9 Benefits Of AI In Accounting and Finance: Improving Various Accounting Processes

Although ChatGPT is the most well-known use of artificial intelligence, there are other ways in which businesses can utilize benefits of AI in accounting. With recent advancements in AI, there are numerous areas in which a company can improve accounting and finance tasks.

In this article, I will discuss the main benefits of using AI technology in accounting and finance so that you can decide for yourself whether you want to stay ahead of the competition or fall behind.

Can AI be trusted for accounting?

AI in accounting lacks the critical thinking and judgment needed for complete trust. While it can be a helpful tool, human oversight is still necessary.

AI’s trustworthiness in accounting depends on quality data, algorithms, compliance with regulations, solid security measures, human oversight, and adaptability to change.

What are the benefits of AI in accounting?

Improved Customer Service

AI-powered chatbots can provide clients with immediate answers to frequently asked questions, such as invoice status, payment deadlines, or late fees. 

Additionally, it frees up accountants to focus on more complex issues and client interactions. Chatbots can improve the client experience by providing step-by-step guidance for tasks like resetting passwords or uploading documents. 

Process Automation

AI can handle tedious and error-prone accounting tasks such as data entry, invoice processing and bank reconciliation. This frees up valuable time for accountants to focus on more strategic work such as financial analysis, tax planning and business advice. 

AI can also automate the collection and categorisation of data from invoices, receipts and bank statements, ensuring an accurate and consistent record of all financial transactions. 

Cost Reduction

By reducing manual labour, businesses can reduce indirect costs such as office space, equipment and IT support required to manage these tasks.

AI enables faster and more accurate invoice processing, allowing businesses to take advantage of early payment discounts offered by suppliers, resulting in significant cost savings.

Lowering Human error 

People can become tired and distracted, especially when performing repetitive tasks. However, AI maintains consistent accuracy regardless of time or workload, reducing the risk of fatigue-related errors.

By automating data handling, identifying anomalies, enforcing rules and validating information, AI significantly reduces the potential for human error in accounting. The result is a more accurate and reliable financial view for organisations, enabling better decision making and improved financial planning.

Improved Fraud detection

It is not surprising that AI is better at handling large amounts of data and detecting fraud earlier than humans. This is a significant advantage for the banking and financial industries, which already deal with large amounts of data.

AI can analyze financial data to identify unusual patterns and trends that may indicate fraudulent activity. 

Unlike humans, who require breaks and rest, AI can continuously monitor financial transactions in real time. Vigilance helps detect and prevent fraudulent activity promptly, minimizing potential losses.

Risk Management

AI allows organisations to make informed decisions and take proactive measures to mitigate financial risks. This results in improved financial stability, stronger internal controls and more reliable accounting.

By analysing historical data, AI can identify patterns that correlate with past financial risks, allowing potential future risks to be proactively identified before they occur.

Organisations can use AI to model different financial scenarios and assess the potential impact of different risks. This helps organisations prepare for unexpected events, develop contingency plans and make informed decisions based on simulated outcomes.

Investment automation

Automated investment platforms use algorithms to create and manage investment portfolios based on your risk tolerance, financial goals and investment horizon. Robo-advisors typically invest in low-cost index funds, offering a diversified and relatively hands-off approach.

The key is to maintain your desired asset allocation, which is the mix of different asset classes such as stocks, bonds and cash, to manage risk. Automated rebalancing tools can regularly rebalance your portfolio to maintain your target asset allocation. This helps to manage risk and keep your investment strategy on track.

Investing in future-proofing your business processes

By incorporating AI into accounting processes, organisations are not only optimising their current operations, but also positioning themselves to adapt to future technological advances and market changes. This more proactive approach to adopting AI in accounting is a powerful strategy for future-proofing a business.

As well as delivering immediate operational improvements, adopting AI in accounting can help ensure that AI systems continue to evolve and improve over time, learning from new data and adapting to the changing financial environment.

Fast return on investment

Implementing AI in the accounting department will significantly accelerate the return on investment, especially when you consider the significant number of hours saved in the long run. By automating routine and time-consuming tasks such as data entry, reconciliation and reporting, AI significantly reduces the manual workload for accountants. 

This reduction can be measured in hours saved per week, which, when added up over months and years, results in a significant increase in efficiency and productivity. For example, tasks that used to take several hours can now be completed in a fraction of the time, potentially saving hundreds of hours per employee per year.

Companies that use AI in accounting and finances

PWC

PwC’s use of AI in accounting is mainly in audit and financial review. Its approach aims to identify irregular transactions or patterns of inconsistencies. This use of AI technology could lead to deeper and more accurate audit analysis, providing a complete picture of a company’s finances at a more affordable cost. 

However, it’s important to note that the use of AI in accounting, particularly at PwC, is still in its early stages. Company officials have acknowledged that their AI technology is in the developmental and exploratory stages, with early results suggesting potential for auditing, but not yet fully realized. 

The wider trend in the accounting industry, including large firms such as PwC, indicates a growing interest in AI but also suggests that there is still much work to be done before AI significantly changes accounting practice.

KMPG

KPMG is actively integrating AI into its audit processes, recognizing its significant potential to improve audit quality and efficiency. They’ve developed an intelligent audit platform called KPMG Clara, which is used globally to deliver consistent, risk-focused audits. This platform integrates digital capabilities, leverages data from clients’ financial systems, and has already automated tasks such as matching cash to revenue.

More recently, KPMG launched the KPMG Trusted AI approach, which is based on ten principles such as fairness, transparency, explainability, and accountability. This framework guides the ethical and responsible use of AI in audits. 

KPMG’s use of AI in audits includes machine learning, deep learning, and large language models. These AI tools are used to analyze large datasets, identify risks, and generate audit evidence, allowing auditors to focus on higher-risk areas, thereby improving audit quality and insight.

In addition, KPMG’s AI capabilities range from assisting auditors in their day-to-day tasks (“co-piloting”) to more autonomous functions such as data analysis and evidence generation (“auto-piloting”). 

Auditors retain control and review the AI-generated results for quality and accuracy. This integration of AI is part of KPMG’s strategy to responsibly integrate AI into audit processes, building on the foundation of its Intelligent Audit platform.

Is AI the future of the accounting industry?

AI will not replace accounting professionals or accounting firms any time soon. As AI-powered systems are implemented in accounting to help with auditing or client service, and repetitive tasks, we will not see artificial intelligence take over more complicated tasks.

AI is likely to play a significant role in the future of accounting. AI excels at automating tasks and finding patterns in data, which can free up accountants to focus on more strategic work.

Final thoughts

With 2024 being one of the biggest years for artificial intelligence, and only a few months in, the future of AI looks bright. Companies using AI in accounting will continue to improve and thrive, while others using traditional methods will be left behind.

If you are considering implementing artificial intelligence, try contacting an agency that is an expert in AI and software development, such as Idea Link.

Now, you need to understand that AI cannot perform deep data analysis or accurately predict potential risks, but you can use AI-powered tools to improve some business processes and internal accounting processes.

I would strongly recommend that you look into implementing at least basic AI in accounting software. It’s not that expensive for businesses these days, and it can be beneficial and pay for itself in a short period considering how much time you would save.