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.

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 existing data and functionality to adapt and learn new skills for tasks that machines were explicitly programmed to perform.

AI could revolutionize accounting and finance by paving the way for more efficient and streamlined processes and the ability to tackle even the most complex financial calculations and tasks 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 many accounting firms spend a significant amount 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
Virtually every company produces an avalanche of data and today’s business environment requires numerous repetitive tasks.  Human data entry and processing contains an error ratio no matter how skilled the person performing the job.  Efforts to automate routine functions have helped reduce the human error factor in data production.  However, many executives still lack confidence in their data sets.  AI operates on algorithms that improve with time as they process more data.  Incorporating AI will help further reduce input errors, help identify mistakes earlier and add greater precision in the numbers. Those who depend on the data outputs can gain real-time visibility and confidence.

Enhanced 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 tedious and repetitive tasks. AI paired with financial management tools can accelerate these activities.  The sooner the numbers are available, the more time the company gains to develop strategies for expense management, cash flow management, and reduction of accounts payable and receivable.  Accounting closing procedures will be done faster and with more accuracy.

Improved Financial Reporting
Meaningful insights are often lost in the volume of available raw data. AI technologies can analyze tremendous amounts of data to spot patterns and trends that may not be recognized using traditional data analysis tools.  This can help companies identify areas where financial performance can be improved, leading to more informed and data-backed decision-making for the company.

Greater Opportunities for Growth
With AI’s promise to help automate repetitive 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.

Embracing the Future

Embracing AI will require adjustments, including re-structuring roles for trusted employees to setting new expectations with clients. No matter the size or type of the organization providing financial guidance and support, 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 for accounting professionals to take on roles that could create better strategy, forecasting, and decision-making.

On the flip side, those who remain entrenched in manual data processing will face increasing challenges to add value within their organizations.  Companies will need to re-assess their data security and make changes quickly to keep their data secure as they implement AI technology.  As with any new and rapidly-changing technology, predicting how it may impact your organization is speculative.  Therefore, many organizations find it difficult to justify a business case to implement AI due to uncertainties in the outcomes.

What the Future Holds for Your Financial Systems

Artificial intelligence is no longer futuristic science fiction.  It is incorporated in many of the day-to-day activities that we depend upon to operate effectively.  AI has the potential to transform the finance and accounting industry. What could this mean for your company’s future?  How can you take advantage of the benefits these powerful resources provide while mitigating the risks they introduce?

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 PeggyHead@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