We live in an amazing age where seemingly every problem can be fixed by a specific tool or piece of technology. You missed the golf ball and created a divot with your club? There’s a tool for that. Curious if that plant growing in your garden bed is a weed or a flower? There’s smart technology for that. Indeed, there’s no shortage of solutions for the challenges we face, even in accounting!
But like these examples, some tools are simple, while others are complex, making our understanding of them and how they actually work a bit cloudy.
Of course, do you really need to understand the details about how something works to be able to appreciate its benefits? No, but it probably helps to have at least a basic understanding. After all, we often fear or feel threatened by what we don’t understand, and there’s absolutely no reason to fear AI automation in accounting!
So to help accountants get a better grasp on what AI is and how it works to benefit their firm, we’ve pulled together this snapshot meant to demystify how AI works in accounting, what it’s capable of, and how it actually helps your firm reach its goals.
How Does AI in Accounting Work?
A lot of accounting is based on workflows, and artificial intelligence can be used to automate those workflows like running payroll or generating financial reports. Machine learning, a sort of subset of AI, assists by learning from our behavior and recreating actions based on what information is fed into it.
Take categorizing transactions, as an example. AI can take information like the name of the transaction and dollar amount and categorize it based on how it’s been categorized previously. This can make those high-volume clients an absolute breeze.
It’s exciting to realize that the more AI is used and adopted, the more powerful it becomes! But rest assured—Siri won’t be running the firm any time soon. 😉
What Kind of Tasks Can AI Do?
To put it simply: AI and ML work together to make your life easier. The technology is constantly evolving and adapting, so if there’s a task you’re wondering if AI can do, the answer is either “yes” or “not yet.”
But for now, AI can take on the more rudimentary tasks your firm handles on the daily. Monthly close procedures are significantly simpler when AI is managing the workflow that consolidates all the data from various sources. And then because you have accurate data readily available, you can turn your focus to real, timely analysis. Procurement becomes simpler when you no longer need to worry about paperwork and file formats. Even auditing can be done more thoroughly, as AI brings you the exact documentation you need and increases review efficiency.
AI is a tool that pays dividends as soon as you implement it, but because it gets more sophisticated and accurate with each task it completes, it becomes even more valuable down the road.
Will AI Replace Accountants?
It’s true that AI will take work off your plate. But could it actually reduce it to the point that accountants become unnecessary?
Don’t forget that even though AI gets better over time, it is technology and not a human brain capable of complex thought and decision-making. AI technology isn’t sophisticated enough to replace the expertise that you bring to the table. The tasks that AI handles are the ones that don’t require critical thinking, like invoice management, processing statements, or virtually any other tedious task that you wish you could delegate in place of more meaningful accountancy work.
AI isn’t here to take jobs away, but rather to make firms more efficient. In fact, the inverse is more likely true: AI will help firms meet the increase in demand for their services. The number of small businesses in the US increased to 31.7 million in 2020. That number is steadily growing as having a side business is becoming more accessible. The difficult minutiae of starting and running a business has been streamlined for prospective business people.
Take, for example, dropshipping businesses, which entice entrepreneurs with the promise of profits without the logistical problems of physical inventory. This increase in the number of small businesses is one of the main reasons the BLS predicts accounting and auditing jobs in the US will increase to 1,537,600 in 2026, a 10% increase from 2016.
Firms must become more efficient in order to grow with the growing number of potential clients. AI empowers firms to do exactly that by handling the most time-consuming and mundane tasks so your firm can focus on providing a high level of service to more people.
Sounds like a pretty good business model, right?!
How Will AI Change How I Use My Time?
AI gives accountants more opportunities to analyze reports by freeing up the time typically dedicated to menial tasks. This, in turn, strengthens conversations with clients and creates more opportunities to offer new services.
The majority of small business owners don’t have an accounting background, nor are they financial experts. This might be a reason why many businesses fail early-on due to financial reasons—they don’t realize they need help until it’s too late. How would their stories be different if they had paid for someone to show them how to avoid those pitfalls?
Branching out into financial advisory services can unlock that next stage of profitability for your firm. Outsourced CFO services can fetch $1,200 to $2,500 per day, especially right now in our remote world when demand is high. But businesses also want that financial know-how without the price tag of a full-time CFO, which was almost $400,000 in 2019.
By using AI to focus on those basic yet time-consuming tasks, your firm will stay locked in on the tasks that generate the most revenue.
How Will Using AI Impact My Clients?
The conversations you have with clients can be the greatest value you provide, and having access to the essential reports and forecasts keeps those dialogues going.
Tools driven by AI do all the back-end work and generate the reports that inspire meaningful conversation. You’ll be empowered to cover the topics on the forefront of every business owner. Yes, you provide balanced books and scour for every possible tax deduction, but you’re also providing something so much more important: peace of mind.
When you talk to a client, you’re talking about their livelihood—the questions they ask are incredibly important to them. They aren’t looking to deal with a robot; they want to talk to a human who empathizes with their situation and cares about where they’re headed. It might feel counterintuitive, but by bringing on a robot, you’re actually able to focus on the human side of things.
Start bolstering your client’s financial knowledge so they understand how money drives their business. They’ll become invested, shifting their perspective so they’re eager to book an appointment to dissect their latest P&L or see how their most recent month affects their long-term forecast. Soon, they’ll be coming with a laundry list of reports they want to look at and discuss—all the more reason to let the AI handle generating them for you!
How Easy is it to Implement AI?
Your firm has had years of doing the same tasks over and over again. Mastering this process is great, but at some point it begins to generate diminishing returns. You can only get so efficient with the same tools before your growth plateaus! Simply put, if your firm really wants to grow to the next level, you must make a change in your process for new efficiency gains.
This article points out some of the biggest benefits of incorporating AI into your firm’s processes and workflows, but rest assured that there are many more (time management, staff workload, deliverables, document management, etc.). When it comes to automation, the possibilities are endless.
Tools using AI are built to be incredibly accessible and can be easily worked into an existing workflow. They’re developed with user experience in mind, minimizing the stress of actually using the technology. Botkeeper is built to be connected to already established accounting softwares like Quickbooks or Xero. By working seamlessly with a platform you already use, you can hit the ground running by having tasks like payroll and transaction categorizing taken over from day one.
With how easy it is to incorporate AI into the workflow of a firm, now’s the time to allow technology to take your firm to the next level. If you want to reduce overhead costs by 50% and allow your firm to scale 10x or more, check out our weekly presentation created exclusively for accounting professionals (and eligible for 1 CPE credit!).