Artificial intelligence in accounting tends to conjure up images of sci-fi movies and cyborgs taking the place of humans. In fact, the idea of artificial intelligence has been around for a long time, and it’s much a more collaborative technology than you may realize.
The first artificial intelligence projects were initiated by academics in the 1950s who were trying to understand whether computers could think like humans and simulate our behavior. Over the past 60 years, the technology has evolved to take many forms, from machine-based learning that progressively gets better at analyzing information and making decisions the more it is used, to speech-based tech that can understand different voices and languages.
What is artificial intelligence in accounting?
Artificial intelligence is technology that enables computers to perform routine, repetitive, and decision-based tasks that were previously done by humans.
Several large accounting firms and organizations made early investments in artificial intelligence and now use AI to reduce the amount of time their accountants spend on complex audits and other accounting tasks.
The Use of AI in Accounting
As noted above, many accounting firms already utilize ai to help perform accounting tasks in their firm. Below are some of the current uses of artificial intelligence in accounting:
AI for Transaction categorization.
The transactions that need to be entered into an organization’s accounting software may be spread across PDFs, spreadsheets, invoices, receipts, and bank statements. AI can extract information from these disparate sources of information and categorize it in the accounting software, something that accountants have traditionally had to do manually.
Expense report review and approval.
Artificial intelligence can learn a company’s expense policy, read receipts, and review and approve expense reports. It can then forward any questionable claims to a human for approval.
Matching payments with AI.
When customers submit payments that don’t match invoices in the accounting system, artificial intelligence can analyze invoices and match the paid amount to the appropriate invoices. It can also clear out short payments or automatically generate a new invoice to reflect the short payment. This frees up the accounts receivable staff from the time-consuming tasks of calling the client for clarification or trying to determine the right combination of invoices to apply the payment.
Artificial intelligence can analyze and digest large volumes of data fast to detect outliers and anomalies. The technology can learn acceptable patters and recognize potentially fraudulent activity in purchasing and accounts payable and forward issues to the appropriate level of management for follow up or review. The technology can detect suspicious behavior long before a human would and significantly reduce the potential hit to the company’s bottom line.
AI Analytics calculations.
Accounting personnel are constantly tasked with answering questions like, “What was our revenue for this service line in the second quarter of last year?” or “How has this product line grown over the last ten years?” With the right data, AI can answer these questions very quickly.
Artificial intelligence and the future of accountancy
A survey from the World Economic Forum found that 75% of executives and experts from the information and technology sector anticipate that at least 30% of corporate audits will be conducted by artificial intelligence by 2025.
Despite these predictions, artificial intelligence isn’t replacing accountants, so if you’re considering a finance or accounting career path, don’t worry. Instead, it’s working alongside them to automate a lot of the data entry, ticking and tying of numbers, and reviewing complicated contracts and other documents and free them up to perform more sophisticated work.
Accountants who want to prepare for the impact of artificial intelligence on accounting jobs should expand their knowledge to include database and IT skills. This may involve taking on specialized projects at work, attending seminars, or completing self-study courses or live courses. Gaining a level of comfort with the new technology and leveraging it to automate mundane tasks and assist with decision making can provide an edge as the use of artificial intelligence increases in the profession.
Rather than fear the changes that artificial intelligence will have on accounting, get excited about the opportunities it will bring. Artificial intelligence won’t replace accountants, but accountants who use it will eclipse those that don’t.