How CFOs Can Use AI To Improve The Finance Department

President Donald Trump has been talking about imposing tariffs on other nations ever since he was on the campaign trail. Throughout six months in office, he’s mostly been focused on making tariff deals. Very few import taxes have been imposed, and many have been postponed for further negotiations.

However, the White House has said that August 1 would be the day that most tariffs take effect—which was reaffirmed last week by Treasury Secretary Scott Bessent—meaning that they might actually happen. In the past week, Trump has announced tariff deals with Japan and the EU, with each country facing a 15% tariff rate once the import taxes are enacted. And on Monday, CNBC reported that Trump said countries that have not negotiated trade agreements will likely face a blanket tariff of 15% to 20%—which he said was something he would do “to be nice.”

While countries and companies can determine how “nice” the tariff levels are, if they go into effect, businesses will be closer to having one thing they’ve been craving all year: certainty. The specter of unknown potential tariffs has made it difficult for businesses to plan for both the near and far term this year. What’s the best way to reorient the supply chain? Are price increases needed? How much? When? How is the financial forecast changing? What internal priorities can the company tackle?

Business leaders have flagged uncertainty as one of their top concerns this year, with CEO confidence falling to the lowest level since Q4 2022, according to figures from the Conference Board. Vistage’s CEO confidence figures have dropped back to 2023 levels in Q2, with companies being extremely cautious about their finances. And, Forbes’ Brandon Kochkodin writes, the uncertainty chilled the M&A market for small businesses, especially those involved in the manufacturing sector. Analysts have said that the largest indicator of whether the economy enters into a recession is if the tariff issue is decided, writes Forbes senior contributor Bill Conerly.

However, certainty may not be all that helpful. While better-than-expected retail sales in the last quarter have boosted stocks to record levels, it’s important to remember that the anticipation of tariffs led many companies to cut their expectations early in the year. Some consumers, fearing the eventual tariffs, may have spent more than usual at the beginning of the year, making bigger purchases before prices go up. And for the companies that have been facing tariffs already, earnings season hasn’t been pretty. Last week, GM reported a year-over-year $1.1 billion quarterly profit loss, mainly because of new levies on auto manufacturing imports.

Being able to navigate uncertainty better and run a variety of forecasts is one of the ways CFOs can benefit from using AI. Mastercard recently compiled some of the best and most impactful uses of the technology for CFOs in a report. I spoke with Mastercard’s Chief Commercial Payments Officer Raj Seshadri about how CFOs can benefit the most from AI. An excerpt from our conversation is later in this newsletter.

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ECONOMIC INDICATORS

The stock market continues to trend upward, buoyed by optimism on tariff deals and technology. But the numbers for ordinary consumers aren’t looking as positive. Data from Indeed last week showed that in the last year, inflation outpaced wage growth for 43% of Americans. People with low- and middle-wage jobs are the most likely to feel the brunt of inflation—which has been relatively low at 2.7% in June. Home prices are also hitting all-time highs, with the National Association of Realtors reporting a median sales price of $435,000 last month. June was the 24th consecutive month of higher median home prices, and it also saw a 2.7% month-over-month decrease in home sales.

Basic products are also going to see large price hikes soon. Hershey announced last week that it plans a double-digit price increase on its candy due to ingredient shortages. Poor weather conditions have roiled the Ivory Coast and Ghana, which account for more than half of the world’s cocoa supply.

BIG DEALS

Elon Musk announced a $16.5 billion deal with Samsung to make Tesla’s next-generation AI chip at its not-yet-operational semiconductor fabrication plant in Taylor, Texas. The chip is vital for the Autopilot feature on Tesla’s electric cars. The deal, which runs through 2033, boosts Samsung’s chipmaking business, which had been losing competitive ground to Taiwan Semiconductor Manufacturing, writes Forbes’ Zinnia Lee. Musk said that for Tesla, the strategic importance of the U.S.-built chips “is hard to overstate,” and he plans to personally walk the production line “to accelerate the pace of progress.”

The announcement brought a slight boost to Tesla’s stock, reeling since last week’s earnings report, in which the company saw a 12% drop in revenues and 16% drop in net income, attributed to a 13% drop in vehicle deliveries. This marks the third straight revenue decline for Tesla, which has seen its standing in the automotive community erode. A new report from EV Intelligence shows that Tesla has the lowest net positive perception among all EV makers and the highest distrust score, which can be attributed to Musk’s dramatic entry into partisan politics, writes Forbes senior contributor John Koetsier.

