• Written by Azhar Aliyar, Director

In theory, a finance system should be able to manage the entire financial workflow, from budgeting to forecasting, without needing human intervention at every step. However, in practice, most systems are limited to answering single questions or performing isolated tasks, rather than taking multi-step actions to achieve a goal. This is where agentic AI workflows for finance come in, enabling systems to use tools, maintain state, and work towards a goal, much like a human would.

Defining Agentic Workflows

An agent is distinct from a chatbot in that it can use tools, maintain state, and work towards a goal. This means that an agentic workflow can perform a series of actions, using various tools and systems, to achieve a specific objective, such as managing cash flow or optimizing budget allocations. A chatbot, on the other hand, is limited to responding to individual queries, without the ability to take proactive action.

For example, a financial analyst using an agentic workflow system can set a goal to reduce costs, and the system will use various tools, such as data analytics and budgeting software, to identify areas of inefficiency and propose adjustments. This level of autonomy and proactivity is what sets agentic workflows apart from traditional chatbot-based systems.

Human Approval and Oversight

While agentic workflows can automate many financial tasks, human approval and oversight are still essential in many cases. Removing the human approval step prematurely can lead to errors or unintended consequences, such as incorrect budget allocations or unauthorized transactions. However, with the right system in place, human approval can be targeted to specific decision points, allowing for more efficient and effective financial management.

A good example of this is a system that automates routine transactions, such as payroll or accounts payable, but requires human approval for larger or more complex transactions. This way, the system can handle the bulk of the workload, while human reviewers focus on high-value or high-risk decisions.

Finance Data Dependencies

Agentic workflows for finance rely on access to a range of financial data, including general ledger, budget, open commitments, and purchase orders, as well as receivables and terms. This data is used to inform decision-making and drive automated actions, such as generating invoices or reconciling accounts. By integrating with existing financial systems, agentic workflows can provide a unified view of financial performance and enable more effective management.

For instance, a shift supervisor can use an agentic workflow system to check the maintenance log and schedule repairs, while also accessing financial data to ensure that the necessary funds are available. This integration of operational and financial data enables more informed decision-making and better resource allocation.

Impact on Financial Management

Agentic workflows can significantly change the way financial management is performed, particularly in areas such as variance explanations and budgeting. By automating the analysis of financial data, agentic workflows can provide timely and accurate variance explanations, rather than relying on manual analysis that may arrive after the period has closed. Additionally, agentic workflows can help identify potential budget overcommitments, enabling proactive adjustments to be made.

As a category manager compares two suppliers, they can use an agentic workflow system to analyze financial data, such as pricing and payment terms, to make a more informed decision. This level of analysis can help optimize procurement and reduce costs, while also ensuring that financial commitments are managed effectively.

Measuring Success

The success of agentic workflows for finance can be measured using a range of key performance indicators (KPIs), including variance to budget, commitment coverage, and days sales outstanding. By tracking these metrics, financial managers can assess the effectiveness of their agentic workflows and make adjustments as needed to optimize performance. For more information on how to implement agentic workflows in your finance function, visit our finance page.

By using these metrics, financial managers can identify areas for improvement and refine their agentic workflows to better achieve their goals. Whether it's reducing costs, improving cash flow, or optimizing budget allocations, agentic workflows can help financial managers make more informed decisions and drive better outcomes.

Limitations and Alternatives

While agentic workflows can be a powerful tool for financial management, they are not a panacea for all financial challenges. In some cases, alternative approaches, such as manual analysis or traditional automation, may be more effective. Additionally, agentic workflows may not be suitable for highly complex or nuanced financial decisions, which may require human judgment and expertise. If you're unsure about whether agentic workflows are right for your organization, contact us to discuss your specific needs and challenges.