experts to focus more on building strategies and making smart decisions. Let’s see the benefits of using generative AI in financial reporting:

Automation

Manual reporting involves collecting large datasets, organizing them, performing calculations, verifying them, and documenting results in reports. But GenAI automates all these processes, saving time and reducing manual errors.

Personalized content generation

Based on your business model, GenAI personalizes the financial report for different groups of people. For instance, the executive might get a concise report highlighting the key trends and insights, whereas a financial analyst's report provides a detailed data-driven report.

Adaptability

The finance industry experiences constant change in accounting standards, market conditions, and business strategies. But generative AI can adapt quickly to these changes and generate compliant reports.

Highly Creative

Generative AI always provides a new and creative way to represent data, such as creating unique visual summaries, easy-to-understand narratives, or insights that lead to better decision-making.

The Next Era of Financial Reporting with Generative AI

In the upcoming years, we can expect more intelligence, innovation, and automation in financial reporting. Generative AI will definitely redefine the way datasets are collected, analyzed, and presented, enabling data-driven decision-making. The GenAI constantly analyzes and updates financial statements in real-time, rather than waiting quarterly and annually to generate reports. GenAI will also send real-time alerts for key changes, enhancing decision-making.

It will provide more accurate predictive analysis, which helps businesses take precautionary measures to prevent potential losses. Financial reporting with GenAI might integrate with advanced technologies like blockchain, IoT, and cloud systems to create a secure financial ecosystem. Financial report generation might become more conversational and will provide detailed representations by simply asking questions. These advancements in financial reporting will empower businesses to make faster and more informed decisions.

Redefine Your Financial Reporting Using GenAI with Maticz

GenAI is helping businesses to make strategic decisions by automating complex report generation, offering predictive insights, and drafting personalized financial narratives. Integrate generative AI solutions for your financial reporting with Maticz. Our cutting-edge AI development services help businesses use GenAI to automate their financial reporting process. Our experienced AI developers combine Machine learning (ML), Deep Learning (DL), Natural Language Processing (NLP), large language models (LLMs), and deep neural networks to build GenAI, uniquely tailored for your business model. Ready to transform your financial reporting? Join hands with Maticz to build your custom intelligent generative AI.