Three of the four largest accounting firms pledged to invest $9 billion in artificial intelligence (AI) and data analytics products and training over the next few years. For accounting professionals, this was big news. It was an eye-opening announcement that revealed the categorical shift to widespread adoption of modern technologies to support day-to-day business practices among the largest financial accounting firms in the world.
For the technology industry, the announcement reinforced the advancements and innovations driven by startups over the last decade. It echoed what Silicon Valley entrepreneurs have been saying for years — that leveraging modern technologies like AI, machine learning and natural language processing would bring sophisticated new opportunities for advancement in efficiencies and capabilities to countless traditional business verticals.
The use of AI in bookkeeping, accounting and financial management for businesses goes beyond strengthening accounting firms’ bottom line; it benefits entrepreneurs, business leaders, investors, bankers and other parties involved in building and growing businesses in many ways. And it’s not something that only large accounting firms and major corporations have at their disposal. In fact, several fintech startups are using these exact technologies to help startups and early stage businesses today.
With more than 10 years of experience leveraging AI, machine learning and natural language processing to build and grow successful AI-powered platforms, here are three ways I believe AI is transforming finances for businesses of all sizes:
1. Financial records are more accurate.
Manual bookkeeping and accounting processes are subject to human error, and a seemingly simple mistake can hurt business performance and profitability. AI helps streamline accounting processes and reliably complete predictable tasks related to data entry, bill pay, invoice processing and more, resulting in financial records completed to the greatest level of accuracy.
That said, an AI-only approach won’t cut it. While entering things like invoice dates and amounts is a relatively black-and-white exercise, assigning classes and categorizations exposes more gray areas and, therefore, a combination of AI working alongside human finance experts is crucial to ensure accuracy.
2. Finance experts can evolve into more strategic, proactive advisors.
When AI takes over time-consuming, human-intensive “busywork” like data entry, chasing receipts, transaction categorizations, processing reconciliations, etc., your team of finance experts can take on a more proactive, strategic role in your business. This means more time for financial modeling based on upcoming business decisions, financial analysis to help understand your business trends, financial reporting at month end (not two or three weeks later) and more.
While AI can free up more time for your finance team, becoming more strategic and proactive is ultimately up to them. Some may have the skill set and determination to rise to the occasion, while others may not. Either way, before you implement an AI-powered financial management tool, be clear with your existing finance team about its impact on their day-to-day responsibilities and the expectations for how their roles and responsibilities will evolve once the AI is up and running.
3. Business leaders gain easy access to important financial insights.
Perhaps the most profound effect of AI on business finance management is the speed at which business leaders have access to important financial insights. Beyond accelerating and improving the accuracy of basic bookkeeping and accounting tasks, AI can also identify and articulate important financial insights based on your financial data, enabling financial data-driven decision making across the board.
Imagine how things might look for your business if you had access to real-time financial insights 24/7. This level of access would affect your sales negotiations, hiring decisions, fundraising efforts, partnership decisions, etc. For every strategic business decision, you would have access to accurate, up-to-date financial data and insights at your fingertips.
When AI unlocks access to real-time accounting data and financial insights, business leaders can quickly identify important business performance indicators and make necessary adjustments as they transpire. Just remember, human oversight is key to an effective and accurate AI-powered finance management system.
Using AI and modern technologies in business finance management can change the way businesses are run. As more and more business leaders gain access to real-time financial insights and timely, accurate accounting data, financial data-driven decision making will become a cornerstone of how every great, lasting company successfully operates.