How AI Will Impact The Accounting And Finance Industry?

Artificial Intelligence (AI) is radically transforming everything it touches. It is emerging as one of the most progressive and advanced technologies that we have in the world today. One can feel its presence everywhere right from businesses to healthcare services, education, home automation, and social impact studies, etc.

Artificial intelligence plays a pivotal role in every walk of life. If you don’t believe this, take a look around you. Every facet is touched by it whether it’s your smartphone or the applications on it, smart speakers, fancy wearable devices, home automation products, television and much more. Everything around us is powered by an artificial intelligence device.

Artificial Intelligence Technology

Even the world’s most influential technology organizations, from Amazon and Facebook to Google and Microsoft, are emphasizing their fervor for Artificial Intelligence.

Sundar Pichai, CEO of Google, quotes, “The last 10 years have been about building a world that is mobile-first. In the next 10 years, we will shift to a world that is AI-first.”

The two major reasons for the rapid growth of AI in this decade are:

Reason #1: Data —The amount of data generated is growing exponentially, all thanks to the internet and IoT devices.

Reason #2: Compute — The limitation that we faced in the previous decades was resolved, which in turn advanced the power of AI. Many firms have started creating hardware specifically for training Deep Learning models.

What is AI?

AI allows machines (bots) to learn from experience, interpret information, make adjustments and apply what they “know” to perform human-like tasks.

• Machine learning (ML) gives computers the ability to recognize and apply patterns to develop algorithms that they can then fine-tune based on feedback; an example is HotStar that can offer you suggestions of what to watch based on your viewing history.
• Computers develop the ability to identify relationships and associations through deep learning.
• Machines first “understand” information and then they actually “think” of the implications of that data and analyze it with machine reasoning.
• Based on the understanding of human speech, natural language processing is used by computers.
• They “recognize” people, activities and objects, and “view” images with computer vision, an example is the iPhoneX that can recognize the face of its user.

How AI Can Be Applied To Accounting?

Finance should become a better strategic partner and value creator to the business – yet it tends to spend a majority of its effort processing transactions.

Artificial intelligence has the potential to transform the finance and accounting industries with advancements that eliminate tedious tasks and free human finance professionals to do higher level and more lucrative analysis and counseling for their clients. Yet, organizations hesitate to employ AI in their workforce due to uncertainties around the business case or return on investment.

Artificial intelligence has been implemented in several industries from stock trading to hospitals. Google has singled it out as the next big thing.

One of the main challenges for the accountants is the huge amount of transactions that the customers may have to deal with especially in the B2B space where you have hundreds and thousands of customers and millions of invoices and you have to go after every transaction. So that’s where a lot of time is being spent by having teams manually deal with massive transactions.

So when you have to go after so many transactions, keeping a record of every transaction, there comes the role of technology. Hence, finance teams lookout for business accounting software and tools to minimize mundane transactional activities, allowing them to redirect their focus on analyzing data, providing actionable insight and truly advising the business.

Forbes predicts that by 2020, accounting tasks including tax, payroll, audits, and banking will be fully automated using AI-based technologies, which will disrupt the accounting industry in ways never imagined and bring both huge opportunities and serious challenges.

AI promises to boost both productivity and quality of outputs while permitting greater transparency and auditability. Not only AI will provide a broad range of possibilities and minimize the regular responsibilities of the finance team but it will also save time and provide accounting professionals with an opportunity to conduct vital research on various aspects.

Besides that, AI will easily forecast accurate financial statements. The core concept is that with machine learning, accounting professionals would predict future data based on past data/records.

So let us discuss how AI applications and AI services can benefit finance experts in accomplishing their regular responsibilities at a faster pace. Let’s start:

Benefit #1. Machines Imitate The Human Brain

Automation, AI chatbots, machine learning tools, and other AI technologies are playing a leading role in the finance sector. Accounting and finance companies are making them a part of their business by investing heavily in these technologies.

