The Role of Artificial Intelligence in Accounting

How is Artificial Intelligence (AI) transforming the accounting software industry?

Remember back in the era of basic personal digital assistants and early cell phone; before the "smart" revolution took over and reshaped our technological landscape. In those days, devices like the Palm Pilot and Blackberry were considered marvels, capturing our attention with their groundbreaking handheld computing capabilities.

Little did we anticipate that within just a few short years, these innovations would evolve into everyday indispensable tools, seamlessly integrating into both our personal and professional lives.

Fast forward to the present, where we find ourselves at the dynamic intersection of accounting and technology. It is imperative to grasp the profound impact that this combination has on business operations, profitability, and overall productivity.

Here we'll explore some of the intricacies of these advancements, providing insights on how businesses can navigate the future trends and leverage them to their competitive advantage. Why is this so important?

The cautionary tale of Blackberry serves as a reminder: failure to adapt to the ever-evolving tech landscape can have significant consequences.

What is Artificial Intelligence?

Artificial Intelligence (AI) is technology that can perform tasks that typically require human intelligence or human judgement. These tasks include learning, reasoning, problem-solving, perception, understanding language variations, and even the ability to interact with the environment.

AI technology applications are widespread across industries such as healthcare, finance, education, transportation, and entertainment. With continuous technological advancements, AI is poised to assume an ever-increasing role in shaping and enhancing various aspects of our lives.

Benefits of Artificial Intelligence

AI excels in processing vast amounts of data, automating repetitive tasks, and enhancing efficiency.

What is Artificial Intelligence in Accounting?

Simply put, AI in accounting refers to the use of Artificial Intelligence (AI) technologies to automated and enhance various accounting processes. These technologies are making profound impacts, transforming traditional business processes, and increasing efficiency.

Here are some of the ways that AI technologies are being used:

• Automated Data Entry: AI streamlines data entry tasks, reducing the amount of manual effort and minimizing the number of errors by automating the input of financial data into systems.
• Fraud Detection: AI algorithms quickly analyze patterns and anomalies, providing an effective tool for detecting potentially fraudulent activities.
• Predictive Analytics: AI leverages predictive analytics to forecast financial trends, enabling businesses to make proactive and informed decisions based on real-time data-driven insights.
• Expense Management: AI-powered systems automate expense categorization, receipt matching, and even reimbursement processes.
• Audit Support: AI accelerates audit processes by swiftly analyzing large volumes of financial data, ensuring compliance with internal and external regulations and flagging inconsistencies for further review.
• Cash Flow Forecasting: AI uses historical data and market trends to predict future cash flows providing valuable insights for effective financial planning.
• Invoice Processing: AI automates the extraction and processing of invoice data, reducing traditional and error-prone manual work and accelerating the accounts payable workflow.
• Advisory Services: AI-driven analytics provide accountants and CPA firms with the ability to provide more strategic advisory services, leveraging real-time data insights to guide businesses.

Unlocking Real Profits with AI-Driven AP Automation

The real key to unlocking profits is to seamlessly integrate AI-driven AP automation into your operations, taking advantage of resulting insights and efficiencies to make informed financial decisions.

Here are 5 steps that you can take to maximize your profits:

1. Integrate a powerful AI solution.

Incorporate a reputable AI-powered solution into your financial systems. Prioritize features such as smart invoice processing, automated data extraction, and machine learning capabilities.

2. Autonomously manage routine tasks.

Once implemented, enable the system to autonomously handle routine tasks such as invoice validation and matching. The system will continue to recognize and learn from patterns over time, refining processes and enhancing accuracy.

3. Streamline the entire invoice workflow.

Streamline the entire workflow from start to finish for faster processing and minimal delays.

4. Maximize efficiency with AI analytics.

Take advantage of advanced AI analytics capabilities to gain valuable insights into areas including spending patterns, cost-saving opportunities, and ways to optimize vendor relationships.

5. Actively engage for informed decisions.

Actively engage with the insights and efficiencies generated by the AI-driven system to make informed financial decisions.

By following these steps, businesses can not only unlock the full potential of AI-driven AP automation but also elevate profitability through strategic and informed decision-making.

AI-Driven Solutions: A Positive Impact on Finances

The use of AI has a profound impact on the finance department, providing accessible and affordable solutions for small and mid-sized businesses. Reliability, flexibility, and adaptability of algorithms have improved significantly, allowing solutions to analyze financial data and manage various document types automatically.

Software-as-a-Service (SaaS) cloud solutions, constantly evolving, contrast with older and less-scalable on-premises solutions, providing widespread usage and continuous technological enhancements.

Artificial Intelligence for Accounts Payable

Before AI, accounting teams were responsible for the manual creation and processing of financial statements, invoices, purchase orders, and delivery orders using paper documents. Subsequently, the documents were manually entered into computers systems, coded, and ultimately transmitted to managers for approval and payment.

It was a long, error-prone process.

AI has ushered in AI automation, an era which such manual workflows are no longer necessary. Advanced technologies such as OCR, smart data extraction, and AI-powered machine learning are capable of automating the entire AP workflow process.

In addition, the technology analyzes, recognizes, directs, and exports data seamlessly into a company's ERP or financial reporting system.

Does AI-Powered Automation Make a Difference?

PayStream (Levvel)’s Guide to Payables Automation 2018 illustrates the different thresholds organizations typically reach based on their accounting automation maturity, illustrating that significant improvements in processing times and cost savings follow technology implementation.

“What used to take weeks now only takes about 2 ½ days,” says Bryan Schmidt, Controller at Unite Here Health. “The improvements are due to capturing, automatically coding and storing invoices instead of handling paper or sending around PDF files.

