Automation is changing the way people work, and automated financial software streamlines tedious tasks, such as reconciliation. AI offers the promise of further automating these accounting tasks and performing them more accurately, freeing human time for more complex and creative activities.
However, many companies are not sure how to properly integrate AI. They may have concerns in doing so, which include worries about accuracy and compliance and concerns about being "replaced" by automation. Understanding how AI operates in accounting and developing processes to leverage it can help accounting firms and financial leaders add more AI into their processes and move forward into a more streamlined future.
Understanding AI in Accounting: Trends and Opportunities
Machine learning in finance and accounting is a relatively new thing, although simple automation technology has been around much longer. There are, however, some trends that are clearly visible, which include:
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Using AI in auditing and review procedures, where it can identify irregular transactions and inconsistencies, just as simpler systems might spot a suspicious credit card transaction
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AI assistants which operate alongside accounting software to provide customers with information and assistance, including helping them analyze financial data and forecast sales trends
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Cloud AI being used to resolve customer service issues faster
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Producing relevant drafts for invoices, sales text, etc.
However, a lot of this is not "ready for prime time. Using ChatGPT to solve accounting problems is currently not efficient for tax assessment, although it does great at auditing. This presents an opportunity for companies which can solve these problems, while not remaining in any way a threat to human finance professionals. Instead, AI will support professionals and save time. Robotic process automation can handle repetitive tasks easily, automated migration can reduce data entry when processing invoices which, in turn, reduces errors. AI also has a lot of promise in fraud detection and number crunching analysis.
This means that AI must be deployed carefully in tasks it does well.
Identifying Suitable Accounting Functions for AI Integration
The first step for AI integration is identifying the functions that you can hand over to AI. These generally fall into three areas.
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Automating Routine Tasks
AI is well suited to routine tasks in both accounts payable and receivable. It can generate one click invoices which only require a brief check before being sent off. It can direct incoming invoices to the person who needs to sign off on them. By automatically propagating customer details, it reduces errors, but AI can go beyond that and predict when an invoice needs to be sent, generate it, and send it to you for final tweaking.
AI can also automate expense management by allowing expenses to be recorded more easily, sent to the right person for reimbursement, or put into the appropriate tax category for end-of-year filing. It can do these more accurately than current systems.
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Enhancing Financial Analysis
Another area in which AI shines is improving financial analysis. In the past, finance officers spent a lot of time just trying to crunch data. AI can do this faster and better, and in real time. You can analyze your finances as they happen and then use predictive modeling to help you improve your financial planning. This doesn't replace the insights of a professional, but rather provides them with the numbers they need.
These advanced algorithms can also more accurately predict market trends and stock performance, helping you handle investments and also plan production to catch peaks and avoid valleys. AI financial analysis is likely only going to get better with improved, specialized models.
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Improving Compliance and Risk Management
AI works off of patterns. If spending patterns abruptly change, AI will "notice" and can flag those changes. This can spot fraudulent transactions long before any human will notice. The faster they are spotted, the easier it is to deal with them.
This AI-enhanced fraud detection and prevention promises to save a lot of time for compliance officers, while the AI may detect a false positive, humans only have to sift through flagged transactions rather than all of them.
AI can also be used to do automated compliance checks. For example, it can check that all the required fields are on an invoice before sending it out and make sure the correct customer number is being used. Again, humans only have to check on things the AI flags, saving a lot of time and freeing professionals from what can be extremely tedious work.
Developing a Personalized AI Adoption Plan
There is no "one size fits all" plan for AI. Depending on your company's size, compliance needs, and focus, you may need different AI services and have different objectives. Because of this, you should develop a personalized plan before you start even looking at potential services.
Here are some best practices and tips you can start with:
Assessing Your Current Processes
Finance is an area in which companies are particularly prone to doing things the way they have always been done. Changing processes can be scary. In the worst case, companies don't even look at their accounting workflow unless it's very obviously not working.
The first step for AI integration is a thorough audit of your existing workflows. This helps you establish how you are doing things now and identify areas for improvement as well as those that have the best potential for AI. You can also flag areas where AI is likely to be the opposite of helpful, at least with current systems.
Setting Clear Objectives
There's a lot of hype around AI right now, and a lot of pressure to implement it or be "left behind." Implementing AI for the sake of it is not going to help your company, workflows, or employees.
