Danny Fields, CTO of Avalara, a cloud-based compliance solutions provider that helps businesses of all sizes get tax compliance right.
AI is everywhere these days. The rollout of ChatGPT in 2023 brought AI, specifically generative AI, to the forefront of many people’s minds. It makes sense—AI has the potential to drive significant positive impacts across industries, businesses and our everyday lives as humans. There are chatbots to help make day-to-day tasks easier, like searching in our email inboxes or asking questions throughout the day. There are also highly specialized AI applications that streamline specific business processes, like AI robots in warehouses for shipping and logistics.
With all the innovation and fanfare around AI, there are some business functions that AI has been slower to infiltrate. My company provides tax compliance automation, which is a backend finance process alongside payment processing, shipping calculations and more. As we move further into 2025, the discussion around and application of AI in backend finance processes is gaining speed. So, what impact will AI have on these processes? Here are my thoughts.
Where And How AI Is Showing Up In Backend Finance Processes
AI is showing up across the finance function. From AI tools being used for financial analysis and risk management processes, like know-your-customer and anti-money laundering monitoring, to AI algorithms being leveraged to optimize transaction payment processes, the value of AI is already being seen.
When I think about a truly backend process, like tax compliance, it’s interesting to see how AI is being applied. Like many backend processes, tax compliance is complex and constantly changing, which is why technology and automation have been critical for businesses looking to effectively manage their obligations.
Because of this complexity, AI is showing up in places that can help streamline complex steps within backend finance processes. When it comes to tax, AI has proven to be extremely useful when classifying tax codes to products and services, as well as extracting information from complex tax documents.
We’re only scratching the surface of AI functionality within backend finance, especially tax, so the full impact is likely yet to be seen. However, we can look back at the evolution of automation and technology in the backend finance space to get a good idea of what is to come.
What Will AI’s Impact Be On Backend Finance Processes?
The fascination around AI in recent years has led many to view AI as a cure-all for many of the challenges businesses and people face today. In some cases, that may very well be true. However, it’s not likely that AI will completely replace or reinvent the backend finance processes as we know them today.
Let’s take tax compliance as an example again. Our company was founded in 2004 as a SaaS automation company (before SaaS was ever really a thing). The founders believed that we could take automation and replace manual processes around tax calculations, and their hypothesis proved correct!
Automation as a tool has significantly reduced the complexity, time and cost associated with tax compliance. Humans have not fully stepped out, nor should they, given that tax compliance is a complex, regulatory requirement. So, when I think about AI in tax compliance, the same approach rings true: AI will be a strategic tool that will enable businesses to manage tax better, smarter and faster.
I believe that we’ll see the same impact across the rest of backend finance processes—whether it’s payment processing, inventory management, shipping and logistics or something else—AI will be a strategic tool that will assist at various points in each process.
Today, AI is helping businesses streamline aspects of the tax compliance journey. It’s also assisting teams managing tax fill gaps left by people leaving the industry. As we move forward, the impact of AI on backend processes will shine brightest in areas where the technology can speed up and make processes more efficient. Things like data extraction, modeling, classifications and more will benefit from the application of AI and businesses will be better for it.
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