AI in Accounting and Finance: Impact, Benefits, and the Future
UK Businesses are slowly implementing AI into their operations, and it has disrupted workforces. With concerns around job and data security, what are the impacts of AI in Accounting? In this post, we discuss the advantages and negative impacts of AI for Accountants and Finance personnel.
The Rise of Artificial Intelligence and its Impact on Accountants
Before we discuss the benefits of artificial intelligence alongside its potential negative impacts, here are 5 ways it is already transforming the Accounting and Finance industry:
Automated Data Entry and Processing: AI can handle multiple invoices, receipts, and other financial documents at once. Optical Character Recognition (OCR) is an AI-based software that can extract data from digital records whilst machine learning algorithms organise that data, avoiding human error and allowing Accounting professionals to focus on value-added tasks.
Fraud Detection and Risk Management: With the ability to analyse large amounts of data including financial transactions, AI can identify patterns and anomalies which might allude to fraudulent activity.
Improved Financial Reporting and Forecasting: The power of AI can also help analyse historical data and market trends to improve the accuracy of financial forecasting and reports. It provides valuable insights, allowing the business to use data to make informed decisions and predict cash flow.
Improved Regulatory Compliance: Staying up to date with changing regulations can be a burden. AI has the potential to help Accountants automate the analysis of financial data to ensure adherence to relevant regulations, saving time and minimising compliance risks.
Chatbots and Virtual Assistants: Accountants can use AI-powered chatbots to answer basic accounting enquiries which allows human Accountants to focus on complex issues and value-add services.
The Benefits of AI in Accounting
The potential of artificial intelligence to complete certain accounting tasks is massive and can help boost financial performance. Here are 5 advantages of AI in Finance teams:
Increased Efficiency: Automating repetitive tasks allows professionals to focus on strategic analysis and problem-solving. With the use of robotic process automation, Accountants can focus on tasks that require human intelligence and increase revenue.
Enhanced Accuracy: Many businesses use AI to analyse large quantities of data as there is less room for human error in reporting and forecasting.
Detailed Insights: The use of AI in Finance teams increases the chance that trends in financial data will not be missed. This allows the business to have an overview of all potential areas for growth and improve the decision-making process.
Reduced Costs: By using AI technologies to automate repetitive tasks and improve accuracy, accounting departments can focus on high-value activities that contribute directly to the bottom line.
Improved Risk Management: The use of AI to detect fraud and aid compliance helps decrease financial risks and protect an organisation from financial loss.
The Potential Risks of AI in Finance and Accounting
Although extremely beneficial, AI is causing uncertainty around the future of accounting jobs and potential data security concerns.
Job displacement: There are concerns that Accounting automation may lead to job losses. Although Accounting firms and teams are using AI to automate repetitive tasks such as bookkeeping, there is still a need for human input.
Over-reliance on Technology: Dependence on AI could lead to a skills gap in human finance teams. If professionals become accustomed to relying on AI for analysis, critical thinking and problem-solving skills could dwindle.
Grey areas: The method by which AI arrives at its decisions, may cause distrust, raising concerns about its accountability and bias in financial decisions.
Data Security Risks: As AI systems handle sensitive financial data, robust cybersecurity measures are a must. Data breaches can have devastating consequences for a business, and AI systems can be vulnerable to hacking attempts.
The Future: Accountants and AI
The potential of AI to improve how Finance and Accounting teams work is boundless and we should work with it, rather than against it. These are the potential benefits of working with AI in the future:
Upskilling and Reskilling: Finance professionals can continue to develop their own data analysis, critical thinking, and strategic planning skills to better understand the conclusions met by AI and partner with it. Businesses should also provide training on AI systems to prevent potential misunderstandings and uneasiness around its implementation.
Focus on Strategic Tasks: AI in Accounting can help handle routine tasks so that human Accountants can focus on high-value tasks like financial modelling, risk management, and providing strategic business insights.
Data Governance and Transparency: Financial institutions must develop robust data governance frameworks to ensure the security and integrity of data used by AI systems. Additionally, efforts must be made to improve transparency in AI algorithms to build trust and reduce bias.
There is no denying that the use of artificial intelligence in Accounting and Finance teams has major benefits that allow human professionals to focus on developing their own skills and unexplored areas of the business. AI can provide a helping hand with transactional duties which provides teams with more time to work on value-added initiatives for a business.
However, businesses should endeavour to provide clarity on how and why AI is used in a business and how it will affect its employees. Training should also be provided to all colleagues of businesses that are experiencing Accounting automation journeys so there is a full understanding of its place in the team and what it means for existing employees.