How AI is Changing the Accounting Landscape
Artificial intelligence has been disrupting a number of industries for quite some time, and accounting is one of them.
Although it’s still in its infancy, this advanced technology makes a significant impact when it comes to improving productivity, streamlining different operations, and saving resources.
Intelligent chatbots and virtual assistants making restaurant reservations, predictive analytics showing tailored product recommendations to consumers, Robotic Process Automation handling dangerous tasks – all this is a reality thanks to AI.
But there’s one particularly powerful aspect of this technology capable of revolutionizing the way we live and work: big data analytics.
The ability of this technology to collect and interpret copious amounts of structured and unstructured data using sophisticated algorithms, learn from complex patterns, and eliminate human error is what makes it increasingly indispensable in accounting.
Improving Business Efficiency
Research studies predict that AI technologies will increase labor productivity by up to 40% as well as help employees use their time more efficiently.
Some accounting roles that contain a great deal of repetitive routine tasks, such as bookkeeping, payroll, entry-level tax, or AR/AP management, will inevitably be automated.
For example, Robotics Process Automation (RPA) solutions can complete high-volume, low-value, repetitive tasks significantly faster and more accurately than humans. As a result, implementing RPA can bring significant cost savings of somewhere between 20%-60% of FTE costs. Finally, these efficient robots will allow human employees to focus on more complex and valuable tasks that require critical thinking.
RPA bots can perform data processing, launch and use different applications, or integrate with enterprise tools, among other things. When we’re talking about the finance and accounting industry, this means they can redefine a number of business processes.
A standard consolidation process, for example, consists of collecting information and templates manually from various departments, reviewing the consolidated results, and requesting additional information regarding significant variances. RPA can automate and accelerate this entire process, as well as eliminate human error from it.
Ensuring a Positive Customer Experience
Delivering an optimized customer experience is of paramount importance in every industry.
When potential clients land on an accountancy website, it’s crucial to provide them with the best possible customer support, which means that their inquiries should be addressed in a timely manner. The thing is that many of these inquiries fall into the category of simple and frequently asked questions.
Having human customer agents spend their time answering these questions is a waste of resources. That’s where AI-powered chatbots can step in, take on this low-value workload, and allow human reps to handle more complex calls. Besides, these smart programs are available 24/7, and they reduce wait times as they can chat with multiple users simultaneously.
There are different use cases for customer service chatbots in finance and accounting that can streamline communication with clients in a cost-effective way.
If we bear in mind that many business owners aren’t familiar with all tax rules and regulations, accountancy firms can leverage bots that navigate their clients through this complex process, or even help them prepare the paperwork and calculate their taxes.
Providing Advanced Analytics
Accounting firms already leverage traditional analytics in order to obtain valuable insights into their clients’ finances. But these procedures mainly involve number crunching and creating reports that show what factors impacted financial results and how.
In other words, traditional analytics offers some kind of hindsight and allows you to prevent repeating the same mistakes and forecast future results using historical data and assumptions.
Advanced, AI-powered analytics takes predicting to the next level by combining big data, sophisticated algorithms, and machine learning. There are two types of analytics:
- Predictive, capable of anticipating future outcomes
- Prescriptive, that can not only anticipate outcomes but also suggest how to transform predictions into actions.
All this will help accounting specialists to identify and understand new market trends, establish new performance KPIs, and improve the accuracy of their predictions.
The benefits of this technology are tremendous, and it will allow CAPs to leverage data-driven recommendations and real-time events instead of relying on guesswork. With advanced analytics, they will be able to spot some hidden correlations and market trends quickly and make informed decisions.
Of course, in order to make the most of this technology, CAPs will have to develop their information technology competencies and skills. Learning statistical methods such as regression analysis and hypothesis testing will be a must for those willing to raise the bar, and deliver better service.
Improving the Accuracy of Optical Character Recognition
Optical character recognition (OCR) solutions have been around for a while, but in synergy with AI, their accuracy will be significantly improved.
This technology is among the most beneficial ones for the accounting industry, due to its ability to extract information from paper and digital documents such as photocopied, scanned, or PDF files, and convert it into machine-encoded text.
Before AI, the accuracy of OCR solutions used to be lower, and a major downside was their inability to interpret unstructured documents. Namely, structured documents like checks that have a static layout could be easily read and converted by OCR solutions.
However, bills and receipts are unstructured documents, and before AI and natural language processing (NLP), it was impossible for OCR to understand them. Intelligent process automation (IPA) is powered by NLP and can make sense of the text, tables, and images within documents. This way, it’s possible for them to understand the context and extract a particular type of content from a number of documents.
For example, thanks to its ability to understand the context, IPA will pick up the meaning even if there are typos in a document, or if synonyms are used.
Accounting firms can use this technology to scan invoices, checks, bills, and different receipts, and streamline payment processing and eliminate manual data entry.
AI-powered technology will not replace humans but assist them in performing different tasks more quickly and accurately. CPAs will have to adapt to this new reality and adopt these innovations if they want to stay competitive and maximize business opportunities.