Artificial intelligence took the business world by storm in 2024. Countless AI-driven tools that emerged during the past year are boosting efficiency in virtually every industry by automating the tasks that most often bog down business processes. Essentially, AI takes on the business world’s day-to-day dirty work, delivering with more accuracy and speed than human workers are capable of providing.
For accounting, AI couldn’t have come at a better time.
As companies struggle to do more with less, AI offers solutions that promise to reshape the accounting world. However, putting AI to work also forces companies to accept some new risks.
“Bias” has become a huge buzzword in the AI arena, forcing companies to consider how the automation tools they bring in to help with processing data may introduce some questionable or even dangerous ideas. There are also ethical issues associated with next-level AI-powered data processing that have some concerned that achieving AI-assisted business efficiency also means risking
To make AI worthwhile as an accounting tool, companies must find ways to balance gains in efficiency with the ethical risks it presents. The following explores the growing role AI can play in business accounting while also pointing out some of the downsides that should be carefully considered.
AI upside: Increased accuracy and efficiency
Accounting isn’t accounting if it isn’t accurate. Mis-keyed amounts or misplaced decimal points aren’t acceptable, regardless of the company’s size or the business it is doing. When the numbers are wrong, the decision-making that relies on those numbers suffers.
Consequently, manual accounting typically moves slowly to avoid errors. Business leaders have learned to wait on financial reporting prepared by hand. They’ve also learned that because of processing delays, they may not have the numbers they need to take advantage of unexpected opportunities.
AI changes the equation by improving the speed and accuracy of reporting. AI-powered data entry automatically extracts numbers from invoices and other financial statements, eliminating the need for manual entry and the mistakes that can occur when an accountant is distracted, tired or just having an off day. AI can also detect errors or inconsistencies in incoming documents by comparing invoices and other documents to previous records, providing a second set of eyes for accounts as they ensure companies aren’t being overbilled or under-compensated.
When it comes to increasing the pace of accounting, AI’s capabilities are truly astonishing. As
AI accounting gives business leaders accurate financial data in real time, meaning they have relevant and reliable accounting intel when they need it rather than requiring them to wait until the end of the month to have a report on where their cash flow stands. It also has the potential to give a glimpse into the future by drawing upon historical data to drive predictive analytics. AI can look at what has been unfolding in a business and its industry to plot the path forward that makes the most financial sense. It’s not exactly a crystal ball, but it’s as close as most businesses should expect to get.
AI upside: More time for high-level engagement
As AI began to make inroads in the business world,
The manual work typical of conventional accounting is tedious, tiresome and time-consuming. Doing it well eats up much of the energy accountants could otherwise apply to higher-level activities. By using AI automation for those tasks, accountants gain the resources needed for high-level engagement.
Accountants who partner with AI gain the capacity to shift their role from bookkeeper to financial advisor. Rather than focusing all of their energy on preparing reports, they are freed up to interpret the reports. Delegating data entry and other day-to-day tasks to AI allows accountants to become strategic partners with the businesses they serve, whether as in-house employees or external advisors.
Financial forecasting becomes much more doable when AI is in play. Accountants can develop comprehensive financial models that forecast future revenue and expenses. They can also assess investment opportunities, such as determining the viability of mergers and acquisitions, and help with risk management and mitigation.
Tax planning and optimization will also become more manageable once AI automations have been added to the mix. Automating data extraction and categorization streamlines the process of classifying expenses for tax purposes and identifying expenses that are eligible for deductions. AI automation can also be used for tax form completion, adding speed and a higher level of accuracy to a process that very few accountants look forward to completing manually.
AI downside: Higher data security risks
Accountants are well aware of the dangers of data breaches. Allowing financial data to fall into unauthorized hands can lead to financial loss, operational disruption, reputational damage and regulatory consequences. Shifting to AI accounting can potentially increase the risk of data breaches.
Changing to AI accounting often means concentrating financial and other sensitive data and moving it to interconnected networks. Concentrating data creates a target that is more desirable to bad actors. Shifting it to the cloud or other interconnected networks creates a larger attack surface. Both factors create situations in which higher levels of data security are definitely needed.
Addressing the heightened threat of cyberattacks requires a combination of tech tools and human sensibilities. To keep accounting data safe, encryption, multifactor authentication, and regular testing and update protocols should be used. Training should also help accounting teams understand what an attack looks like and how to respond if they sense one is being carried out.
AI downside: Less process customization
Developing the types of platforms that can safely and reliably drive AI automations is not an easy — or cheap — undertaking. Consequently, many companies choose the economy of “off-the-shelf” platforms. However, opting for a standardized platform could mean closing the door on customized financial workflows a company has developed.
For example, an off-the-shelf platform may not have the option of accommodating the accounting rules of highly specialized industries. It may have a predefined chart of accounts structure that doesn’t fit the structure a company has traditionally used. It also may be limited in the formats that can be used for financial reporting, which could require business leaders to make peace with reports that don’t fit their personal tastes.
To avoid big problems that can surface after shifting to off-the-shelf solutions, companies should make sure to take their time and seek software that can scale with their plans for growth. Like any other technological innovation, AI is a tool meant to support and not supplant a company’s processes. The process of selecting an AI platform to improve accounting efficiency begins with mapping out a company’s unique processes and identifying where AI can boost efficiency. If the platform you are considering can’t deliver, keep looking.
AI best practice: Take it slow and learn as you go
The biggest temptation for companies as they begin to embrace AI will likely be doing too much too fast and with too little oversight. Artificial intelligence is a remarkable tech tool, but still in its infancy. Taking advantage of its capabilities also requires managing some risks.
For example, AI has what some experts describe as an “explainability” problem. Developers know what AI can do but don’t always know how it does it. Companies that feel compelled to provide their clients or stakeholders with a solid explanation of the process behind their AI automations may be limited in how they can put AI to work.
Now is the time to begin integrating AI with your company’s accounting efforts, but take it slow and learn as you go. A solid best practice is to explore what is available, experiment with how it can help your business, and expect to make many adjustments before you arrive at an optimal process. Your accounting efforts will serve you best when they combine human and artificial intelligence.
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