Artificial Intelligence For Accounting: An Introductory Guide
According to recent statistics, 82% of businesses are failing as a direct result of mismanaged profit and cash flow. While this is a scary statistic for business owners, you'll be happy to know that there are some very simple ways that you can ensure this doesn't happen to you.
Using artificial intelligence (AI) in accounting can be one of the most beneficial strategies for tracking money going into and out of your company. When you have the right technologies, it becomes easier than ever to track your cash flow, even if you aren't a financial expert or math whiz.
Here, we're going to delve into the specifics of AI, its uses in accounting, and the impacts of incorporating it into your daily life. Read on for an approachable intro to AI and its use in accounting. And if you're an accounting firm, share this post with your clients so they better understand why automation is so important for their businesses!
WHAT IS ARTIFICIAL INTELLIGENCE?
It’s no surprise that artificial intelligence technologies are rapidly becoming more and more popular in every industry (accounting is no exception). However, in order to understand the way that automated accounting works, it's important to first understand what AI is at the most basic level. In this section, we're going to define artificial intelligence and talk about its uses in bookkeeping more specifically, so read on for some essential background on AI!
THE BASICS OF AI
AI is more important in basically every business market than ever before, and that significance is only growing. Within the next five years, the use of artificial intelligence across different industries worldwide is projected to grow by 55.6%.
On the most basic level, artificial intelligence is an automated computer system or bot that is programmed to perform and execute certain tasks that would usually require human knowledge. Tasks include the initiation of communications, the tallying of receipts, and the organization of files.
When you think of AI, you might think of sci-fi movies that feature humanoid robots, but that isn't the reality of AI accounting. The sorts of AI that work for businesses are basically simple automated computer programs and apps that are installed on your computer. After inputting the basic information, these AI systems will be able to perform repeated tasks like data entry and categorizing transactions.
THE ROLE OF ARTIFICIAL INTELLIGENCE IN ACCOUNTING
Now that you know the basics of AI, it's time to look into the specific applications for artificial intelligence in accounting. Here, we're going to dive deeper into the specific ways that AI works for bookkeeping and accounting, and we’ll also take a look at the things AI can do for different accounting professionals in different areas.
HOW DOES AI IMPACT ACCOUNTING?
There are three steps that an effective accounting AI takes to ensure that your books are in order.
The first thing that these bots do is to integrate all the software that you use to control cash flow and manage accounts like credit cards, banks, payroll providers, invoice creation software, and all other financial apps. This provides faster and more efficient bookkeeping because the AI won't need to waste time going back and forth between multiple systems.
Second, the AI automates the financial processes that you regularly handle. The bot pays bills, invoices, categorizes expenses, enters data into the software, and more.
After that, the AI tech syncs all verified transactions into the distributed ledger that your business keeps. This allows you to dedicate more time and resources to the clients you serve. And AI streamlines this process by providing you with further insight into your client base so you can develop better strategies for branding and diversification.
Generally, there are three types of people who benefit most from artificial intelligence in finance: accounting firms, accountants at small to medium-sized businesses (SMBs), and the owners of those businesses.
If you're an accounting firm, bookkeeping that's powered by AI makes it much easier to integrate the many solutions necessary for day-to-day operations. This makes it much easier for each and every one of your employees to stay organized so that they don't make mistakes when doing the calculations.
Furthermore, artificial intelligence services have been proven to cut the overhead costs for an accounting firm in half. It also allows you to grow to ten times your size for the same price—it's a scalable solution.
When it comes to accounting bots for SMBs, there are primarily two people who benefit. Accountants have a much easier time organizing their files, just like employees at accounting firms do. Business owners also benefit because they won't have to worry about themselves and employees wasting time on bookkeeping tasks that could otherwise be automated.
AI allows professionals to have the time and energy for innovation that otherwise wouldn't be possible. Therefore, more people will be able to put their heads together to streamline the business that company owners and administration are always looking to perfect.
WHY IS AI TECHNOLOGY EFFECTIVE?
Now that more of the basics are out of the way, let’s take a look at why AI is effective for accounting firms and their clients.
AI IS SECURE
When AI takes on your accounting and finances, you may be worried about security. This is only natural—money is important confidential data, and you don't want your leads and invoices to be hacked into for any reason. You also don't want them to be tampered with and have hackers steal from you.
To be sure, AI bookkeeping is incredibly secure. Despite the fact that you're adding new software to the mix, there's nothing to worry about since AI has security measures in place for your protection. We won't bore you with the details, but we’re talking bank-grade security.
AI IS CONSISTENT
Artificial intelligence in accounting is also incredibly consistent. Because it logs your financial information automatically, you won't need to worry about maintaining a consistent format in your data logs. The bot will do it for you!
Furthermore, you'll have unlimited support when it comes to using AI. If you need help with the mechanics of the bot while getting the hang of using it, you can always contact customer support and ask questions (the best AI accounting platforms offer 24/7 support). This also applies if you have any questions about your business finances or any of the monetary uses for the bot. Help is only a couple of clicks away on your computer!
Having the answers to inquiries promotes accuracy in bookkeeping so that you don't need to worry about inconsistent and scattered errors.
AI IS VERSATILE AND FLEXIBLE
A bookkeeping AI solution is also incredibly versatile. It can be used both on computers in the workplace and mobile devices so that accounts can be managed from anywhere. Each piece of an AI platform is designed with a user-friendly look and high functionality on all devices, including the smartphone or tablet that you spend much of your day on while at home.
Artificial intelligence is also flexible insofar as it’s compatible with a wide variety of different platforms. You can use it in conjunction with all sorts of accounting software because it's able to sync with and integrate into them. This means that you won't need to purchase all new software for your firm, saving money.
AI technology is also programmed to continuously learn the subtle nuances of your businesses so that it becomes more efficient over time. It never stops learning, just like your business never stops growing and adapting to new technology!
AI SAVES TIME AND MONEY
First of all, your business will be able to get tremendous savings and scalability with automation instead of manual data entry. You won't need to waste money purchasing resources to enter data into a computerized ledger manually—instead, you can simply sign up for a single AI service and pay only one expense.
Since there are AI pricing packages for all kinds of businesses that have different budgets, you're sure to find something that works for your specific needs!
Using AIs also greatly reduces the risk of human error. While you’re still going to want accounting experts to be crunching the numbers at your business, bookkeeping AI creates a record of expenses that reads consistently and automatically updates without error. This will stop people from accidentally recording a sale twice or skipping an invoice.
While these errors don't sound like a big deal, one little mistake can cost you hours of productivity—and money for the labor required to correct them.
You might also like: What's the difference between AI and ML?
GET STARTED BOOSTING PRODUCTIVITY
There are a lot of reasons why AI is useful for accounting professionals and firms. While the use of AI is starting to gain some impressive momentum across all industries, accounting firms must better embrace AI technologies in order to remain profitable in the future.
AI for accounting will save your firm—and your clients—time, money, and effort when it comes to bookkeeping. Moreover, the confidence you gain with software that’s nearly 100% accurate will be a game changer for growing your book of business.
If you’re interested in learning more about how Botkeeper supports accounting firms and their clients in all growth stages, join us for a free presentation. Click below to save your spot!