Before diving into a couple of reasons why small accounting firms should embrace machine learning and artificial intelligence, it is vitally important to discern the difference between the two concepts. Artificial intelligence is a technology that enables a machine to simulate human behavior, whereas Machine learning is a subset of AI that allows a machine to automatically learn from past data without programming explicitly.
According to Peterjohn Bishop, Artificial intelligence is already great at automating repetitive accountancy tasks, which improves accuracy and productivity. It helps firms to discover hidden insights and trends that affect their clients’ businesses. It can automatically upload documents, understand entries, and classify them using the right accounting codes.
AI enables accountants to do more with fewer resources and has freed up time and energy for creativity when it comes to analysing and interpreting data to extract real value for clients.
Accounting firms can derive a lot of benefits from employing. AI and machine learning (ML) pick up the pace and could come to aid small accounting firms in gaining a competitive edge. Traditional bookkeeping can be rather time-consuming and draining. With AI, everything works at the speed of light can speed up. It delivers dynamic insights that can drive strategic decisions and transform accountants from number-crunchers into true change-makers.
Bishop has detailed three benefits accountants could derive from making use of AI and ML, namely invisible accounting, continuous auditing, and dynamic insights.
1. Invisible accounting
At the beginning of 2020, over half (54%) of South African accountants were moving away from traditional service models and were reinventing their core technologies, recruitment approaches, and skillsets to offer customers an end-to-end consulting service.
They were able to do this because AI had eliminated repetitive tasks from the daily workload and increased the amount of readily available data and, therefore, intelligence to understand the current health and direction of their client’s businesses.
2. Continuous auditing
Nearly all South African accountants (90%) say that the ongoing effects of technological advancement and digitisation are forcing them to move faster and invest more to keep pace with the market.
Artificial intelligence can help accounting firms to build trust through better financial protection and controls.
As the volume of online transactional data increases, so does the potential for financial fraud, manual accounting errors, and dishonest payments. This has made compliance a lot more complex. But AI can review the data at speed.
It can detect anomalies like duplicate invoices, determine links between seemingly normal (but not) payments, and assign expenses to the correct categories, so the business doesn’t pay out for items it shouldn’t.
Automated anti-fraud and finance management systems help practices to significantly improve compliance procedures. In implementing predictive, strategic services to protect their own and their client’s finances, they’ll also be able to pick up on potential issues before they arise.
What’s more, AI lets accountants capture business activity in real-time, perform continuous reconciliation, and make adjustments such as accruals throughout the month, which reduces the reporting burden at the end of the financial period.
3. Dynamic insights
AI’s ability to analyze large quantities of data at speed and at scale allows it to deliver actionable insights in real time.
In pulling data from customer demographics, past transactional data, and external sources, AI helps accountants to optimize their workflows, make better business decisions, and puts them in a position where they’re looking forwards with clarity, rather than backward with obscurity.
AI can help businesses to understand why customers leave and how they can improve their retention strategies.
This means that accountants can help clients to respond to financial challenges before they become acute, by adjusting spending or processes as required. And, as AI advances, accountants will soon be able to provide predictive consultancy beyond classic financial planning to incorporate other areas of the business.
For more information, visit www.digitalead.co.za.