Does the thought of artificial intelligence make you bite your nails or jump for joy? While some accounting professionals are excited about the doors opening for AI in accounting, others are cautious about how this new technology will transform the industry.
Chances are that you're already using AI for specific accounting tasks, especially if you use BILL to automate your accounts payable and receivable processes. Accounting AI is all about leveraging the latest technology to enhance the capabilities of finance and accounting professionals. Here's everything you need to know about AI in accounting and finance.
What is AI in accounting?
Artificial intelligence (AI) technology is all about using software and algorithms to simulate human reasoning and input. Accounting AI is primarily used for two broad functions.
First, AI can analyze financial data. AI-powered tools can analyze large datasets, provide valuable insights regarding historical trends, and even make meaningful predictions about a company's future.
Second, you can use AI accounting software to automate repetitive tasks, such as managing invoices and governing AP and AR processes. As a result, accounting processes can be completed much more efficiently than before and with less error.
How is AI used in accounting?
According to CPA Practice Advisor magazine, 72% of accounting professionals expect AI to grow over the next three years. How are accounting and finance departments currently using AI to manage their financial processes? AI-powered systems are being used for such functions as:
- Invoice processing
- Fraud detection
- Predictive financial analysis
- Budgeting/forecasting
- Tax compliance/preparation
- Bookkeeping and data entry
- Audit support
Thanks to machine learning algorithms, AI tools can improve the above processes for greater accuracy, efficiency, and regulatory compliance.
Examples of artificial intelligence in accounting
AI-based tools are transforming how companies handle internal accounting processes by automating repetitive tasks, reducing errors, and improving efficiency. However, it’s important to note that AI still needs solid human judgment to make corrections and ensure that all the numbers add up. Frame AI as a support tool—not the final say.
With that in mind, the following are some representative examples of AI and machine learning in accounting.
Invoice processing
By using robotic process automation (RPA) technology, AI algorithms can scan invoices and related documents and pull the most relevant data. This eliminates the need for time-consuming manual data entry in AP and AR processes and improves accuracy.
On top of this, AI can detect duplicates and multiple bills within multi-page invoices, which can help you and your clients avoid overpaying. It can also save you from the painstaking task of manually separating bills.
Financial reporting
By analyzing historical data, AI systems can produce quality financial reports. AI programs can likewise be used to catalog your financial statements and other data, building a library to draw from when analyzing a company's performance over time.
Compliance and audit management
Artificial intelligence can help accounting firms navigate an evolving set of regulations and retain records to reduce risk in the event of an audit. AI accounting software can manage financial statements and other key documents so auditors can review your data more efficiently. As a result, you'll spend less time and resources completing your audit.
Fraud detection and protection
Natural language processing (NLP) technology allows AI accounting software to review data in virtually real-time. These algorithms are designed to analyze financial data and pinpoint anomalies that could point to fraudulent activity.
On top of this, platforms that use AI tools can provide multi-layered security to keep your payment and client data more secure. For example, BILL Annual SOC 1 and SOC 2 audits, role-based access control, data encryption with Transport Layer Security (TLS), and virtual cards all level up security and protection.
Data analysis
One of the greatest applications of AI-powered software is the ability to analyze historical data quickly and identify patterns that prove helpful for future decision-making. Data analysis tools can also help business leaders identify potential risks and adjust their financial operations to mitigate them.
Automate routine tasks
AI automation can manage many of your business processes, including data management, invoice processing, and payroll. Companies rely on AI to streamline these routine processes and minimize the risk of human error.
How can AI help accountants?
Artificial intelligence in accounting won't eliminate the need for human judgment. Instead, AI accounting software can enhance the workflow and improve the efficiency of accounting firms in the following ways.
Save time
AI-powered software can save hours accountants might otherwise spend on routine or repetitive accounting tasks. As a result, financial professionals can expect to have more time to devote to other core processes that drive business growth.
Improve accuracy
Delegating routine tasks to AI-powered software will save time and produce better, more consistent results than those you would achieve through manual data entry. Natural language processing (NLP) software reduces errors associated with data entry, supporting savvy accountants and their firms to have greater confidence in their expense reports and other data.
Enhance analysis
Artificial intelligence can help businesses manage their most important data. And accountants can use AI to sift through large amounts of data and identify patterns and key insights about a company's financial performance. These tools give accountants a deeper understanding of a company's financial health and assist in managing large volumes of company data.
Shape business decisions
One of the greatest changes to the accounting industry is how accountants and other financial professionals are called upon to influence business decisions. This is especially true in the "C-suite," where CFOs and financial controllers are asked to present data to help companies make well-informed decisions regarding the future.
AI can provide access to real-time data, and predictive analytics can augment the financial planning process by looking at future trends. This can include external data such as market trends or competitive analysis as well as revenue or cash flow forecasting based on past company data.
Streamline audit and compliance processes
AI can also assist accountants with the auditing process. AI-based systems provide detailed document management and storage routines that provide a clear record of a company's financial decisions.
