In 1829, Stephenson’s Rocket, an early steam locomotive, made its first run. It was a slow and ponderous journey, beset with difficulties. But that first journey changed the nature of transportation forever. Within a few short years steam trains were rushing along at 100mph, according to Accounting Today.
That’s a little where artificial intelligence is in our current moment. The initial breakthrough has led to an almost breakneck rush to develop the next iteration of AI. It’s like the AI equivalent of a Japanese bullet train.
There is little doubt that AI and automation are going to revolutionize the way we work. But how will that affect one of the oldest professions in the world — accounting?
Being highly trained and skilled professionals, it’s easy for accountants to rest on their laurels and think that the industry is immune from major transformations. However, we are at a point of pivotal change. The repetitive, automated nature of many accountancy tasks means it is an ideal candidate for disruption. Intelligence can turbocharge the profession from a backward looking “bookkeeping” function to delivering forward looking insights which can drive strategic decisions. Machine learning models applied to data can reduce fraud, enhance trust and increase compliance. The juxtaposition of AI technology and the accounting industry puts the profession at the centre of an exciting new era.
AI changes everything
Today, algorithms and code are still written by humans to solve problems and learn from scenarios put in front of them. We are still a long way from true AI where, in theory, computers can think for themselves.
But AI is already good at automating repetitive tasks, increasing accuracy and efficiency, and discovering hidden insights and trends. It can interpret the best path to achieving an answer and learn the routines that get the best result. It can automatically upload documents, understand entries and classify them in the right accounting codes. AI never sleeps, never wears out and doesn’t make mistakes.
AI creates the potential to do more with the resources we have. By automating administrative tasks, accountants can devote more time and energy on creativity — analyzing and interpreting the data to extract real value for the business and their customers.
Many professionals are excited by the benefits that AI can offer. In fact, according to Sage’s “Practice of Now” report, more than half (58 percent) of accountants strongly agree or agree that AI will help improve their firm in the future.
As we move forward with the application of AI, we see three clear areas of benefit to the accountancy profession: invisible accounting, continuous audit, and active insight. This will provide businesses with the ability to capture business activity in real time, perform continuous reconciliation and make adjustments such as accruals throughout the month. This will also help reduce the burden at the end of the period. The use of AI in accountancy will bear fruit for finance professionals in the coming months and years.
AI allows for repetitive tasks to be eliminated from an employee’s daily workload, and also increases the amount of readily available data at one’s fingertips. This, in turn, increases the intelligence available to understand the health and direction of a business at any given time.
AI automatically manages the process of gathering, sorting and visualising pertinent data in a way that helps the business run more efficiently. This frees up staff to do more productive tasks and gives them more time to drive the business forwards.
Build trust through better financial protection and control
AI can also significantly reduce financial fraud and minimise accounting errors, often caused by human oversight. The rise of online banking has brought a host of advantages, but it has also created new avenues for financial crime, specifically around fraud. The chances of a dishonest payment slipping through the net grow as the volumes of data increases. That has made the accountant’s compliance task much harder to complete.
AI can handle that data review at speed. For example, it can detect anomalies such as duplicate invoices or determine links between seemingly innocuous payments and other known risks. It can also help to assign expenses to the correct categories, ensuring the company doesn’t pay out for items it shouldn’t. By implementing automated anti-fraud and finance management systems, practices can significantly improve compliance procedures and protect both their own and clients’ finances.
In this way, AI and accountants can work together to provide a more predictive, strategic service — using the available data to pick up on potential issues before they arise.
Active insights help drive better decisions
Regardless of the sector, AI can be used to analyse large quantities of data at speed and at scale. It has the ability to detect anomalies in the system and optimise workflow. Finance professionals can use AI to assist with business decision-making, based on actionable insights derived from customer demographic, past transactional data and external factors, all in real-time. It will enable accountants to not just look back but look forwards with more clarity than ever before.
Companies can use data to perform cash flow forecasting, predicting when the business might run out of money and take actions to protect against the situation ahead of time. They can identify when a customer might be about to churn and look at how to renew their series. All this means is that accountants will be able to help clients respond to financial challenges before they become acute, adjusting expenditure or processes as required.
As AI integrates wider business information flows into the accounting mix, accountants will also be able to broaden their predictive consultancy beyond pure financial planning to incorporate other areas of the business. For example, if a manufacturer sees a rise in supplier costs, the AI-equipped accountant can predict the likely impact on the business in the near future. They can advise on the best action to address the potential shortfall before it becomes a problem.
Today, we still marvel at the bullet train whizzing through a station. Now that same train service can tell passengers if there is a problem with the schedule, before they board, and advise people on alternative routes or connections. An AI-equipped service has the potential to provide an answer to passengers before they have the time to think of the question.
It’s the same story for the accounting profession; it’s modernising and becoming more sophisticated. While the rules of finance remain the same, the rules of how the work is done are shifting. Accountants will become true changemakers. So get on board! The future is an express train of changes and new parameters in the world of finance.