The system observes and learns from clerks’ keystrokes, continuously improves GL coding, and reduces errors.”

How Artificial Intelligence is Used in the Accounting Industry

 Embracing Change for Modern Finance Leaders

If you're a contemporary finance leader focused on strategic priorities, the significance of workflow automation can't be overstated. This is especially true when it comes to handling routine Accounts Payable (AP) tasks such as invoice processing, approvals, payments, and vendor audits where staying competitive requires embracing the following five emerging automation technologies:

1. Financial Data and Analytics: Unveiling Hidden Insights

Navigating Data Challenges:

Industry research indicates that organizing and standardizing data is a common pain point, prompting finance leaders to consistently seek the best strategies to address this concern. Fortunately, advances in machine learning and unstructured data processing will enable CFOs to see relevant information, becoming more accurate in estimating revenues and enabling them to make smarter business decisions.

Actionable Insights:

Imagine managing multiple locations and having data analysis reveal cost discrepancies within the vendor network. This may include varying charges for the same item at different locations or the same product being supplied by two different vendors.

The ability to promptly respond to these insights in real-time improved the effectiveness of supplier negotiations and consolidations. This, coupled with timely payments, serves to strengthen and improve supplier relationships.

Furthermore, as we look to the future, prescriptive data analysis promises to provide valuable insights to unveil new markets, customers, services, business models, and sales channels, fostering profitable business growth.

2. Risk Management: Artificial Intelligence (AI) as Your Guardian

Transforming Risk Evaluation:

Yooz CEO Laurent Charpentier expressed a frustration shared by many CFOs and risk managers. "Up until now, we had to have a human that could actually decipher the information from risk evaluation, which was a nearly impossible task." Fortunately, this is changing.

Empowered by AI and robust data analytics, finance teams can now make well-informed decisions regarding cash management, investments, and lending. As a result, the likelihood of encountering capital shortages for mission-critical projects is significantly lowered.

Fraud Prevention:

AI tools of the future have the potential to possess deeper understanding of human expertise and the capability of analyzing vast amounts of data, enabling the detection of fraudulent activities before they escalate.

This proactive approach not only ensures financial security but also offers a sense of assurance, allowing finance professionals to rest easy knowing that their AI guardian is constantly protecting against potential risks.

3. Robotic Process Automation (RPA): Your New Co-Worker

Automation Evolution:

The use of cloud-based AP automation platforms leveraging RPA and other machine learning algorithms powered by AI and machine learning is on the rise. While our current robots may not roam offices shouting "Danger" like the one in the television series and movie "Lost in Space", they are poised to become indispensable allies, ushering in a new era of efficiency across financial planning and analysis processes.

Job Enhancement:

Instead of replacing human jobs, RPA powered by AI is positioned to become your new favorite co-worker, boosting productivity and transforming how we work.

4. Blockchain: Beyond Cryptocurrencies

The Blockchain Promise:

Cryptocurrencies continue to collect mixed reactions in the finance industry, depending on the day. However, blockchain is emerging as a potential solution for transparent supply chain payments and other financial transactions.

Practical Applications:

Blockchain has already demonstrated its value across various industries, addressing significant challenges for accounting firms and business leaders including:

• Saving time by streamlining everyday business transactions and eliminating inefficient processes.
• Identifying and limiting risk.
• Reducing overhead and eliminating multiple intermediaries.
• Establishing a strong audit trail.

5. Cloud Applications: Real-Time Empowerment

24/7 Connectivity:

Today's era of constant connectivity has sparked an increase in cloud applications providing real-time data access. These applications perform data processing at the edge of the network, next to the data source, a concept appropriately labeled "edge computing."

This approach ensures that users benefit from swift, real-time analysis essential for smart decision-making.

Cloud Dominance:

Driven by cutting-edge technologies like AI, RPA, and Machine Learning (ML), cloud applications are poised to assert their dominance over ERP and CRM platforms. This trend promises better spend visibility, acting as a catalyst for widespread adoption of cloud computing over the next few years.

AI's Impact on Finance Teams

As finance teams transition away from traditional, task-driven approaches, the adoption of AI-based systems takes over, automating repetitive tasks and driving operational efficiency. This shift frees employees to concentrate instead on high-value activities like in-depth analysis, strategic planning, creative thinking, and decision-making.

The infusion of AI into internal accounting processes results in streamlined operational efficiency, positioning finance professionals as strategic partners capable of contributing meaningfully the organization's overarching goals.

This marks a fundamental change in the dynamics of finance teams, fostering a more dynamic and value-driven approach to their responsibilities.

Can AI Replace Accounting Professionals?

While AI technologies have indeed transformed various aspects of the accounting industry - ones such as automating routine accounting tasks to providing data insights - the actual role of accounting professionals remains irreplaceable.

As mentioned above, AI excels in processing vast amounts of data, automating repetitive accounting tasks, and enhancing efficiency. Accounting professionals bring contextual understanding, ethical considerations, and strategic insights that AI currently lacks.

Instead of replacement, the synergy between AI and accounting professionals is reshaping the field, allowing professionals to focus on higher-level tasks, innovations, and person-to-person relationships. In contrast, AI handles the routine and data-intensive aspects.

In essence, AI complements and augments the capabilities of accounting professionals rather than replacing them.

Moving Towards a Future of Smart Finance

The finance world is witnessing a paradigm shirt, freeing finance professionals from dull, repetitive tasks and allowing them to add real value to their roles. With such a tangible impact, AI is poised to shape the future.

At Yooz, we're at the forefront of this revolution, leveraging these technological advancements powered by AI with our motto: Easy. Powerful. Smart.

Ready to experience the transformative power of artificial intelligence in your AP process? Schedule a call with one of our AP automation specialists today!