Artificial intelligence (AI) is disrupting and revolutionizing almost every industry, including accounting and financial planning.
From saving time and gaining valuable insights into financial patterns and client behavior, accountants and accounting firms can benefit from adopting AI technologies in many ways. But how do you know if it’s time for your firm to invest in AI accounting software?
It’s natural to feel hesitant when it comes to adopting new technologies. The fear that artificial intelligence will replace human labor is widespread, but in most cases, this fear is unfounded. Think of AI like a trusted financial advisor, not your competition—in reality, artificial intelligence is best used to augment accountants’ current responsibilities, rather than replace them altogether.
Some experts claim that artificial intelligence for accountants can help reduce costs by up to 80%, and even reduce the time it takes to perform tasks by 80-90%. If your accounting firm falls behind the curve by hanging on to analog, repetitive tasks, you run the risk of losing business to forward-thinking competitors who can get the job done faster—and better.
Embracing AI (ideally before your competitors) will do more than help you stay on the cutting edge—it will also give you the opportunity to upskill your current staff and offer a broader portfolio of services so you can generate more revenue and scale your business.
In this post, we’ll take a look at how AI accounting software is transforming the accounting industry, as well as 8 tasks you can automate with artificial intelligence for accountants. Let’s jump in.
How is AI Accounting Software Transforming the Accounting Industry?
AI can be used in myriad ways to streamline operations and improve the quality of your services.
Here are a few ways artificial intelligence is already transforming the accounting industry:
- Automated accountants and bookkeepers: Currently, only 34% of financial tasks are automated, yet estimates suggest that 60-80% of historical accounting activity could be automated. Robo-accounting is projected to replace 40% of accounting work such as payroll, uploading files, auditing, inventory, and accounts payable and receivable, improving accuracy and efficiency and freeing up time for accountants to focus on higher-value activities rather than rote tasks or data entry.
- Invisible accounting: AI is excellent at constantly gathering, sorting, and visualizing data to improve business efficiency. By implementing artificial intelligence, the risk of human error and potential lawsuits is greatly reduced. AI accounting software can unearth potential financial fraud risks and minimize human errors such as duplicate invoices, automatically assign expenses correctly to avoid unnecessary expenses, and even invisibly manage compliance as regulations become more complex.
- Optical character recognition (OCR): Optical character recognition technology can scan digitized physical documents to extract data quickly, such as receipts, invoices, purchase orders, and other relevant documents. This data can be automatically fed into other systems, eliminating the need for manual data entry and freeing up time for accountants to focus on higher-value tasks. By rapidly evaluating massive data sets with OCR, AI accounting software can also provide actionable insights that executives can use to make data-driven business and strategic decisions.
- Robotic process automation (RPA): Robotic process automation (RPA) is used to perform repetitive, low-value, and high-volume tasks, and can save an accounting team of 40 people over 25,000 hours of annual work. Examples of actions software robots can execute include: filling in forms, completing reports, extracting, copying, and inserting data, and moving files and folders. By implementing RPA into your accounting firm, your accountants will be freed to do tasks they enjoy, such as collaborating with colleagues, innovating, strategizing, and interacting with customers, leading to increased cost savings, efficiency, ability to take on higher demand, improved compliance, and resiliency, even in a volatile market.
- Analytics: AI accounting software unlocks powerful predictive and prescriptive analytics capabilities. Predictive analytics can be used to anticipate future outcomes, such as forecasting sales and demand planning. Prescriptive analytics, on the other hand, provide raw data that can be used to compare financial decisions, such as suggesting the exact materials or services a client may need to improve output and increase sales.
8 Ways To Use AI in Accounting
Artificial intelligence has an incredible return on investment (ROI) with minimal upfront costs and high potential to rapidly scale your small accounting firm. By automating monotonous tasks, AI will maximize productivity while allowing accountants to focus on more creative and mindful tasks that generate more value for your business.
An accountant can also analyze AI data to find valuable insights and business intelligence to improve processes and identify trends. This kind of time-saving automation will allow accountants to spend extended time with their clients, leading to more meaningful conversations that can save time in the long run by fully understanding their clients’ needs and expectations from the get-go.
Here are 8 tasks firms can automate with artificial intelligence for accountants:
1. Expense management
Automated expense management can eliminate the need to track spending with paper receipts. Simply upload receipts with a picture and allow the software to submit expenditures to the books directly. An automated workflow can also incorporate an approval process for employee reimbursements as well as instantly match data from company credit cards to receipts.
