AI accounting: revolution, impact and future

Accounting dates back thousands of years and has certainly come a long way since clay tablets and abacuses. But despite the tremendous evolution the practice has undergone throughout its history, accounting is currently experi­encing perhaps the most exciting and revolu­tionary time ever.

Thanks to the intro­duction of AI accounting, the intro­duction of AI technology is changing the structure of accounting as you know it by automating manual processes, improving accuracy and speeding up workflows. AI-driven analytics can give you deeper insights into financial health and give you the data you need to perform predictive analysis and support strategic decisions.

This change is impacting the accounting industry at great speed. To under­stand its impact on the future of the industry, Sage surveyed 1,000 accoun­tants and accoun­tants across the UK. The report provides insight into the benefits and risks associated with the use of AI and highlights the regula­tions required to regulate it.

Created in collab­o­ration with ACCA and leading think tank Demos Report “Going for Growth: Creating an AI-first Future in Accounting.” examines the current and future adoption of AI and its current and potential impact on daily work, business perfor­mance, wellbeing and the accounting profession as a whole.

This article explores some of the key findings from this report, including the evolution and impact of AI-powered accounting. But one particular finding stands out: if all practices adopted AI at the same pace as industry leaders over the next three years, it could boost GDP by £2 billion and create 19,900 additional jobs.

“It’s really exciting to see AI adoption in UK practices accel­er­ating and not just large organi­za­tions benefiting,” said Alistair Brisbourne, head of technology research at ACCA.

“As the report confirms, profes­sional accoun­tants have a deep under­standing of the risks associated with AI, data usage consid­er­a­tions, and potential efficiency and produc­tivity benefits. As an industry, it is clear that the accounting profession is well placed to leverage these skills to provide clarity for businesses and support the devel­opment of appro­priate frame­works.”

Alistair Brisbourne, head of technology research at ACCA

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The AI ​​revolution is shaping accounting

As accoun­tants continue to integrate AI into their businesses, the time-honored accounting practices of yesterday are likely to be phased out – and there are certainly some aspects of this that won’t be overlooked. Tradi­tional accounting practices, which tradi­tionally relied on manual data entry, general ledger accounting and recon­cil­i­ation, were time-consuming and prone to human error. All of this repet­itive manual effort was far from ideal, but the biggest downside to the “old methods” of accounting is that they signif­i­cantly limit the time you have for strategic financial planning.

But with AI, that will soon change.

More than a quarter (26%) of accounting and bookkeeping practices have already adopted artificial intel­li­gence technologies, with this number expected to rise to 52% over the next five years.

But how is AI currently used in accounting? First, it is important to note that AI is an umbrella term for a range of artificial intel­li­gence-based function­al­ities and use cases. This umbrella is likely to grow larger over time as technology advances and more appli­ca­tions are discovered.

Today the effects are felt across the entire industry. AI technology is showing up in accounting in a variety of ways, including:

• Machine learning (ML) that automates data catego­rization, predicts financial trends, and detects anomalies for fraud prevention by learning from historical data and identi­fying trends
• Data analytics that provide real-time insights, financial forecasting, and intel­ligent, contextual infor­mation for more strategic decision-making
• Automation that can perform repet­itive tasks such as data entry, invoice processing, and recon­cil­i­ation, improving both efficiency and accuracy
• Gener­ative AI tools like ChatGPT and other digital assis­tants that use NLP to quickly discover infor­mation from large amounts of data and generate content such as text using simple, conver­sa­tional prompts
• Optical character recog­nition (OCR), which helps process and digitize infor­mation by converting scanned images into editable and searchable text, speeding up data extraction and analysis

How AI impacts the way accountants work

AI offers accoun­tants a variety of solutions to work smarter, not harder. Here are 5 key ways AI can transform your everyday work life.

1. Perform repet­itive tasks – AI can automate repet­itive, time-consuming tasks such as data entry, invoice processing, and trans­action catego­rization. Tasks that previ­ously took hours or days can be completed in minutes, reducing the manual effort required to complete these important tasks and minimizing errors.
2. Simplify data analysis for faster forecasting – AI-powered tools can analyze massive amounts of financial data much faster and 24/7. This speeds up analysis and reporting and also helps you identify trends, anomalies and insights that may not be visible or available using tradi­tional methods. AI can also help you instantly create accurate financial forecasts such as cash flow forecasts by analyzing historical data and market trends. This saves you time, allows you to make more informed predic­tions, and helps customers plan better for the future.
3. Improve fraud detection – AI excels at identi­fying patterns, which is good news for accoun­tants who want to spend less time manually looking for anomalies that could indicate fraud.
4. Extract data more easily – tools like OCR can help you reduce data entry time by automating the extraction and processing of data from sources such as receipts, invoices and bank state­ments. The laborious typing of every single line by hand is no longer necessary.
5. Optimize commu­ni­cation – AI can also enable smoother and faster commu­ni­cation with customers. According to the report, more than half of accoun­tants use chatbots to engage with clients. This helps them find what they need faster by making it easier to complete tasks like answering common questions, sched­uling appoint­ments, and gathering infor­mation.

The bottom line is that letting AI handle routine tasks allows you to focus on higher-value activ­ities like consulting and strategic planning, increasing your produc­tivity and helping you deliver better experi­ences to your customers.