TAXES

Between January and May, the IRS lost about 25% of its workforce, according to the Treasury Inspector General for Tax Administration, writes Forbes’ Kelly Phillips Erb. This adds up to more than 25,000 employees, with some accepting incentives to leave, and some cut as part of mass government layoffs. Different business units have been impacted in different ways, with more than a third of employees working in the small business/self-employed division gone, and 20% of taxpayer services employees no longer there. A quarter of the employees who worked in the tax-exempt and government entities unit have left, and nearly a fifth of those who worked with large and international businesses are no longer there.

OFF THE LEDGER

How AI Can Improve Your Finance Department

Mastercard keeps a close eye on how CFOs are working with AI and helps them adapt to improve the financial department. Last month, they released new research detailing how CFOs are utilizing AI and improving how they operate. I spoke with Raj Seshadri, Mastercard’s chief commercial payments officer, about how she sees CFOs using the new technology. This conversation has been edited for length, clarity and continuity.

Where do most CFOs begin when they’re starting with AI? Is there something that might be easier or more impactful?

Seshadri: The ERP or the procurement systems or the receivable systems have some types of agents and AI built into it these days, and that’s where the embedded finance opportunity is. But it’s fit for purpose because there are other things that you need to do as a CFO.

Take forecasting. You might have models that are built based on backward data and back tested, and you think about deploying them to predict the future. This is an area where you can actually think about in a very different way. Leveraging AI, leveraging data from disparate systems within the business, but also from macroeconomic sources, forecasts that economists might have about what’s going on with the trends in the economy that might be relevant. If you bring all of that together, then you can move forecasting from a static model that’s released every quarter, every few months, and is updated based on historical data, to one that’s much more predictive and future looking.

There’s a lot of planning for different types of scenarios so that you future-proof the business, and you also drive a level of resiliency. You can design the resiliency to think about the likelihood of different macroeconomic scenarios, how they might impact your business and what you might do in those situations to react. You’re not reacting after the scenario happens, you’re reacting as the scenario develops.

I used to be a lead of the services business, and that interacts with our payments business. It’s a flywheel: The more payments we do, the more data we generate, the more services we build, which allows us to provide more insights into the payments business. As part of that flywheel, we worked in the services business with the CFO and finance function of a very large retailer. Initially, they were very skeptical that we could use macroeconomic data and a different way of modeling to improve their forecasting. Actually, we generated a 10x improvement.

Are there any challenges that CFOs and finance departments commonly face when they’re trying to bring in AI?

The most common challenge is just a question of prioritization. For each business, it’s a little different. Where do you start? What’s most important? What’s going to create value? You’ve got to think about the effort that it’s going to take, versus the impact it’s going to have. Those are two independent dimensions. Then you’ve got to prioritize the things that are easiest to do with the highest impact first, and then progressively ease into the opportunity. That varies from business to business.

That’s something that we work on with customers. To say: For you, given your businesses, the environments you’re operating in, the markets that you’re selling in, the markets that you’re sourcing from, what are the opportunities with the greatest impact and the easiest to do in the near term? Then, what can you do in the medium to long term?

Often, payments end up being one of the highest priority opportunities. If you can optimize the payment, you immediately generate working capital, reduce expenses and generate compliance.

What advice would you give to a CFO who is trying to move forward with bringing more AI into their department?

You’ve got to embrace it. You’ve got to understand how you’re going to use it. You’ve got to figure out how to get the right level of trust in it that makes you comfortable to deploy it faster.

It is a trend that is here to stay. It’s a trend that releases a lot of opportunity, [especially in areas like] working capital expenses, compliance. You have to embrace this trend because otherwise, your company will not keep up with what’s available and be as dynamic. It will future-proof your business. It’s important to do. And so it’s a question of trying to figure out what can make you go faster.

COMINGS + GOINGS

Fashion retailer Nordstrom appointed Kelly Dilts as its next chief financial officer, effective August 29. Dilts most recently worked as executive vice president and CFO at Dollar General and will succeed Cathy Smith, who left the role earlier this year.
Agriculture firm Pyxus International promoted Dustin Styons to its executive vice president and chief financial officer role, effective July 23. Styons had worked as interim CFO since February, and succeeded Flavia Landsberg, who left the role earlier this year.
AI customer service startup Parloa hired Chris Silver as chief revenue officer, effective July 29. Silver most recently worked at Five9 and AT&T, and joins weeks after the startup secured a $1 billion valuation.

STRATEGIES + ADVICE

It is possible for your business to see enormous growth—but you won’t get there by playing safe. Being courageous, thinking big and making bold plans can jumpstart you to get there.

If you want to be a better leader, you might not get there if your success is based on evaluations of other leaders. You need to find out how you’re doing with the people who matter most: Your employees.

QUIZ

It’s been a rough year for commercial airlines. Which airline’s plans to furlough and demote pilots this fall became public this week?

A. Spirit Airlines

B. American Airlines

C. Southwest Airlines

D. JetBlue

See if you got the right answer here.