How AI is Reshaping Accounting Industry

Around the globe, Artificial Intelligence (AI) has become a buzzword in the last couple of years because of its practical potential. Simply put, AI has turned out to be one of the most significant technological advancements that have happened in the world.

To a lot of people, it may seem like a new idea. But it is the result of the efforts of tech experts over the last few decades. The chatbot revolution, smart applications, voice-based technologies, etc., it all represents a well-defined integration of AI into our lives. The implementation of AI to design intelligent systems and consumer electronics has an impact on the decision-making process in all types of businesses.

The accounting industry is no exception. AI-powered applications do a good number of tedious tasks that were previously done manually by the accountants. It has helped them focus more on their core work and become more efficient.

What is Artificial Intelligence?

AI is an advanced technology that has extended a computer’s Input/Output programming to the level of predictions and decision-making. It has enabled computers to make predictions and do specific tasks more efficiently than humans. Along with machine-based learning, it makes computer programs better at analyzing data.

In the accounting industry, it would not be wrong to say that Artificial Intelligence is replacing some human eyes for the better.

Connection of Human Errors and AI

One of the significant advancements in accounting is the creation of double-entry bookkeeping to record both profits and losses. But the fact says that it happened around five hundred years ago. Since then, not many innovative advancements have come up in accounting, except for the use of computers.

But these days, major accounting software vendors like Intuit, Sage, etc. have implemented AI to offer innovative features of data entry automation, reconciliations, and many others. Even tax, payroll, audits and banking are getting automated using AI-based technologies.

Now coming to why AI implementation is becoming so popular in accounting –

The accounting industry is based on numbers. Even a small mistake can cause significant losses to accounting firms and their clients. No matter how many sharp-minded accountants are working in a CPA firm, there is a certain limit to their calculative capabilities. To assist them, there is AI and other advanced technologies like Machine Learning, etc.

With AI in place, a good number of time-consuming, redundant tasks that accountants do daily can be automated. This frees up their time and helps them focus more on the growth of their businesses.

Current Implementation of AI in the Accounting Industry

For the accounting industry in which numbers and data are its lifeblood, AI-based systems can draw conclusions from a large amount of data. They can do the menial tasks related to accounting in a fraction of second.

Here are some examples of how accountants and CPA firms are using the benefits of AI –

1. Expense Auditing

Earlier in time, auditing of a company’s expenses was an incredibly tough task. This is because people used to look through receipts, check and identify dates, etc. for days.

But time has changed now. They have AI-based software put in place for expense auditing. These software or applications do not only read receipts or audit expense claims but also point out abnormalities in the human investigation done previously.

Using these advanced technologies ensures that the expense claims sent to accountants are high in accuracy.

Recommended Reading: Top 5 Technologies to Improve Your Tax Practice

With AI engines carrying out calculations and verifying information, CPA firms and accountants get accurate data at a fast rate. This improves their work efficiency, thus relieving the time they would have otherwise wasted on doing redundant tasks. As a result, they can also work upon delivering more value through their services to the clients.

2. Bookkeeping

Traditional bookkeeping tasks are not loved by those who work upon them. But nowadays, they can easily get helped by automated data entry and data categorization. As a step forward, it also allows accountants to look at and analyze financial trends.

3. Account Payable and Receivable

A lot of small and big accounting firms have automated their business processes by implementing AI-based applications at work. Some of them do not require employees to work on accounts payable and receivables. Not just that, AI-based fully automated account systems are also available to do almost everything, be it matching POs (purchase orders) or flagging invoices.

Debate About Humans and Machines

In the accounting industry, use of AI-based technologies has truly resulted in improved work efficiency and higher productivity. But alongside, it has also resulted in the prospect of the loss of jobs that humans did before. Even to accountants and CPA firm owners, a question that is most commonly asked is – should humans be replaced by machines and applications for a better ROI?

You may hear arguable answers to this question. But the actual result showcases interdependence and not the independence of technology.

With the introduction of AI in accounting, more and more accountants get to use it to support their decision-making process. They get to learn how to analyze big chunks of accounting data in less time. Machine learning and AI are there to complement human brain power, and not to overrun it completely. With the automation of routine tasks, some jobs will disappear, but others will transform as well.

AI is not replacing human accountants from their jobs but helping them focus more on tasks that require human insight, those which can’t be done by machines at all. It is only taking over menial tasks that are repetitive and time-consuming. This leads to improved operations and a reduction in overall business expense.

How to Prepare for AI Implementation

Not all accountants and CPA firms have started to embrace the implementation of AI-based technologies at work yet. But the call of time says that they should, even though it requires them to make significant adjustments in the way they work.

To be prepared for AI in accounting means that they need to develop new skills and work-related strategies. One of the hardest obstacles to cross over is to leave behind the traditions that have been followed for so long. It also means implementing AI-based apps into the accounting work, learning to use them and improving the quality of service that the accountants offer.

Forbes predicts that major accounting tasks will be automated using AI by 2020, which is very near in time. So, it’s time for accounting professionals to make room for AI in the work they do.

Final Thoughts

Artificial Intelligence has the power to transform the accounting industry. It can supplement humans with the power to process and analyze data faster with more accuracy. This way, accountants can dedicate their time to work that requires human involvement, be it client dealing, planning for growth, making strategies, etc.