Financial management is a critical aspect of any business, and harnessing the power of AI can significantly improve efficiency and accuracy. As the business landscape evolves, companies increasingly turn to AI to streamline their operations and gain a competitive edge. While some may believe that AI is only accessible to large corporations, the reality is that AI and its financial applications are becoming more accessible and valuable to small and medium-sized businesses (SMBs) too.
In India, SMBs are fast recognising the potential benefits of implementing AI solutions to enhance their financial processes and achieve greater success in their respective industries. We will explore some of how AI is helping Indian SMBs improve their financial management and improving business conduct.
Accurate financial forecasting with AI
For Indian SMBs, accurate financial forecasting is critical for success in today’s fast-paced business environment. AI-powered platforms can help these companies make better financial decisions by analysing historical data related to supply, demand, sales statistics, inventory control, and internal expenditures. By using advanced algorithms, these platforms can create models that accurately forecast future supply and demand and the cost of operations.
This enables finance professionals to generate precise revenue predictions and make data-driven decisions to help their businesses stay competitive in the Indian market. With AI technology becoming increasingly accessible, Indian SMBs can now leverage these powerful tools to enhance their financial forecasting capabilities and achieve greater success in their respective industries.
Improving efficiencies in risk management with AI-powered Financial
Despite being critical drivers of the country’s economy, SMBs often face several challenges, including regulatory compliance, data breaches, security incidents, and operational and financial risks. These risks can cause significant damage to these businesses and even lead to their closure. AI-powered risk management tools can help mitigate these risks.
Small businesses can consider using AI-powered compliance solutions to scan through massive amounts of regulatory documents, identify the relevant rules, and suggest the necessary changes to ensure compliance.
They can also opt for AI tools that can help prevent data breaches and security incidents by detecting anomalies in network traffic and monitoring suspicious user behaviour. Further, AI-powered security solutions can help detect and respond to cyber threats in real time, reducing the risk of data loss or business interruption.
In addition, AI can help SMBs manage financial risks by analysing data related to cash flow, debt, and credit risk. By providing insights into the company’s financial health, AI-powered tools can help businesses make better decisions about investments and financial planning.
Prevention against fraud and cyber attacks
Previously, fraud detection and prevention in India was typically affordable only by large companies, who could afford to employ forensic accounting professionals and lawyers to handle such matters. Financial frauds are a cause of great concern and can cause significant harm to SMBs in India, leading to financial losses, reputational damage, and legal repercussions.
Historically, fraud detection and prevention have been challenging for SMBS due to limited resources and expertise. However, AI-powered solutions have enabled SMBs to identify fraudulent activities by analysing their financial transactions and spotting anomalies based on historical data. This technology can help SMBs detect and prevent fraud before it causes any harm to their businesses.
With the rise of digital transactions in India, SMBs are more vulnerable to fraud and cyber-attacks. By leveraging AI technology, SMBs can implement more robust fraud detection and prevention measures. AI-powered fraud detection tools can monitor real-time transactions and automatically flag suspicious activities. AI can also help SMBs to create predictive models to identify patterns that could indicate fraudulent activities in the future.
AI-powered fraud detection and prevention tools offer Indian SMBs an effective and efficient way to mitigate the risk of financial fraud and protect their businesses. By leveraging these tools, SMBs can reduce their exposure to fraudulent activities and maintain financial stability.
Fintechs redefining lending parameters for SMBs with AI
Accessing finance has typically been challenging for small and medium-sized businesses (SMBs) in India due to their limited credit history or lack of collateral. Traditional lending institutions rely on credit scores and collateral to determine a borrower’s creditworthiness, making it difficult for SMBs to secure loans; that has hindered the growth of SMBs and limited their potential to contribute to the Indian economy.
However, fintech companies in India are now leveraging AI models to enhance the financial access of SMBs. This paradigm shift is transforming the lending landscape in India, enabling SMBs to access finance based on their financial health and potential rather than just their credit scores or collateral.
Regulatory bodies in India have recognised the potential of fintech lenders in enhancing the financial access of SMBs and have encouraged them to offer small-ticket-size loans to these businesses. Fintech lenders also leverage AI to make the loan application and approval process faster, more efficient, and less time-consuming for SMBs.
A paradigm shift in analysis
Fintechs use analytics and behavioural patterns to drive formal credit and help businesses opt out of the informal lending system. By analysing real-time cash flow data, fintech lenders can offer cash flow-based lending to SMBs even without a credit history. This approach provides a more accurate assessment of the borrower’s financial health, enabling fintech companies to offer loans tailored to each business’s needs.
Moreover, AI-powered lending platforms can assess vast real-time data points, including social media activity and digital payment patterns. This helps fintech build a more comprehensive understanding of the borrower’s creditworthiness and offer loans at more competitive rates.
Overall, fintech lenders in India are using AI models to disrupt the traditional lending landscape and provide SMBs with greater access to formal credit, empowering them to grow and thrive in a competitive market.
Many opportunities for growth ahead
AI has revolutionised financial management for small and medium-sized businesses (SMBs) in India. With AI-powered solutions, SMBs are reaping the advantages of accurate financial forecasting, risk management, fraud prevention, and lending services. Further, the advent of many fintech solutions has transformed the lending landscape in India.
With AI-led solutions, SMBs can enhance their financial processes, reduce risks, and compete more effectively in their respective markets. AI tools have enabled SMBs in India to achieve unprecedented growth and innovation.