Table of Contents
- What is AI Accounting?
- How Is AI Being Used in Accounting?
- AI in Accounting and Auditing
- 6 Benefits of AI in Accounting
- Evaluating AI Accounting Software
- Accounts Receivables after AI
Key takeaways
- Artificial intelligence empowers accountants to make more informed decisions without slowing growth.
- Accountants can apply AI to various tasks, including forecasting, cash flow management, data analysis, and invoice processing.
- Accounts receivable (AR) management can leverage AI to speed up payments without sacrificing compliance.
Artificial intelligence (AI) has become a mainstay across industries but is still closely associated with financial services. In particular, AI in accounting has generated questions, concerns, and excitement over the sector's future.
AI is popular, with 79% of tax and auditing professionals reporting that AI benefits their work. Meanwhile, others are uncertain about what this new technology means for job security or their role, especially those positions incorporating more automation, such as accounts receivables (AR) and accounts payable (AP).
Technology, however, is more nuanced. In this article, we’ll cover AI’s role in accounting in-depth, touching on what it is, how it is used, and what it means for accountants going forward.
What is AI Accounting?
AI accounting may be a misnomer. AI-driven accounting offers a more realistic view of the current state of accounting technology. Essentially, it allows accountants to rapidly scale and optimize their accounting processes, giving rise to new and simplified workflows.
Today, 38.7% of executives say their organization already has or will have a Generative AI strategy for accounting, and based on a recent Mordor Intelligence report, the use of AI in accounting is set to increase rapidly over the next five years.
Is AI Considered Automation?
No, AI and automation are not synonymous. But AI does often make automation more efficient.
Prior to artificial intelligence, many accountants may be familiar with robotic process automation (RPA) software. These solutions used basic computing logic to enable bots to complete repetitive tasks. However, these programs were severely limited. For example, RPA bots cannot adapt to process changes and must strictly follow predefined rules. Still, RPA software counted towards automation.
AI is different, namely in that it is intelligent automation. Artificial intelligence-driven accounting solutions can optimize processes, “learning” from human input. They can also analyze more complex data structures and improve their accuracy.
How Is AI Being Used in Accounting?
AI eliminates repetitive tasks and allows accountants more time to focus on high-level projects, such as drafting new strategies and following up on unique situations.
12 Examples of Artificial Intelligence in Accounting
Accountants are already leveraging AI for various tasks, such as:
- Account reconciliation
- Audits
- Budgeting and forecasting
- Data entry
- Data analysis
- Email drafts
- Expense categorization
- Expense and payroll processing
- Fraud detection
- Invoice processing
- Report generation
- Tax Preparation
AI in Accounting and Auditing
Audits are often a cumbersome, manual process. But AI audits let accounts work far more efficiently.
Traditionally, auditors must collect financial data from ERPs and other accounting systems. The more transactions a company makes, the more likely they will need to depend on a sample rather than analyze all of the data.
AI radically changes this process. This technology, for example, can analyze large amounts of data at once, allowing accountants to test all journal entries rather than a sample. As a result, these audits are completed more quickly and accurately.
How Can AI Help Accountants?
When properly and thoughtfully implemented, AI can benefit accountants in several ways. First, it will reduce their workload and stress and free up time to handle more challenging accounts. Second, AI eliminates boring tasks, like data entry, enabling accountants to focus on more interesting tasks. Third, accountants can leverage AI’s rule-based system to remain compliant.
Will AI Replace Accountants?
AI is not set to take over the accounting industry anytime soon. Artificial intelligence is a tool. While it can handle complex logic and adapt to change, it cannot replace human decision-makers.
Accounting may be built on numbers, but its foundation lies in the human experience. Businesses and individuals need accountant expertise—which AI can’t emulate.
6 Benefits of AI in Accounting
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Simplified workflows: AI automation in accounting essentially eliminates low-level, repetitive tasks. Combined with a digital-first experience, accountants no longer have to spend hours on data entry, scanning invoices, invoice matching, reconciliation, manually categorizing transactions, and similar tasks. As a result, workflows are simplified, making processing payments and training new hires easier.
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Improved straight-through-processing (STP): While technology can’t handle every transaction, AI can correctly analyze and process far more than its predecessors. Accountants have a lighter workload when following up with unique or suspicious accounts.
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Faster payments: One of the biggest benefits of AI-powered accounting solutions is getting paid faster. AI can process multiple transaction types rapidly, and if the right solution has customer-friendly payment portals, this combination can boost cash flow.
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Rapid fraud detection: Artificial intelligence can process thousands of transactions quickly and in real time, making it ideal for fraud detection. It is already being used across the country to combat fraud threats. In 2023 alone, the United States Department of the Treasury recovered $375 million with its AI fraud detection solution.
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Accurate data: Using automated AI in accounting reduces the likelihood of human error in data collection and processing.
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Improved Job Satisfaction: AR teams leveraging AI are just as critical to the organization as before, but now they have the tools to collect payments efficiently. AI reduces the workload and provides greater insight into the payments process. This gives accounting professionals a break from the grind and enables them to become a strategic asset.
Evaluating AI Accounting Software
Artificial intelligence is a step up from basic automation. However, not all AI models are created equal. When looking for an AI accounting solution, it’s best to keep the following criteria in mind:
- Robust platform: Will the platform scale with your organization? Does it offer more than basic AI functions?
- How it leverages AI: How does the solution train and use AI in its software? Any solution that vaguely namesropes using the technology but does not clearly define it may not be the best option.
- Customer experience: While AI does increase efficiency and usability on the backend, the ideal solution for accountants will also offer a superior customer experience. For example, AR professionals will want a program that makes payments easy for the end-user, as this will only accelerate payments, reduce time spent in collections, and boost healthy cash flow.
- Integrations: Ideally, your AI accounting software should work seamlessly with your ERP and other accounting tools.
- Cost: A flat fee platform is often preferable to variable rates based on transaction volume. Your AI accounting solution should have a pricing structure that makes sense for your organization in the long term.
Accounts Receivables after AI
AI offers numerous advantages to accountants, including lower workloads, simplified processes, and faster payments. But what will AR look like as more organizations implement AI, enhanced analytics, and real-time payment technology?
We’ve got you covered. Read our in-depth white paper for finance professionals on the trajectory of Finance and what trends to be aware of.