Obstacles to implementing AI accounting – and how to overcome them

AI has become acces­sible very quickly and offers you and your practice many oppor­tu­nities to integrate it into your accounting processes. You can access AI function­ality through publicly available gener­ative AI tools, purpose-built, industry-specific solutions, and in many cases through existing accounting solutions that invest in integrating AI into their products.

However, imple­menting any new technology comes with challenges, and AI is no exception. If you’re consid­ering adopting AI into your accounting practice, here are some common obstacles you might encounter and how to overcome them.

Data quality: There is a famous saying about data: garbage in, garbage out. AI needs good data to learn, predict and gain useful insights. Feeding poor quality data into your AI solution can impact the perfor­mance of the algorithm. Therefore, make sure you adopt the right data management, cleansing and management practices to achieve the best results.

Cost: The initial investment can also be a barrier to adoption. However, many AI services are cloud-native and can be used on a pay-as-you-go basis, helping to reduce acqui­sition costs. You can also opt for a phased imple­men­tation, focusing on high-impact areas first to get a better handle on costs. In some cases, you may be able to purchase an AI upgrade for products and services you already use, elimi­nating the need to budget for an entirely new solution.

AI capabil­ities gap: AI is new to everyone, so it’s under­standable to be concerned that a lack of AI expertise among accoun­tants is slowing adoption. In fact, nearly two-thirds (63%) of accoun­tants and bookkeepers fear skills gaps are limiting the effective use of AI.

The good news is that many AI solutions, especially those designed for an industry like accounting, are designed to be acces­sible and easy to use. You don’t have to be a data scientist to implement AI into your accounting processes, but of course targeted training is still a good idea to fill any knowledge gaps and ensure you’re getting the most out of your AI solution.

Regulatory Compliance: AI is a powerful tool and must be used ethically. Accounting firms process a lot of sensitive and personal infor­mation about their clients and companies. Therefore, it is important that any AI systems you implement comply with relevant data and privacy regula­tions. By conducting regular audits and working with legal experts, you can ensure you are fully compliant with compliance standards.

Change management: People are often resistant to change, even if the changes can make our lives easier. This resis­tance to changing processes and learning to use new tools can seriously hinder AI adoption. However, with effective change management, you can mitigate much of this obstruction. Make sure you engage everyone involved from day one of your AI imple­men­tation project, fully commu­nicate the benefits they will enjoy, and provide appro­priate training to ease the transition.

Leveraging AI with AI-powered accounting software

There have been many important devel­op­ments since the earth-shattering intro­duction of AI. Enter­prise software devel­opers have been working hard to integrate AI into their products and help customers maximize their produc­tivity. This means that you can use AI even in niche indus­tries quickly and easily through software that is specif­i­cally tailored to your needs.

And there are already numerous AI software options for accoun­tants that combine multiple AI technologies to help you save time and get more done.

AI-powered accounting software is designed to help businesses automate routine tasks such as data entry, invoicing and recon­cil­i­ation, increasing accuracy and saving time. These platforms provide real-time reporting and advanced data analytics that provide deeper financial insights, enable better forecasts and more informed decisions, and give you the ability to adapt to changes.

The Future: What’s Next for AI Accounting?

This rapidly evolving technology will undoubtedly continue to shape the future of accounting in the years to come. It will further improve automation, enable more sophis­ti­cated data analysis and improve predictive capabil­ities.

AI accounting software solutions will learn and expand their ability to handle increas­ingly complex tasks, from advanced financial modeling to strategic planning support. Additionally, AI’s ability to integrate and analyze different data sources will help provide richer financial insights and enable more accurate forecasts.

No one can predict exactly where AI accounting will take us next, but as AI accounting adoption increases, one thing is certain: those who lead the way by imple­menting AI tools will benefit sooner rather than later.

According to the report, accounting firms that consis­tently use AI tools expect to grow three times faster over the next three years and increase their revenue by 18 percentage points more than those that have no plans to use AI. And perhaps most impor­tantly, AI can have a hugely positive impact on wellbeing: more than half (51%) of practices using AI report improve­ments in wellbeing, including reduced workload and increased job satis­faction.

Find out more in the full report

If you would like to learn more about how to implement AI in your accounting practice and what benefits this innov­ative technology can bring to the accounting industry, you can read the full report, “Going for Growth: Creating an AI-first Future in Accounting.” But accoun­tants won’t be the only ones excited about these findings.

“Aimed primarily at policy makers, these unique insights demon­strate the huge benefits to the UK economy that AI in bookkeeping and accounting can bring,” said Chantelle de Villiers, Director of Public Affairs at UKI, Sage, “as well as some of the challenges and policy solutions that will help unlock the full potential of AI in the accounting industry.

“We look forward to presenting the findings to the new UK government and working together to create the right policy environment that enables accoun­tants and accoun­tants to take full advantage of AI technologies so they can focus on high-value tasks.” This in turn, will unlock signif­icant added value for the overall economy.”

Chantelle de Villiers, Head of Public Affairs at UKI, Sage

The good news is that the new Labor government is expected to advance current policy to help accoun­tants effec­tively realize the full potential of AI. Until then, download the report and learn how you can implement AI in your accounting practice and stay ahead of the compe­tition.