Future of finance: How AI transforms accounting

accounting

Ever since Venetian merchants started using an early version of double-entry bookkeeping, accountants have tracked business numbers using a similar process. And for centuries, that process was primarily manual and labor-intensive. Then one day, Excel arrived on the scene and brought accounting into the modern era. Formulas, macros, and all kinds of spreadsheet shortcuts made the job easier, but looking back now, Excel can feel like ancient history (even if you just used it yesterday).

Today, the future of finance and accounting is being transformed by AI and machine learning. Where the Excel spreadsheets allow you to streamline some processes, AI enables accounting and finance tools to store information and analyze it and improve over time.

Improved processes

If AI makes you think of shiny, humanoid robots doing our chores (and hopefully not starting an uprising), you’re not alone. Of all the things AI can do, you’re probably still planning to give your robot a to-do list of cleaning and lawn care when everyone is issued an AI helper.

In accounting and finance, AI makes mundane, repetitive tasks quick and easy while also improving how those processes are completed each month. Data entry becomes automatic, and the coding of those transactions becomes more and more accurate with time. Account Reconciliation Software cuts days off the monthly closing process by comparing data from multiple sources and ensuring everything reconciles. Internal audit tools that flag issues for human review, saving time and energy, not to mention reducing bleary-eyed human error at the end of a long week.

AI automated processes free accounting and finance professionals to focus on the big, strategic picture and spend more time commuting and coordinating with other departments to help them understand the implications of accounting data.

Leveraging data

One of the significant advantages of computers is that they can process an enormous amount of data very quickly. They can analyze in minutes what might take weeks or months for humans. Thanks to Machine Learning (a specific form of AI), future finance and accounting tools can analyze data and gain incredible knowledge without being told what to look for.

As more and more of our financial transactions occur online or in the cloud, we have increasingly massive pools of data to pull from. It makes machine learning a viable option for everything from coding transactions (think QuickBooks Online suggesting accounts) to internal audits watching for red flags (and deciding what a red flag even is) and even external audits that identify businesses and taxpayers that warrant a closer look.

As the data-harnessing bar keeps increasing, accounting and finance departments will want to strategize to make sure they don’t fall behind. While the latest software may be an investment, it’s likely to be one with a great ROI.

Unbiased decision making

Accountants and finance professionals do what they can to be unbiased and objective. Unfortunately, as human beings, we always carry certain preconceptions and leanings with us. On the other hand, AI isn’t influenced by emotions, social pressures, or preconceived notions. It gives AI a major advantage when it comes to decision-making.

The future finance and accounting tools will be able to make routine decisions independently without any need for concern (they already do, but this will only grow moving forward). Major decisions can be analyzed and prepared by AI for human review, and honestly, that review is more of a formality because humans love to be consulted.

Moving into any decision-making process with a completely objective set of tools puts you in a powerful position. The businesses that jump on this train first will be at a distinct advantage over the competition.

How can financial professionals prepare for the future?

So what’s the key for professionals who want to stay relevant and valuable as AI makes the job easier? While accounting is often seen as a hard skill, all about concrete numbers, future financial professionals will be developing their “soft” skills. The ability to communicate cross-functionally and work outside of the finance and accounting silo is essential.

As the number-crunching tasks become more and more automated, the true value will be in financial experts who understand the inner workings and can explain and communicate them to non-accounting stakeholders. This “translation” for accounting data is likely one human step in the process that will never be fully automated.

What the future will hold for financial professionals

So, where exactly will AI take the future of finance? We can only guess what’s to come in the next few years. Artificial intelligence is not only getting smarter at an incredible pace; it’s accelerating by making itself smarter. We know that finance and accounting professionals are getting better insights into the flow of money in and out of their businesses, and the benefits will continue to grow.

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