Artificial Intelligence in Accounting14/10/2022 0 By indiafreenotes
Artificial intelligence systems can be very powerful and are improving quickly. They provide outputs that can be extremely accurate, replacing and, in some cases, far superseding human efforts. However, they do not replicate human intelligence. We need to recognise the strengths and limits of this different form of intelligence, and build understanding of the best ways for humans and computers to work together.
Artificial intelligence and Accountancy
Although artificial intelligence techniques such as machine learning are not new, and the pace of change is fast, widespread adoption in business and accounting is still in early stages. To build a positive vision of the future, we need to develop a deep understanding of how artificial intelligence can solve accounting and business problems, the practical challenges and the skills accountants need to work alongside intelligent systems.
ICAEW has long-standing expertise in technology-related issues, drawing on the experience across many aspects of business, finance and accounting, and will focus on building understanding of the practical use of artificial intelligence across business and accounting activities today and in the near future.
Benefits of Artificial Intelligence for Accountants and Finance Professionals
New technology is changing the way people work in every industry. It’s also changing the expectations clients have when working with companies. The same is true for accounting. Artificial intelligence can help accountants be more productive and efficient. An 80-90 per cent reduction in the time it takes to do tasks will allow human accountants to be more focused on providing counsel to their clients. Adding artificial intelligence to accounting operations will also increase the quality because errors will be reduced.
When accounting firms adopt artificial intelligence to their practise, the firm becomes more attractive as an employer and service provider to millennials and Gen Z professionals. This cohort grew up with technology, and they will expect prospective employers to have the latest technology and innovation to support not only their working preferences of flexible schedules and remote locations but also to free them up from mundane tasks that machines are better suited to complete. As clients, millennials and Gen Zers will determine who to do business with based on the service offerings they can provide. As more accounting firms adopt artificial intelligence, they will be able to provide the data insights made possible by automation while those who don’t commit to the technology will not be able to compete.
Robotic process automation (RPA) allows machines or AI workers to complete repetitive, time-consuming tasks in business processes such as document analysis and handling that are plentiful in accounting. Once RPA is in place, time accountants used to spend on these tasks is now available for more strategic and advisory work. Intelligent automation (IA) is a more sophisticated version of RPA. IA can mimic human interaction in many cases, such as understanding inferred meaning in client communication and using historical data to adapt to an activity. There are multiple applications of RPA and IA in accounting work.
AI can often provide real-time status of financial matters since it can process documents using natural language processing and computer vision faster than ever making daily reporting possible and inexpensive. This insight allows companies to be proactive and adjust course if the data show unfavourable trends.
Automated authorization and processing of documents with AI technology will enhance several internal accounting processes including procurement and purchasing, invoicing, purchase orders, expense reports, accounts payable and receivables, and more.
In accounting, there are many internal corporate, local, state and federal regulations that must be followed. AI-enabled systems help support auditing and ensure compliance by being able to monitor documents against rules and laws and flag those with issues. Fraud costs companies collectively billions of dollars each year and financial services companies have $2.92 in costs for every dollar of fraud. Machine learning algorithms can quickly sift through enormous amounts of data to discern potential fraud issues or suspicious activity that might have been otherwise missed by humans and flag it for further review.
Changing the Human mindset
It seems like the only barrier to artificial intelligence adoption in accounting is getting people on board with the change. Nearly 85 per cent of executives understand that AI will help their companies attain or sustain a competitive advantage according to a study from The Boston Consulting Group and MIT Sloan School of Management. Since the chief executives seem to understand the importance of artificial intelligence, it just requires a mindset shift from the accounting professionals to accept the changes. With an assist from AI-enabled systems, accountants are freed up to build relationships with their clients and deliver critical insights.
Enterprises that jump on the digital transformation train by adopting AI have the advantage as they can leverage AI to all aspects of accounting, including improved operational efficiency, reduced costs, and more significant ROI. For instance:
Payables/ Receivables Processing
Invoice processing is considered one of the more time-consuming and labor-intensive parts of the enterprise. AI-based invoice management systems help by increasing the volume, performing zero-error processing, and improving vendor relationships.
The AI-based approach helps expand customers’ reach, increase revenue, and evaluate the suppliers with minimal human intervention.
Purchasing and procurement processes mean a lot of paperwork – sometimes in different systems that are seemingly unconnected! With AI-driven workflows, finance teams can process unstructured data while automatically mitigating governance/compliance/risks.
Data analytics establishes the scope of the audit, and risk assessment as RPA and analytics facilitate tracking of routine transactions. Cognitive computing, predictive analytics, and AI enable tracking more complex transactions that go with estimates and judgments.
Monthly and Quarterly Cash Flows
AI-based tools empower enterprises to reconcile financial activities quickly, understand historical cash flows, and predict future cash requirements. AI applications also ensure that all financial processes are secure by collecting data from many sources and integrating the data.
When manually done, managing expenses-related processes is not only filled with complex paperwork but also prone to fraud and data breaches. Expenses management automation ensures almost zero errors and alerts the team to a breach if it occurs.
AI-driven chatbots help solve user queries quickly and efficiently, including queries on account balance, financial statements, account status, etc. Tracking outstanding invoices and automating the follow-up collection processes with AI ensures that accounts are kept balanced and closed promptly. Moreover, AI chatbots answer customers’ routine questions and can provide level-1 support.