Using AI for financial modeling and forecasting

Financial models can sometimes feel like a house of cards—built on a delicate balance of assumptions and manual inputs. It may not seem like an obvious fit for AI, but the future of AI-driven modeling and forecasting is closer than many finance teams realize.

One of the biggest advantages of generative AI is its ability to take complex, time-consuming, data-heavy tasks and simplify them. That’s great news for finance teams—because financial modeling and forecasting checks all those boxes.

Traditionally, this work has involved a lot of manual effort: collecting and validating data, building models from scratch or templates, and updating them repeatedly over time. Each step introduces the risk of error—especially in spreadsheets. In fact, research from the European Spreadsheet Risk Interest Group estimates that over 90 percent of spreadsheets contain at least one mistake.

For finance leaders managing forecasts at scale, even a small error can have big consequences.

AI can help change that. It can speed up the modeling process, reduce manual effort, and even let you use natural language to generate reports. More importantly, it can surface trends, risks, and opportunities you might miss—and reduce risk by catching anomalies before they become costly issues.

All of that adds up to a more accurate, efficient, and proactive approach to forecasting.

The benefits of using AI for financial models and forecasts

AI has become a bit of a buzzword—and with good reason. The potential is enormous. But in finance, especially when it comes to FP&A modeling and forecasting, it’s helpful to reframe what AI really means: automation.

At its core, AI in this context is about automating complex, time-consuming tasks that would otherwise require manual input. These automations can involve multiple steps and sophisticated logic—but the key value remains the same: faster, smarter workflows that free up time for strategic work.

Here are just a few of the benefits AI and automation can bring to financial modeling and forecasting:

Streamlines workflows

AI helps automate time-consuming tasks like data entry, model setup, and updates—saving your team valuable hours each week. With tools powered by AI, you can integrate automation into nearly every stage of the modeling process.

Reduces errors

Manual spreadsheets leave plenty of room for mistakes—from miskeyed numbers to broken formulas. AI dramatically reduces those risks by automating calculations and surfacing inconsistencies before they become costly.

Lowers the technical barrier

Traditionally, building a financial model from scratch requires deep financial and spreadsheet expertise. With AI-powered tools that respond to natural language inputs, more team members can run forecasts and build models. That said, it’s still important to have experienced finance professionals review and validate the results.

Enables faster scenario planning

AI accelerates the forecasting process, which means your team can explore more scenarios, more often. You can quickly adjust assumptions and build new projections in real time—making it easier to respond to shifting priorities or market conditions.

Handles larger, more complex data sets

Spreadsheets have limits—especially when dealing with large-scale data from tools like Stripe or Salesforce. AI can manage and organize massive datasets without needing to import them into spreadsheets, giving you faster, more reliable access to the insights you need.

How AI is used in financial modeling and forecasting

In a recent roundtable on AI in finance, Rob Matthews from Spiff summed it up perfectly: AI should be used to do “the simplest tasks that suck the most.”

That might sound lighthearted, but it’s actually a useful lens for evaluating where AI and automation can have the biggest impact in your financial workflows. One of the most practical applications today? Organizing your data.

Manual data collection from multiple systems is a time-consuming task that AI can now handle with ease. It can combine and categorize large, complex datasets—giving your team a solid starting point for analysis. With the support of machine learning and predictive analytics, AI can also highlight anomalies, spot trends, and surface early signals of risk or opportunity.

These insights don’t replace your analysts—they support them. AI takes care of the “what,” so your team can focus on the “why.”

Think of AI as part data wrangler, part analyst, part model builder. It gives you cleaner data and baseline forecasts that your team can then refine, interpret, and turn into strategic guidance for the business.

Security considerations when using AI for financial forecasting

While AI brings a lot of promise to financial modeling and forecasting, it’s important to keep data security top of mind.

AI tools like ChatGPT are trained on massive datasets—ranging from credible websites to blog posts and even public conversations on platforms like Reddit or Twitter. These models generate responses based on patterns in that training data. And, depending on the tool, user inputs may also be collected to improve future responses.

That means any data you enter into some AI platforms could potentially become part of their broader training dataset. So it’s critical to avoid inputting anything sensitive or proprietary—especially when working with publicly available models.

The good news is that there are evolving solutions designed to combine the power of AI with strong data protection. For example, some platforms now use large language models (LLMs) as interpreters—transforming your natural language queries into technical instructions without ever exposing your actual data. In this setup, your data stays securely within your own systems.

Before adopting any AI tool, it’s essential to ask the right questions: How is your data handled? Is it stored or shared? Does the model have access to it?

Understanding these details ensures your team can safely harness the benefits of AI—without compromising trust or compliance.

How to implement AI in financial modeling

So there are some very clear benefits to implementing AI into your company’s financial modeling. But how exactly do you go about implementing it into your business? There are some key steps to consider.

1. Identify potential use cases

Start by thinking about where AI could have the most immediate impact. As Rob from Spiff put it, a good place to begin is with “the simple tasks that suck the most.” You won’t uncover every possible use case right away, but identifying a few high-impact opportunities helps guide your next steps.

2. Find the right solution

Once you’ve outlined the kind of functionality you need—whether it’s scenario modeling, anomaly detection, or pulling quick insights from existing data—look for AI-powered financial tools that align with those needs. The right fit should support your goals while keeping your data secure and accessible.

3. Use the tool regularly

After adopting a new AI assistant, the key is to use it consistently. Whenever you take on a task, ask yourself: could this be done faster or more efficiently with AI? Testing a variety of tasks helps you identify where AI delivers the most value—and over time, you’ll discover even more use cases than you originally expected.

4. Trust, but verify

As with any new hire, it’s smart to validate outputs early on. Over time, as the technology becomes familiar and learns your workflows, you can shift from heavy oversight to confident collaboration. AI becomes an extension of your team—speeding up execution while leaving strategic thinking where it belongs: with your people.

AI financial modeling and forecasting FAQs

What is AI financial modeling?

AI financial modeling uses artificial intelligence to make financial modeling faster, more accurate, and less error-prone. Traditional models depend on large datasets and complex calculations to forecast future performance. With AI, analysts can automate much of the process—reducing manual errors and accelerating the time it takes to generate reliable insights.

What skills do finance professionals need to effectively use AI in financial modeling?

The core skills finance professionals need to use AI effectively in financial modeling are the same ones they use when building models manually. Analysts still need to understand the model’s purpose, know which datasets to include, and be able to review outputs for accuracy.

AI doesn’t replace these foundational skills—it enhances them. By taking care of the manual, time-consuming steps, AI allows analysts to focus more on the strategic thinking and critical analysis that drive better business decisions.

How can smaller businesses or startups benefit from AI in financial modeling?

AI can be a game-changer for small businesses and startups, offering the capabilities of a full analyst team—without the overhead. Instead of hiring multiple team members to gather, organize, and review data, companies can use AI to automate those tasks. This allows one or two skilled analysts to deliver the kind of insights and output you’d expect from a much larger team, helping early-stage businesses stay lean while scaling smarter.