Another way AI can help is with compliance. Business software can review contracts and other vital documents and verify that the company meets current regulatory standards. Similarly, AI-powered software can highlight key risk areas so companies can better adjust their processes to these external standards.
Generate reports
As accountants are seeing more long-term AI benefits, controllers and corporate accountants are discovering that they need to tap into a broader skill set to thrive. For instance, senior-level accountants and controllers may be asked to advise boards on the best financial strategies moving forward.
AI for accounting can supplement human expertise by creating meaningful reports and offering recommendations based on historical data. In addition to developing technical documents, some AI tools can help accountants generate summaries and other text to assist non-specialists in understanding a company's financial management.
Create jobs
While some worry that AI will steal jobs from current accountants, the opposite will be true. The merging of accounting and AI will create an ongoing need for data scientists and other technical specialists who can leverage these advanced tools to guide a company's most crucial decisions.
Consider how software certifications have already influenced the professional world of accounting. Those who pursue certifications like the BILL accountant certification program have a competitive advantage over other financial professionals. Similarly, accountants who learn to leverage the latest AI applications and tools will have greater job security and may be in higher demand than those who don't adapt to these future trends.
Benefits of AI for accountants
AI technologies bring the tandem benefits of automation and advanced analysis. As a result, accountants can expect to see the following benefits.
Invisible accounting
Accountants can increasingly count on machines and software to generate reports, analyze data, and perform the other technical tasks of the profession. This means that the most technical aspects of the accounting world take place behind the scenes, so to speak, which liberates accountants to take an active role in the company's decision-making process.
Continuous auditing
Artificial intelligence allows users to continually monitor company data and even provide reports with no gaps. Companies can, therefore, have more precise control over their processes and provide a thorough audit trail.
Active insight
Accounting managers and corporate leaders can rely on advanced software to provide real-time, end-to-end visibility into their financial processes. Accountants can use AI to keep their finger on the pulse of any organization, and firms can use AI accounting systems to continually monitor multiple clients.
Challenges of AI in accounting
While AI offers excellent advantages to accountants and their firms, there are some limitations—and that might be a good thing. After all, AI-powered tools can never replace the need for human decision-making or political sensitivities that a company may need when communicating with stakeholders.
At present, AI struggles with several key challenges:
- AI can't adjust to unforeseen developments.
- The security level of third-party AI chatbots when entering client financial info to quickly generate reports.
- AI can't always gain contextual meaning of certain documents.
- AI doesn't always master technical jargon, such as legal language.
- AI can't consistently provide personalized guidance and advice.
That said, AI is developing rapidly. By some estimates, AI technology doubles in processing ability every 3.4 months.
How to leverage AI and machine learning in accounting with BILL
BILL makes it easy for accounting professionals to automate client AP, AR, spend, and expense. Create customizable workflows, reduce risk, and gain granular insights into every aspect of your client's financial health. Your team will enjoy greater efficiency and accuracy without devoting time and energy to routine and manual tasks. BILL integrates with popular accounting software providers, including QuickBooks, Oracle NetSuite, Xero, and more.
Before BILL, the accounting firm Chaney and Associates suffered from a "nightmarish expense management process." There were simply too many cards to efficiently manage the system, making it "impossible to grow." Converting to BILL not only streamlined the firm's expense management process, it improved it dramatically.
Now, the firm closes its books weekly, not monthly. They manage multiple clients and spend less time doing it. And thanks to BILL, the firm now has greater control over its data and enjoys seamless integration between BILL, QuickBooks, and Xero.
BILL can do the same for your accounting team. By adapting early and using AI in your accounting firm, you'll gain an advantage over competing companies and offer your team members a chance to learn the best practices in AI and accounting. To learn more, explore BILL's accounting page.
How is AI changing the accounting industry?
AI is changing the accounting industry for good. Current developments in AI enable accountants and their firms to automate core tasks, freeing up more time to participate in strategic planning and decision-making.
Accountants are increasingly tasked with communication and presentation, illustrating that the "soft skills" of accounting are becoming all the more important now that computers handle the technical side of things.
AI is also making it easier for companies to outsource their accounting needs. That's because AI offers total access to financial data. Business leaders gain greater control over their finances by partnering with an external firm as long as it provides the kind of end-to-end transparency companies need to evaluate their business models.
Technology continues to evolve at a dizzying speed, so there's no telling just how dramatically AI might improve the financial landscape. But one thing remains certain: the need for accountants will never disappear, and AI can amplify the voice and skill set of accounting and financial professionals now and in the future.
FAQ
Will AI replace accountants?
Artificial intelligence technology is unlikely to eliminate the need for flesh-and-blood accountants. If anything, new developments in AI will create new job opportunities for accountants with experience in data analysis and reporting.
Will AI take over accounting?
AI software will not "take over" accounting, though it will transform it. Financial professionals can look forward to AI tools augmenting their existing responsibilities and enhancing their ability to analyze data and provide reports.
How will AI affect accounting?
AI developments will improve the ability to use data to drive key financial decisions, as well as automate routine and repetitive tasks. As a result, the accounting world can expect greater accuracy, greater efficiency, and less time on repetitive tasks.