According to researchers, AI apps and ML apps are impacting the accounting & finance professionals and their everyday jobs. Using AI and ML, finance experts can improve productivity and deal with new clients.AI can replace humans from the monotonous job of extracting, organizing, and structuring the data. But those same accountants and auditors working with AI can perform different tasks. First, they teach the AI what data to look for and how to organize it. Then they investigate anomalies. Thus, AI can take on the tedious work that takes up so much time – data entry and reconciliation – and also eliminate errors, reducing liability. With the mundane tasks handled, accountants will be free to engage in more advisory roles.

Benefit #2. Fighting Misrepresentation

With the help of machine learning algorithms, payments companies can analyze more data in new and innovative ways to identify any hoax activity. Every consumer transaction includes uniquely identifiable information. With AI and machine learning, payments companies can search rapidly and efficiently through this data beyond the standard set of factors like time, velocity, and amount.

AI helps in efficiently processing huge amounts of data from different sources, look out for problematic transactions and relationships, and report them in a visual tool that, in turn, will allow the compliance team to handle such types of suspicious cases more effectively.

Benefit #3. AI Machines Perform Make Accounting Tasks Easier

According to a consulting firm Accenture, “Automation, minibots, machine learning, and adaptive intelligence after becoming a part of the finance team at lightning speed.”

Artificial intelligence machines automate accounting procedures far and wide. It ensures operational efficiency while reducing costs. As automation is accessing every corner of a company, the financial companies also adopt the digital transformation that will gain from the technology developments. The accounting and finance leaders who deployed AI will be ranked in the future of digital transformations.

For example, Xero, an accounting firm, has launched the Find & Recode algorithm that automates the work and finds common patterns by scanning code corrections. Using the algorithm, 90% more accurate results were found while analyzing 50 invoices.

The advantages of artificial intelligence in accounting are more. Now, let us see what AI machines can do in accounting and finance:

Advantage #1: Pay/Receive Processing

Traditionally, invoice processing has been one of the most time and cost consuming jobs done manually in any firm. Invoices worth billions are processed and accounts payable is one process that mid to large size companies cannot elude. Moreover, one needs to go through every email, download invoices, verify and extract the data manually and finally, process the payments.

In this digital world, the need to automate invoice processing has become important to improve accounting, increase the volume, get zero-error processing, and maintain vendor relationships.

Digital transformation in accounting and finance has gone to another level, thanks to AI-based invoice management systems that help finance clients in making invoice processing efficiently. Due to technology advancements in the finance sector, digital machines using AI are learning the accounting codes that best suit for every invoice.

Advantage #2: Supplier Onboarding

Using AI into your onboarding processes can help you reach a broader set of new customers while increasing revenue and differentiating your organization from the competition.

The AI-powered systems can now assess the suppliers by scrutinizing their tax details or credit scores. AI tools can set all suppliers in the systems without the involvement of a human. Also, they can set the query portals to get the required data.

Advantage #3: Procurement

According to a recent report conducted by Gartner, AI technologies will add significant value if provided with the right platform, so application leaders in procurement need to drive better adoption of foundational procurement solutions.

There is a lot of paperwork involved when it comes to filing the organization’s procurement and purchasing methods. A huge amount of records needs to be maintained on the systems that are not in connection with each other. As AI-machines process unstructured data using APIs, the procurement process will be automated.                       

Advantage #4: Audits

Data analytics is very important for auditors. It helps them to easily establish the scope of the audit and carry out a risk assessment. Robotic process automation and analytics facilitate tracking records for the audit of routine transactions. Cognitive computing, AI and predictive analytics help with more complex and non-routine transactions that require estimates and judgments.

Artificial intelligence automates many tasks that were previously done manually, such as ingesting data. It analyzes 100% of the dataset without requiring a human to create tests, write scripts, or remember all the rules. Key to the future of audit is that AI is changing the definition of reasonable assurance, by understanding the entirety of the ledger and identifying anomalies based on risk, rather than rules.

