The Big Boom of AI and Its Impact on Accounting, Finance, and Business

Some experts suggest we buckle up because artificial intelligence (AI) is about to shake the accounting profession. They predict that in the next decade AI will automate many of the most repetitive processes in accounting such as data entry and reconciliations. What does this mean for the profession and what opportunities could business teams seize?

With the rapid advancements in artificial intelligence, the accounting and finance industry is undergoing a major transformation. But what does this mean for the future of accounting and finance?

What Exactly is AI?

Chances are you’ve heard all about AI by now. Artificial intelligence has become crucial to highly demanding industries. If you hear the term artificial intelligence you might think about self-driving cars, robots, ChatGPT, etc. However, it’s also important to look behind the outputs of AI to understand how the technology works and its impact on future generations.

AI has been around since the 1950s and was described as a machine’s ability to perform a task that only humans could once perform.  Fast-forward to 2023, AI systems demonstrate traits of human intelligence such as learning, problem-solving, perception, and even a limited spectrum of creativity and social intelligence.¹  Basically, AI has the ability to use training to adapt and learn new skills for tasks that machines were explicitly programmed to perform.

From the perspective of accounting and finance, AI could revolutionize this area by paving the way for more efficient and streamlined processes and the ability to tackle even the most complex financial problems with ease. According to Forbes, software companies such as Intuit and Sage are utilizing AI and machine learning technologies to speed up bookkeeping tasks.  AI could be transformational since 1/3 of accounting firms spend most of their time on low-value, repetitive projects.  Imagine the benefit of alleviating day-to-day issues and streamlining tasks such as processing audits and contracts. ²

AI’s Impact on Accounting and Finance Functions

Fewer Mistakes
Human error is part of our DNA.  Virtually every company produces an avalanche of data, but that doesn’t mean the finance team has the right data. Many executives lack confidence in their data sets.  AI operates on algorithms that improve with time as they process more data, meaning AI will make fewer mistakes and have greater precision in the numbers. This means accounting professionals can gain real-time visibility into a company’s financials with greater accuracy and confidence.

Greater Strategic Planning
By automating some of the less strategic tasks in the accounting function, finance firms can spend more time focusing on strategic decision-making and corporate vision tasks.

Faster Results
As mentioned earlier, AI-powered software is used to help automate many tedious and repetitive tasks. AI paired with financial management tools can quickly and easily reconcile the organization’s activity and understand its historical cash flow activity as well as future cash flow requirements. The sooner the numbers are available, the more time the company gains to develop strategies for expense management, cash flow management, and accounts payable/receivable.  Quarterly and monthly closing procedures will be done faster and with more accuracy.

Improved Financial Reporting
Within financial reporting, AI technologies can analyze tremendous amounts of data to spot patterns and trends that may not be visible to the human eye.  This can help accounting professionals identify areas where financial performance can be improved, leading to more informed and data-backed decision-making for the company.

Opportunities for Growth
With AI’s promise to help automate lower-level tasks, financial professionals can now refocus their time to help businesses they support in an advisory role.  By offering more holistic financial consulting, financial professionals can diversify their services such as analyzing broad financial trends for business growth. For example, they can ensure that their clients are ready for significant financial transactions such as initial public offerings, mergers and acquisitions, business loans, strategic reviews, or restructuring. Accountants often navigate these transactions in real time.³ However, AI will help them benchmark, track, and improve clients’ businesses before a transaction starts.

Embracing the Future

Embracing AI will require adjustments from creating fulfilling roles for trusted employees to setting new expectations with clients. For companies that use large accounting firms, a fractional CFO, or business advisors that guide financial decisions, AI can be a game-changer. Since AI allows for transparency, accuracy, and streamlined processes, companies can have confidence that their data and financial information are timely and accurate. Ultimately, AI may create new opportunities where your accounting professionals can now take on more important roles that could create better strategy, forecasting, and decision-making.

On the flip side, AI may cause high unemployment rates for low-level accountants and high data breach risks due to AI’s cloud-native environment. Some companies are still reluctant to move their financial systems to the cloud. Once they do, they need to factor in change management to take advantage of AI. In addition, many organizations hesitate to implement AI due to uncertainties around the business case or the return on investment.

What the Future Holds for Your Financial Systems

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, more lucrative analysis and counseling for their clients.  What could this mean for your company’s future?

Your company is in the expert hands of financial and strategic business advisors when you engage with B2B CFO®. The diverse nature of B2B CFO®’s client base means we have the expertise to manage complex financial issues. Our Partners take great pride in helping to ensure our clients are always on track to achieve financial stability and business success. If you should have questions or need assistance, email, ArtBottoms@b2bcfo.com.

Sources

1. ZDNET What is AI- Everything you need to know. April 21, 2023

https://www.zdnet.com/article/what-is-ai-heres-everything-you-need-to-know-about-artificial-intelligence/

2. Forbes, How Technology is Transforming Accounting, November 2022 https://www.forbes.com/sites/forbestechcouncil/2022/11/30/how-technology-is-transforming-accounting/?sh=58cf795e108e

3.  Business.net, How AI and Automation Technology Can Help Accountants, February 2023. https://www.business.com/articles/ai-and-accounting/