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October 27, 2023

Benefits of AI in Accounting and Finance

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Today’s accounting profession has seen a significant shift with the addition of artificial intelligence (AI) solutions. The benefits of utilizing artificial AI in accounting are numerous, e.g., optimization of financial processes, raised accuracy, automation of routine procedures, etc.

Would you like to cut expenditures by 80% and decrease the time it takes to complete objectives by 80% or even 90%? Accenture Consulting says robotic process automation can provide such results for the financial services field. Let’s discuss why businesses should consider adding AI to bookkeeping and how to incorporate AI in the economic services sector.

Capabilities of AI in Accounting

AI in accounting refers to the introduction of artificial intelligence, which is a subset of computer science focused on creating tools for tasks that typically necessitate human intelligence, into the financial sector. Generally, artificial intelligence is utilized to automate procedures related to processing economic information and collecting insights for decision-making.

There are various ways to utilize accounting automation:

  • Fraud detection: Machine learning mechanisms detect transaction fraud based on information about past illegal activities.
  • Data automation: AI helps accountants automate manual and repetitive tasks, e.g., creating papers such as invoices, expenditures reports, purchase orders, etc.
  • Forecasting: AI can be used in the formation of investment forecasts. Today, many corporations utilize AI-backed systems to launch investment advisor robots.
  • Economic advisory: Machine learning-based budgeting software may provide users with valuable economic advice to monitor daily spending and to identify the top sources of capital flight.
  • Adoption of chatbots: AI-ruled chatbots help to quickly and efficiently respond to consumer requests about account status, financial documents, etc. It makes it simpler to control unpaid bills to prevent penalties.

The auditing firm Gursey Schneider (GS) LLP used artificial intelligence to analyze the data. With the help of AI, 100% of customer operations were verified, which no accounting professional could provide. GS processed and studied 6.2 million procedures in four years. AI helped obtain data that allowed the opening of criminal fraud cases involving $2,800,000.

Tasks Performed by AI in Financial Sector

To properly select the AI-powered solution and instruments available to bookkeepers and accounting professionals (particularly AI-enabled financial programs), we will explore several key areas: machine learning, natural language processing, and robotic process automation.

  • Machine learning, or ML, mechanisms extract valuable insights from large datasets and create accurate predictions. Such structures highlight patterns, trends, and relationships, allowing economic experts to define market conjuncture and investment potential and assess risks.
  • Natural Language Processing, or NLP, allows you to analyze economic papers, news, and standards to obtain critical data, including enterprise performance, market sentiment, and tendencies.
  • Robotic process automation, or RPA, lets you build program bots that imitate human actions so that they quickly and accurately perform rule-based routine procedures, including data entry, processing and reconciliation of accounts, and preparation of economic papers.

There are many options for digital transformation accounting shortly. Still, we will most likely see intelligent automation (IA) development, a more complex variant of RPA. IA simulates human relationships in many situations, e.g., to understand data when communicating with a client or to modify historical data for a specific activity.

Benefits of AI in Accounting and Finance

Benefits of Adding AI to Accounting System

Sage Research conducted a large-scale survey of people who work in the bookkeeping field; 58% of respondents believe AI will assist their organizations in improving. Intelligent solutions maximize efficiency and provide unprecedented insights. Let’s analyze other pros of such solutions:

  • Maximum precision and efficiency: It is especially true if we speak about automating repetitive and time-consuming procedures, e.g., data entry and transaction processing. This efficiency lets an accountant engage in processes that add value to the enterprise.
  • Costs cutting: Automating routine tasks means significant savings for your enterprise. Besides decreasing the need for manual labor, this also minimizes the chance for mistakes and rework, which cuts the overhead associated with bookkeeping functions.
  • Perfected compliance and risk management: Accounting standards, tax requirements, and economic reporting rules constantly change. AI-powered tax may spot errors and inconsistencies, decreasing economic and reputational risks.

KPMG, a Big Four accounting organization, has been utilizing AI-ruled systems from McLaren Applied Technologies (MAT) since 2015 to perfect its audit processes. As mentioned earlier, AI can track every paper in the audited organization. KPMG experts believe enterprises should go beyond standard reporting and move to better forecasting through AI-backed systems.

Difficulties with Artificial Intelligence in Accounting

Undoubtedly, innovative enterprises realize the value of adding AI-backed solutions. However, this demands a change in mindset, and not just for the CFO. Professionals in economics and accounting must go through the transition and acquire the necessary knowledge and skills. When implementing artificial intelligence, other challenges may also arise:

  • Issues of security and confidentiality of information: The adoption of AI in accounting involves working with confidential economic details. Protecting such insights from unauthorized access, hacks, and cyber threats is complicated.
  • Ethical component: AI-ruled structures make decisions based on algorithms and patterns obtained from data. Ensuring the ethical use of AI in accounting technology requires examining potential biases to provide transparency and fairness.

Adding AI to existing programs and workflows can be a sophisticated objective. Legacy solutions may not be suitable for interoperability with AI-backed software, which requires significant efforts to guarantee compatibility.

Areas Where Human Intelligence Outperform AI

Despite the benefits of artificial intelligence, it cannot do all the work in financial management. It lacks soft skills such as communication, problem-solving, and critical thinking. There are several other reasons why accountants are more valuable than AI:

  • Accountants may advise: People needing expert advice prefer human intelligence over machine consultation.
  • Bookkeepers specialize in different areas: They can help with tax law, forensic bookkeeping, etc.
  • Accountants may use sophisticated software; using advanced software is a skill that AI lacks. Although he successfully performs certain functions, he cannot do it alone. Moreover, artificial intelligence requires regular human oversight.

Instead of viewing AI as a threat, economic proficiencies may use such instruments to expand their potential. You can delegate routine jobs to AI-based structures to concentrate on more critical tasks.

Some Recommendations on How to Adopt AI in Financial Activity

Bookkeeping AI has the potential to revolutionize how businesses manage capital. However, implementing such tools can be complicated. Let’s take a look at the key steps enterprises need to take to get started with AI:

  • Define zones for improvement: Consider which processes may benefit the most from AI, including information entry and analysis, fraud mitigation, budget forecasting, and more. By prioritizing correctly, you maximize the profits of AI in accounting.
  • Select an optimal AI-backed solution: There are many artificial intelligence tools available for bookkeeping, such as machine learning, natural language processing, and robotic process automation. Professionals should estimate each technique and select the solution that advises their needs and budget.
  • Begin small and scale applications: Implement AI-backed solutions in small businesses as a first step. Then, gradually scale them up as the staff familiarizes with its use.

It is crucial to constantly track and estimate the effectiveness of bookkeeping AI to ensure it aligns with your purposes and objectives. It will allow you to define fields for improvement and optimize the use of AI-backed techniques in the economic sector.

Final Words

The potential of artificial intelligence in accounting and the economic sector is limitless. AI-backed solutions can radically change how economic decisions are made and business procedures generally. If you plan to keep enterprises competitive, your workers need to be aware of the possibilities of AI to utilize it for organizational development.

You may consult with BooksTime experts to find out what accounting activities can be performed by AI instead of qualified personnel and how to add AI-ruled tools to ensure the effective development of the firm.

This article is not intended to provide tax, legal, or investment advice, and BooksTime does not provide any services in these areas. This material has been prepared for informational purposes only, and should not be relied upon for tax, legal, or investment purposes. These topics are complex and constantly changing. The information presented here may be incomplete or out of date. Be sure to consult a relevant professional. BooksTime is not responsible for your compliance or noncompliance with any laws or regulations.

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Author: Charles Lutwidge

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