Digitization in the audit process has led to the enhancement of the security level. Each file that is accessed can be tracked by the auditors using a digital tracker. It makes possible for auditors to work better and smarter by probing into the digital files rather than spending too much time searching all the paper documents. It enables them to use their human judgment to analyze a broader and deeper set of data and documents. Hence, the digitization process in auditing provides improved accuracy of audits.

Artificial intelligence in accounting and auditing helps to record every financial transaction of the company. It will help auditors to become more efficient, therefore, increasing productivity and helping their organizations to meet their goals.

Advantage # 5: Monthly/Quarterly Cash Flows

AI empowers businesses with financial management tools to quickly and easily reconcile the organization’s activity and understand their historical cash-flow activity and future cash requirements. It shows trends both backward and forward in time.

AI tools, devices, or AI applications not only speed up your processes but also make your financial processes accurate and secure. The AI-powered systems can collect data from various sources and integrate that data. The AI-powered machines make your monthly/quarterly cash flows collected in no time and consolidate it easily.

Advantage #6: Expense Management

The AI-powered systems can replace humans by taking over all the tedious tasks that were done manually earlier thus saving a lot of time. They are more quick and efficient. The task of revising and finalizing expenses to confirm that they are compliant according to the company’s norms is a difficult one. The manual process consumes more time for your finance team. AI will speed up the process because instead of the possibility of human error, the chain will be entirely digital, allowing for a tighter, more precise review. AI machines can read all receipts, audit costs, and also alert the human workforce when a breach occurred.

Advantage #7: AI Chatbots

AI-driven chatbots are developed to solve user’s queries efficiently. The queries may include the latest account balance details, statements, credit bills, and account status, etc.

With the help of chatbots, your finance team can track outstanding invoices and automate the follow-up process to ensure that invoices are paid and closed promptly.

AI chatbots can also be used to allow employees in other departments, like sales or marketing, to more effectively report and track business expenses by submitting receipts directly to the bot or by asking simple questions like, “Do I have any outstanding expense reports?” or “When will I be reimbursed for this business expense?”

AI Chatbots even answer everyday questions from customers and are increasingly becoming capable of handling tier 1 level support. Additionally, they can answer questions about your latest account balances, the due date of certain bills, the status of accounts and more.

Therefore, AI helps accountants in many ways. Many aspects of financial services involve a series of tasks that become tedious owing to the manual validation, assessment, and verification of data. AI not only allows accounting companies but also tech companies to solve problems in ways we have never considered, thanks to the data we are equipped with.

Robots Will Replace Humans – A Big Dilemma

It is a common dilemma that financial automation will replace humans with robots, which is not true.

One cannot deny the fact that this revolution of AI in accounting is not going to slow down in any way. No doubt AI technology has the potential to perform all mundane tasks of accountants. But, the technological changes cannot replace humans in any situation as human intelligence will always be required to perform and efficiently run technology.

The accountants are needed by the firms for interpreting and analyzing data captured by AI-powered machines. Moreover, accountants will play a major role in doing higher-order task consulting services better than machines. Rather than spending unnecessary time performing repetitive tasks, they can invest their time and focus on general tasks like data analysis and consulting services. Therefore, rather than replacing accountants, artificial intelligence helps accountants to do their regular tasks in a more technologically advanced manner.

The key to the digital transformation of accounting and financing is pairing people and machines together allowing each one to contribute in areas they are best skilled at.

A professor at the London School of Economics Leslie Willcocks said, “It takes the robot out of the human.”

Conclusion

This article shows how the finance and accounting industry is rapidly changing with artificial intelligence technology. AI-powered systems can efficiently and accurately analyze a tremendous amount of data, they can identify patterns in the data and learn how to deal with a varied amount of data. With machines taking care of the mind-numbing and monotonous tasks, human accounting and financial professionals will be free to take on tasks they are better suited for.

So, AI technologies can make our lives more convenient and easy, but there will always be a need for people to control, advance, and guide the machines where they need to go.

People and their relationship with technology, or more specifically, how they work with and apply technology in new and imaginative ways, will help define the new world of work.

– Paul McDonald, Senior Executive Director, Robert Half