Payroll is one of the most tedious aspects of accounting. Sifting through tax documents, employment types, and employees’ work hours can be easily automated with existing AI accounting software suites. Automated payroll can assist with releasing payments, inputting data, and calculating employees’ net pay, freeing up time to focus on higher-value tasks that will generate more revenue for your firm.
3. Bank reconciliation
Bank reconciliation involves matching bank statements with accounting records to correct any missing or duplicate entries. In addition to fetching data, AI can also generate automated reports for added time savings. Automating bank reconciliation catches fraud in real-time to limit a clients’ risk to exposure. With AI accounting software, you can automate bank reconciliation for your firm, as well as for your clients.
4. Accounts receivable (AR)
Accounts receivable has the highest impact on determining a small business’ bottom line. Accounts receivable includes sending and tracking invoices and collaborating with various stakeholders such as finance, sales, and customer service, and presents multiple opportunities for human error. With automated AR, accounting practices can easily gain faster approvals, automatically send customers payment reminders, and produce accurate invoicing with minimal effort.
Use automated accounts receivable software to:
- Classify accounts to prioritize collection and ensure account information is up-to-date
- Predict and forecast remittance—quickly identify which customers are likely to make late payments, or no payments at all
- Send and receive correspondence with the right tone and content to help your firm collect payments on time
- Track payments automatically
- Collect metrics that provide valuable insights into cash flow, trends, and other customer behaviors
5. Accounts payable (AP)
Accounts payable covers all payments owed by your business or your clients’ businesses, such as bills, rent, and vendor invoices. Automating accounts payable allows for a reduction in time to payment so that small businesses can reduce late payment fees and maintain a good relationship with their customers and suppliers. AI accounting software can handle:
- Initiating payments to suppliers
- Collecting bills in a central location
- Adding transactions to accounting software
- Automating the approval and sign-off process for invoices
- Managing documents easily, with a searchable paper trail that makes it easier to maintain regulatory compliance or find the documents you need when you need them
Automating accounts payable, freeing up time for accountants to focus on other work. It can also reduce the chance of error, since data is automatically extracted from invoices and bills and classified accordingly.
6. Tax compliance and financial reporting
During tax season, accounting professionals can benefit from delegating tasks to AI. Automated tax compliance and financial reporting software can prepare tax returns, create financial statements, update taxes based on current rates and location, and even predict future revenue. By handing off labor-intensive and complicated reporting to artificial intelligence algorithms, accountants will have added time to identify trends and forecast results.
AI’s ability to audit documents has helped some accounting firms realize productivity gains of over 40%. With financial data housed in one cloud-based location, accountants will have centralized access to financial data that was previously spread across individual spreadsheets and devices. Consolidated databases and AI-powered machine learning processes make it easy to audit an organization’s entire financial profile instead of using data samples, providing a big-picture view that will allow accountants to analyze financial patterns and reduce risk.
Accounting firms are regulated by internal corporate, local, state, and federal regulations. AI accounting software can help ensure compliance by flagging documents that don’t meet or otherwise violate rules and laws in your jurisdiction, reducing your firm’s risk. Machine learning algorithms and artificial intelligence for accountants can quickly review vast amounts of data to identify possible fraud concerns or suspicious activity that might otherwise have been missed by human review.
Is It Time For Your Firm to Invest in AI Accounting Software?
AI accounting software offers a variety of benefits for accounting firms, from drastically reducing time spent on repetitive tasks to unearthing powerful insights and freeing up time to strategize and consult.
Purchasing and implementing AI accounting software requires an investment of capital in order to purchase and implement the new technology, as well as train existing staff on how to make the most of AI in accounting. Alternative funding options like merchant cash advances can provide a fast infusion of working capital to help you invest in AI accounting software and provide training without losing speed. Merchant cash advances offer a number of advantages over other forms of small business funding, including:
- Simplified applications with less paperwork and less rigorous approval requirements.
- Faster processing and approvals, with funding sometimes available in as little as one business day.
- Greater flexibility and more room to negotiate terms.
With funding from as little as $3,000 up to $500,000, Greenbox Capital® can help accounting firms and small business owners access flexible merchant cash advance funding to help purchase and implement AI accounting software.
- “Artificial Intelligence In Accounting And Finance.” Bernard Marr. Bernard Marr & Co.
- “How Will AI Affect the Future of Accounting?” Emporia State University. August 23, 2021.
- “The future of AI in accounting: Part 1 – What is AI?” Jim Eicher. Becker. November 10, 2021.