Instead, be very clear on what you want to achieve with AI. Are you trying to increase your accuracy in invoicing, save time, or save money? If you are concerned with saving time, make sure the workflows you plan on implementing will actually do that, and talk to employees about their needs and goals.
Clear objectives will make sure your AI adoption plan is focused and effective.
Creating a Step-by-Step Accounting AI Implementation Plan
A common pitfall is to try to implement everything at once. Once you know your objectives and what you want to automate, it's time to prioritize. Start with the projects that are both feasible and will have a higher impact.
Then once you have listed out those phases, set timelines and achievable milestones to keep everyone from getting overwhelmed. It is better to take your time and get it right than rush in and find yourself with inaccuracies on data from a poorly-chosen module, that you are expecting too much from AI, or that you missed an important step such as looking at UX design and created a system nobody wants to use.
Collaborating with Experts
Throughout the process, you should work with experts on AI in finance who can help you prioritize and choose the right software, platform, and models for your company. Leverage their expertise to produce a strategy that is tailored for you.
Make sure you choose experts who understand both the strengths of AI and its limitations.
Leveraging Finance Consultants and Outsourced Services
Getting your AI strategy right is complex and vital. It's easy to go down roads that waste time and money or worse. For most companies, the best route is to partner with an outsourced service or AI consultant.
Benefits of Partnering with Accounting AI Experts
A good consultant has experience in AI integration while being up-to-date on the current trends and new practices that might benefit your company. They can help you design a tailored solution using their knowledge of AI and your intimate understanding of your business.
Work with them to help you understand your needs and goals and they will help you understand the opportunities to streamline your workflow and improve your business.
Steps to Choose the Right Partner
Because AI integration in accounting is so new, you can't go only by experience. Many consultants, however, have prior experience helping design and select software for financial officers, so you can look at that as well.
Check case studies and client testimonials. Look for clients that are as close to you as possible in size and industry. This helps you establish that they understand your business. You also want a good cultural fit, and people with roughly similar work processes so it's easy to get on the same page.
Overcoming Common Challenges in AI Integration
Ai has its challenges. There are a lot of myths and presuppositions in both directions that need to be addressed. AI integration can also be a significant change, and possibly perceived as an even bigger one than it is. Some things to think about and overcome:
Addressing Employee Concerns - Will Accountants be Impacted by AI?
One of the biggest concerns your employees might have is whether AI is a threat to them. The fear of being replaced by a chatbot has resonated across multiple sectors. AI, however, cannot replace human accountants. Rather, it can make their jobs easier by helping crunch numbers and taking on boring, repetitive tasks.
Ensuring Data Security and Privacy While Using AI in Accounting
Consumer grade cloud AIs can't always be trusted with the data entered into them. This can lead to an overall distrust of AI. You need to implement robust data protection measures and use customized systems that are designed to be compliant with financial regulations, GDPR, and overall privacy best standards. Specialist models are always the best choice.
Managing Change Effectively
Fear of change is natural. You need to set up a change management plan to make sure everyone knows what the transition will be like, keep everyone on the same page, and engage with new systems in a measured way.
Regularly review and adjust your strategy as needed to make sure that you are not going down the wrong road.
Measuring the Impact of AI on Your Accounting Processes
The last area to consider is how to measure whether AI is doing what you need. Just as you need to know the before of what your processes looked like, so you need to track the after. Two things are key here:
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Setting Key Performance Indicators (KPIs)
Set KPIs that match your goals. For example, if one of your goals was to reduce the amount of time spent processing invoices, then a good KPI would be the number of invoices processed in a day. It may be more complicated than that, such as comparing the accuracy of your financial forecasts with and without AI. Regularly review performance and adjust your strategy to get closer to the KPIs you set.
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Continuous Improvement
AI is always evolving, and so should you. Gather feedback from your team and make any adjustments. Then stay updated on the latest advancements so you can integrate them, replacing outdated systems as needed.
Keeping a relationship with a consultant is important here as they can help you keep track and point out things you might not have noticed.
Embracing AI can help your accounting or finance department meet the future. It can streamline processes, save time, and greatly improve your financial analysis. However, you need to implement AI with care, making sure you use it for the things it is good at, and freeing up your staff to add human creativity and insights.
Personiv can help you with personalized finance and accounting outsourcing solutions that can help you develop the perfect adoption plan for your company. Contact us to find out how we can help you.
