For many, it's hard to imagine a world in which artificial intelligence (AI) technologies will soon be completing and submitting tax returns, performing bookkeeping tasks and processing payroll. However, the technology industry, specifically AI, continues to grow at an alarming rate and the use of 'robots' to perform simple business functions like accounting tasks, is no longer a distant 'what-if' scenario.
What impact will AI have on the accounting industry?
Businesses are continually embracing new technologies and innovations to streamline operations and improve efficiencies. The accounting industry is no exception. It just so happens that AI is one of the best-suited technologies to do just that.
Accountants, bookkeepers and payroll processors go through a significant amount of data in their jobs. Many accounting tasks are repetitive, time-consuming and rules-based - from processing payroll transactions to collecting the necessary information to lodge tax returns or business activity statements (BAS).
What does this mean for artificial intelligence within the accounting space? Roles that handle accounts payable, receivable and payroll spend most of their day processing invoices and entering invoice data into systems. Spending a 9-to-5, Monday-to-Friday job, entering invoice after invoice, can be mentally taxing and demotivating to many employees. In fact, the other aspects of these roles can suffer if there is an influx of invoices or data to be entered into accounting systems. A great example of this lies within the payroll function. Events like public holidays or award changes can increase data-entry tasks, often taking the focus away from more complex tasks like sorting out pay queries or handling repayment issues and so on.
Examples of how AI can improve accounting efficiencies
- Data entry and invoice processing automation
AI can help by introducing data entry automation technologies like optical character recognition (OCR) and NLP technologies1. These systems ‘read’ invoices, contracts and documents and automatically enter in dollar amounts accurately. This removes the chance of human error that can be found in manual data entry tasks and saves valuable man-hours. Not only does it save on costs but it allows for you to re-focus those hours on other aspects of your accounting business. It will also help improve staff satisfaction rates. By allowing those employees to work on building client relationships or value-adding services within your organisation and taking away the mundane, repetitive nature of lower-level accounting tasks, you'll find they'll likely thank you for it.
- Bookkeeping automation
You might be surprised to find out that applications you use daily, within say your bookkeeping tasks, already use AI. Accounting platforms, such as Xero and MYOB, have made reconciling accounts and transactions easier for business owners. Xero introduced the use of AI within their systems by acquiring HubDoc. Now, when you go to take a photo of your receipt to upload to Xero, artificial intelligence 'reads' the details on the receipt and will automatically match the receipt to the appropriate transaction on your bank feed. The best thing about this for bookkeepers and accountants is that this saves significant time by allowing AI to complete time-consuming and repetitive tasks.
"Technology automates mundane, repeatable tasks and activities that are best done by machines— refocusing human skill and judgment on problems that machines can't solve." - Cliff Justice, Principal, Innovation & Enterprise Solutions, KPMG3.
The key factor here is the rules-based aspect of accounting tasks. AI is all about machine learning. If you tell AI, through coding, how to perform a job, the AI system will do that for similar future tasks, learn from experience and understand how to respond to task anomalies. This can be extremely helpful for accountants in regards to compliance and audit functions. With AI systems being able to generate reports for accountants due to their ability to sift through large amounts of data, they can, in turn, maximise efficiencies and highlight compliance errors that might have been overlooked. For example, with data categorisation and highlighting missing information, AI can learn to understand what data should be prioritised based on an accountant's behavioural patterns2.
Why doesn't AI complete all accounting tasks?
Although repetitive and rules-based tasks can easily be digitised and set up for robotic process automation systems like AI, there is still that "human" component of accounting services that AI models cannot imitate.
Take advisory accounting roles, for example. While AI is taking care to eliminate human error and reduce liability in data-entry tasks, your accounting team can focus on strategy, process improvement, capital optimisation and cost control.
We mentioned earlier how AI is all about machine learning. It uses historical data to predict and forecast future data trends. However, it has its limitations. AI is still a while off being able to fully 'think like a human' and can't currently come up with those out-of-the-box, planning accounting strategies like humans can.
Tasks such as detecting credit fraud and building client and inter-departmental relationships require a special human touch.
As an example, it’s sometimes hard to express ‘empathy’ from an AI-powered chatbot. Humans can detect tone to better emphathise with customer situations and manage financial hardships more effectively. There are just too many tasks within the accounting industry that robots cannot do.
Will AI robots replace real-life accountants?
The short answer is no, absolutely not. An accountant is more than just data entry and reports. They are a business advisor that analyses historical data and provides real-life solutions to human problems technology cannot solve.
It's understandable how people within the accounting industry panic when they hear of 'robots taking over jobs' but that's a limited perspective on AI. Instead, it should be more about how AI can make accounting tasks more efficient and add value to the existing accounting processes4.
AI should be considered a 'level-up' upgrade that accounting services can use to get ahead of their competition. If you speak to an accountant, payroll adviser or even CFO and ask what the one thing that takes up most of their team's time is, you'll hear keywords like data-entry, invoice processing, report writing or even tax preparation. Now, think of AI as a possible solution to this. A solution that would transform their accounting functions not replace them.
Instead of spending countless hours entering data and then having to analyse it, accountants will actually be able to get rid of that data-entry component of their day and spend more time studying and understanding the implications of the data that AI creates; free of human error5.
Suddenly, accounting teams are solving business problems left right and centre and understanding that to keep up-to-date with modern client needs, sustain a competitive advantage and plan for future growth AI will help, not take away these opportunities.
The advantages and future of AI accounting
There simply is no way to escape the introduction of AI into the accounting field, not if you want to stay competitive in the coming years. The fact is that artificial intelligence within the accounting market is expected to grow at a compound annual growth rate (CAGR) of 30% from 2020 to 20276. The benefits of speed, efficiency and accuracy that AI can provide accountants and their teams are unmatched. AI equals more efficient and faster data management which equals more growth opportunities within the business and your accounting team.
The best thing to do is embrace these opportunities and maximise them within your existing accounting services. If you can produce accounting solutions faster and quicker than competitors for your clients by integrating AI into your business, imagine the possibilities for scaling and growing your business as a whole. Your entire business plan would change, and chances are, your accounting team would expand, not shrink because of it.
The fact of the matter is that some businesses simply do not have the time, resources or funds to research and implement these accounting solutions. So how can they reap the benefits? By partnering with an organisation that does.
Outsourcing means you’re sending tasks outside of your business to be completed by a third party. If you choose to outsource your accounting roles and tasks to an experienced BPO provider, consider asking them what kind of automation technology they have on hand to assist in making their employees more efficient.
You will still need to train your outsourced employees on your systems and processes - that is unavoidable and key to outsourcing success. But, by partnering with an offshore provider that has actively invests in AI-powered solutions to make their teams, operationally, more efficient, you’ll reap the benefits too.